Saskatchewan: Orphan Well Ownership
Following a consultation period, the Saskatchewan Ministry of Energy and Resources can now re-assign orphaned well ownership. As of February 16, 2023, leases for orphan wells and facilities can now be transferred to other parties even in cases where the original and current lease holders can not be located, are defunct, or are bankrupt. Although there are tax and payment priorities still in litigation when well ownership is transferred, this move to swiftly address orphaned wells will allow plugging or repurposing to move forward in the absence of a solvent owner.
On the Rise: More Orphan Wells
This regulation is a result of several companies who recently became financially incapable of maintaining or properly closing a large number of marginal wells, adding nearly 4,000 orphaned wells in Saskatchewan. The Saskatchewan Orphan Fund Procurement Program lists each orphaned well (4,079 wells) and its closure progress and owner status.
Plugging Efforts: Taking Care of Business
The province has recently made use of federal funds as part of a $1.7 billion initiative intended to employ industry workers across Canada to clean up well sites and facilities. The Accelerated Site Closure Program, launched in May 2020 during the pandemic, and provided nearly $400 million with the goal of remediating 8,000 inactive wells in Saskatchewan by 2023. The program was planned to end in 2022, having employed 1,300 fulltime local workers, closed over 6,100 wells, decommissioned dozens of facilities and performed remediation and reclamation across the province.
Funding the Future: Costs and Timelines
The Parliamentary Budget Office (PBO) estimated that it would require $1.1 billion by 2025 to effectively and correctly plug orphaned wells to protect aquifers, surface water, land, and the atmosphere by shutting off leaks and greenhouse gas emissions, particularly methane. The PBO report estimated the plugging cost per well at around $78,000, but costs of leakage clean up and environmental remediation are not included in the total, nor are oilsands cleanup.
The majority of Canada’s orphaned and abandoned wells are located in Saskatchewan and Alberta, an estimated 10,000 orphaned wells. However, there are also another 7,400 or so wells that are considered abandoned, not orphaned, and which may need to be reclassified.
