Business of Energy - February 2023

OF ENERGY

ALBERTA’S NEW ENERGY MINISTER

PETE GUTHRIE ON HIS UNIQUE PAST AND PLANS FOR HIS NEW ROLE

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OF ENERGY

PUBLISHERS

Pat Ottmann & Tim Ottmann

EDITOR

Melanie Darbyshire

By Cody Battershill

By David Yager

By Melanie Darbyshire

By Jamie Zachary

COPY EDITOR

Nikki Mullett

ART DIRECTOR

Jessi Evetts jessi@businessincalgary.com

ADMINISTRATION/ACCOUNTING info@businessincalgary.com

THIS ISSUE’S CONTRIBUTORS

Melanie Darbyshire

David Yager

Jamie Zachary

Cody Battershill

COVER PHOTO Production World

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‘JUST TRANSITION’ MEANS FAIRNESS FOR WORKERS, FAMILIES, COMMUNITIES

BY CODY BATTERSHILL

When it comes to energy and climate policy, it’s important Canadians continue to keep their collective eye on the prize. From my perspective, the prize is continued market access together with fair treatment for fossil fuel workers, families and communities.

The federal government has rightly said there’s far too much polarization in the conversation around fossil fuels. We’ve said the same since the first days our group began to speak out on the topic.

We know, for example, that demand for all categories of energy supply continues to grow. That means we’ll require oil and gas for a very long time. So fossil fuels, together with other renewable sources, will form a key part of our energy future for the foreseeable future.

We must ensure Canada remains a strong energy supplier, so we’re not forced to rely on other countries for our energy resources – and other countries don’t simply take our market share when we’re capable of supplying even more of the world’s energy needs.

Several pieces of the Canadian energy puzzle exist and are ready to be put together. But let’s be very clear. There are some important caveats to solving the puzzle. Here’s how a University of Ottawa survey described the requirements of a just transition.

For any energy transition to be a just one, it has to consider human dimensions of the policy and technical issues. It must engage with stakeholders, ensure the task force is geographically and vocationally reflective of the groups affected and avoid partisanship and politicization. That seems reasonable.

For example, when a just transition task force for coal workers released its report during the first Justin Trudeau administration in 2018, it recommended a wide range of attributes and methods for a truly just transition.

But as far as the fossil fuel just transition discussion has gone, almost in every case these aspects of fairness and justice have fallen by the wayside.

It seems obvious that workers, families and communities that rely on fossil fuel industries for their existence shouldn’t bear a disproportionate share of the costs of the transition. It’s equally clear those key stakeholders should be afforded a chance for meaningful participation. Without that, polarization will only increase.

Yet for some reason, Ottawa’s seemingly rushed efforts to execute on the coal phase-out have ignored the committee’s guidance on fairness and justice.

Affected families and communities need a regionally determined policy with longer timeframes and reasonable job replacement options – jobs in the same region and at the same time that displaced workers need them.

Here’s my bottom line: A just, pragmatic and fair transition for workers, families and communities is just as important as the technical issues of lowering GHG emissions. BOE

Cody Battershill is a Calgary realtor and founder / spokesperson for CanadaAction.ca, a volunteerinitiated group that supports Canadian natural resources sector and the environmental, social and economic benefits that come with it.

PATHWAYS TO THE FUTURE

GLJ uses its 50 years of energy consultation experience to explore energy opportunities with Environmental, Social, and Governance goals

assess, track, and report on their data, others have yet to capture data of any sort, and others are somewhere in between. Our team has the capacity and experience to work with all of them,” comments Colleen Sherry, VicePresident Sustainability & Emissions Management.

“Part of what makes our sustainability expertise unique is the depth of technical experience we can access within GLJ more broadly. The other part is our commitment to ongoing education and keeping abreast of current technology research and regulatory policies, which allows the team to provide potential and meaningful solutions to any challenge,” says Sherry.

GLJ Sustainability & Emissions Management Services

With more than 25 years of energy experience, Colleen leads GLJ’s expanding advisory capacity in decarbonization, energy transition, ESG reporting, responsible product certification, and emerging technologies. Colleen has supported client sustainability strategy assessments and development in numerous jurisdictions worldwide and is a passionate advocate for a sustainable energy sector.

Through 50 years in business, GLJ has amassed a depth of technical experience differentiating our advisory services from that of our peers. The business has grown and evolved to meet the changing needs of our clients. Today, the next step in our evolution means expanding our Sustainability and Emissions Management services to meet society’s changing expectations.

Our clients, and companies in the energy sector in particular, are exploring their sustainability strategies and related environmental, social and governance (ESG) targets (or lack thereof). They are also evaluating Carbon Management pathways that would lead to more mature practices aligned with government and regulatory policies leading to Net-Zero 2050. Business drivers for these activities include requests from investors, lenders, or insurance agents, or acknowledgement that deliberate plans will support expanding energy needs while still addressing emission reduction targets. The desire to evolve could also be due to external social or community group pressure, but is more often the result of a combination of a number of these factors. Regardless of the catalyst, energy companies recognize that there’s work to be done to establish, execute, and report on ESG targets.

“Our clients are at different places along their ESG journeys. Some have established frameworks and processes to

• ESG Reporting - Pre-reporting assessment, inaugural report guidance and annual reporting

• Sustainability Strategies - Including materiality assessments and scenario planning to mitigate business and reserves management risks

• Technology Assessment and Evaluation - Assess the technical and commercial viability and application of existing and emerging technologies including emissions reduction, carbon capture and storage (CCS), and hydrogen

• Carbon Management Strategies - Assess a company’s carbon footprint and develop decarbonizations strategies and plans, including risk management and economic modeling

• Monitoring and Verification - Design and management of operational data measurement, validation, process workflows, and independent bottoms-up emissions forecasting

• Regulatory Education - Training on government and regulatory policies that impact business

• Sustainably Linked Lending (SLL) - Advise and technical validation of SLL plans to satisfy investors and lenders

GLJ’s process starts with an individual assessment of a clients’ goals and needs. We learn where the client’s team sits along the sustainability maturity curve, then clarify challenges and opportunities that can be addressed through a bespoke sustainability strategy and/or emissions management program.

To learn more contact our team at sustainability@gljpc.com

Colleen Sherry, Vice-President, Sustainability & Emissions Management

TIME FOR A FRESH NEW LOOK AT ALBERTA’S OIL & GAS FUTURE

BY DAVID YAGER

With common sense finally returning to the future of fossil fuels, Alberta has a remarkable opportunity to switch from defense to offense.

Instead of reacting to external events as we’ve done for years, we should again become masters of our own destiny.

Fifteen years ago, there was talk about increasing oil sands output to five million barrels per day and beyond. But this was eclipsed by the oil price collapse, pipeline obstruction, climate concerns and the declaration of war on fossil fuels by too many western governments.

This century started with natural gas paying the rent for Alberta. But because of huge quantities of new supplies of methane from shale gas plays across North America, the gas business tanked. There were great plans for LNG exports, but with the exception of one project, this opportunity has gone nowhere.

Frequently discussed but never fully understood is what it means to be in the oil and gas business for over 100 years and accumulate several hundred thousand separate producing assets of all shapes and sizes that at some point must be properly decommissioned. Alberta has never before been in cleanup mode on this scale.

Within Alberta there has been a major geographical shift in activity from the central and southeast regions to the oil sands and light tight oil and natural gas liquids plays in western and northwestern regions of the province.

This has dramatically changed the economic and taxation landscape for half the province. What we hear most on this file is how producers are

delinquent on their property taxes and surface rights leases. The collateral damage of lost jobs, taxes and the complete retooling of the oil service industry has not been properly framed.

Alberta likes to blame losing control of its hydrocarbon destiny on external forces in Canada, the U.S. and internationally. There is massive evidence that this is indeed the case. The thesis of the “energy transition” is that that the sooner Alberta is out of the oil and gas business, the better the world will be.

But some of our problems are home grown. The first oil sands emissions cap regrettably originated in Alberta in 2015 courtesy of NDP Premier Rachel Notley. It is now the federal law of the land. There are many other issues within Alberta that have made the oil and gas industry less successful than it could be otherwise.

Things changed big time for Alberta in 2022. The Great Reset as proposed by the World Economic Forum in 2020 has been replaced by the Great Reality Check. That’s when the invisible hand of Adam Smith slapped the world in the head and reminded consumers and policy makers that energy price, supply and demand still matter.

As a result, in 2023 the major issue with energy is cost and supply, not carbon content. Despite the continued chorus from climate alarmists that the world is doomed unless we immediately do what they say, there is growing acknowledgement that fossil fuels are going to be around a lot longer than hoped or planned.

A great analysis from Goldman Sachs energy guru Jeff Currie last October summed it up. He noted that in 2012 fossil fuels provided 82 per cent of the world’s

primary energy. Ten years later, and after investing US$3.8 trillion in replacement renewable energy sources, the figure was reduced to 81 per cent.

Whatever you’ve heard and been told – and whether or not this should be the case – Alberta is going to be in the oil and gas business for a long time.

It will be different of course because of an evolving resource base, technologies and society’s expectations of what a responsible environmental footprint looks like in the 21 century.

But as a province, we should review all aspects of the industry to find the areas where we can

improve operations and opportunities without asking anybody for permission.

This hasn’t been done for a long time.

Alberta’s oil and gas business has changed much more than how it is managed and regulated.

Many government departments like finance, education and transportation have been doing essentially the same thing the same way for a long time.

Energy is different because it changes continuously. Today, Alberta is trying to run a 100-year-old

business with a patchwork of overlapping and conflicting regulations from multiple sources. This hampers competitiveness and impairs growth.

What energy consumers want to know now is what Alberta can deliver in terms of increased hydrocarbon output produced in the most environmentally responsible way possible.

How can we do everything better?

The oil sands producers are ahead of the curve. Perhaps that’s because they have been criticized the most and have the greatest production volumes at stake. The Pathways Alliance has developed an ambitious but expensive plan to materially reduce production emissions through a combination of CCUS and possibly lower carbon heat from Small Modular Nuclear Reactors.

Natural gas is more challenging. What is not well known is that in 2020, 6.4 bcf/day, or 54 per cent of all gas consumed in Canada, was used in Alberta. Of that, 84 per cent was “industrial” as heat for oil sands recovery, petrochemical feedstock and electricity generation.

But supply has shifted. With prices down and operating costs up, the traditional areas of development in central and southeast Alberta have been all but abandoned for new supplies from the massive light tight gas and liquids reservoirs like the Montney and Duvernay in northwest Alberta.

This has caused a myriad of problems that were not anticipated. Big new gas volumes from the opposite end of the province have exposed the shortcomings in the Nova Gas Transmission Ltd. gathering system. This has collapsed spot gas prices to previously unimaginably low levels in the past three years. That caused significant financial pain on many fronts.

The lack of new drilling and the maturity of the gas producing assets is affecting municipalities

in central and southeast Alberta. In 2005 there were 8,801 new gas wells drilled in this region. In 2021 the figure was only 52. The oil services sector in Medicine Hat, Brooks, Taber and Drumheller has been clobbered resulting in lost jobs and commercial activity.

Fewer wells and the amount of new land required for development has squeezed municipal property taxes and surface rights payments on private lands. Back in the day this was a reliable source of non-voter tax revenues, and a welcome income supplement for agricultural producers.

But the gas crash created new issues like unpaid municipal taxes and access payments. With production volumes down and prices still not what they were when many of the wells were drilled, these costs impair the industry’s competitiveness.

Decommissioning Alberta’s legacy production asset base is a source of regular study and concern, but the subject is much more complex that reciting “polluter must pay.”

In 2021 there were over 360,000 individual producing assets including over 300,000 wellbores and surface locations (oil, gas, bitumen, inactive, partially reclaimed), 47,000 gas and oil processing facilities, eight oil sands mines, 25 in-situ bitumen projects, and eight heavy oil upgraders.

As the number of assets has increased, so has the regulatory complexity and cost of what is expected for satisfactory decommissioning. As cash flow from existing production declines, more producing assets are rendered uneconomic thus increasing the mature asset reclamation base.

This is a death spiral that nobody has thought through. As available funds for decommissioning liabilities falls as the industry contracts – as per the master energy transition plan away from fossil fuel – the number of assets requiring decommissioning rises.

Miraculously,oilandgasissupposedtogooutof businessandleavenothingunreclaimedbehind.No industryinworldhistoryhaseverdonethis.

Miraculously, oil and gas is supposed to go out of business and leave nothing unreclaimed behind. No industry in world history has ever done this.

The most obvious solution is a fiscal and regulatory regime to keep as many of these assets commercially viable as long as possible. The rest need further study to ensure costs and expectations are reasonable.

The last big issue is competitiveness. The 2022 Fraser Institute’s North American oil and gas competitiveness report put Alberta 12th among 15 U.S. states and Canadian provinces. This is a measure of operating costs, regulatory complexity and returns on invested capital.

Alberta ranks above only Alaska, Colorado and B.C., three jurisdictions well known for their environmental protection zealotry.

Saskatchewan ranks number six behind Wyoming, Texas, Oklahoma, Kansas and North Dakota. It operates under the external parameters as Alberta.

When Premier Ed Stelmach’s disastrous 2007 New Royalty Framework was replaced in 2010, government and industry conducted a comprehensive competitiveness review to ensure Alberta continued to be an attractive destination for oil and gas investment capital.

Revisiting this after 12 years is hardly a radical idea.

With a provincial election coming, the future of the oilpatch should become a major economic policy issue.

Former Premier and NDP leader Rachel Notley is now pledging “stability” after doing the exact opposite in 2015.

Based on the foregoing, more of the same is hardly an attractive option.

Reviewing everything and charting a new future for Alberta’s oil and gas industry is a much better idea.

David Yager is a Calgary oil service executive, energy policy analyst, writer and author. He is president and CEO of Winterhawk Casing Expansion, a new wellbore and methane remediation technology company. His 2019 book From Miracle to Menace - Alberta, A Carbon Story is available at www.miracletomenace.ca.

Withaprovincialelection coming,thefutureofthe oilpatchshouldbecomea majoreconomicpolicyissue.

ALBERTA’S NEW ENERGY MINISTER

PETE GUTHRIE ON HIS UNIQUE PAST AND PLANS FOR HIS NEW ROLE

by Melanie Darbyshire

They say politics is not for the faint of heart, and when it comes to Alberta Minister of Energy Pete Guthrie’s experience, they aren’t wrong. First elected as the UCP MLA for Airdrie-Cochrane in April 2019, Guthrie was part of a Jason Kenney-led government intent on reversing much of the damage caused by the previous NDP government. On course to achieve many campaign promises, the government’s plans were derailed in March 2020 when the COVID-19 pandemic hit. What a time to be in government.

Two years of pandemic restrictions threatened to split the UCP party, lead to a dismal leadership review and the resignation of Kenney as leader. The leadership race that ensued was hard fought, with the ascension of Danielle Smith to the Premier’s seat last October. Guthrie was sworn in as the new Energy Minister shortly thereafter.

And now, with the pandemic largely behind them and the party united, Smith, Guthrie and his fellow UCP caucus members are facing re-election in May.

“It’s been a heck of a time to get into the political realm for the first time,” Guthrie chuckles from his office in Edmonton’s legislature building. “We did get a lot done as a government, but we still have a lot more to do. The pandemic really diverted attention from a lot of the great work that our government has done. But I do feel that it’s being recognized, and we’ll win the next election.”

Guthrie, a successful businessman and rancher prior to entering politics, decided to jump into the lion’s pit because he wasn’t happy with the way things were. “As a small business person [circa 2015] I was frustrated,” he recalls. “We had the new NDP government in Alberta, and then Trudeau was

elected federally. The oil and gas sector was going through a major price decline. We had provincial and federal regulation and policy being created during a time of recessionary pressures and it was hurting small business.”

Born in Brockville, Ontario, Guthrie’s family moved around a lot when he was child, including to Fort McMurray where his father, who was in the petrochemical industry, worked for Syncrude when Guthrie was 10 years old.

The family moved to Alberta permanently in the early 1980s. Guthrie attended high school in Fort Saskatchewan and completed a chemical engineering degree at the University of Alberta in 1992.

“My first job as an engineer out of university was in Grande Prairie, working for a chemical company in the pulp and paper sector,” Guthrie recalls. He moved into the air gas business after that and spent six years in Vancouver. “It was some great experience working across Western Canada. I also got to work in Brazil, Sweden, Taiwan and India.”

Then in May 2000, Guthrie, his wife and young son moved to Consort, Alberta, to take up farming and ranching. “My wife had lost her younger brother in a farming accident on the family farm,” he explains. “So we made a decision to take two years and go to the ranch. We thought it would be good for our family to bond.”

Two years turned into 10, as Guthrie and his wife ended up buying into the family farming business. They grew it into a major success. “We had a 3,300head backgrounding feed lot, and 450 cows on top of that,” he says. “After 10 years we sold most of it off. There are still a couple of satellite properties.”

Pete Guthrie. Photo by Production World.

While wrapping up the ranch, Guthrie’s brotherin-law found an opportunity with a Mr. Lube store in Calgary. Guthrie and his wife joined as silent partners. “And before we knew it, it had ballooned out with some other opportunities,” he explains. “So we bought into the business and ended up making a shift from ranching to retail ownership in 2009.”

Guthrie and his wife, Tracy, bought out other family partners a year-and-a-half after opening the store. They ran the business, located in Harvest Hills, for eight years. “We built that store,” he says proudly. “We were one of the most successful stores across Canada. We were, depending upon the month, either the seventh or eighth busiest store in Canada.”

However by 2015, Guthrie was becoming frustrated with the political environment.

“We saw our expense side increasing at the same time that we had declining revenue,” he laments. “I felt like we had a provincial government that was working against us. So that was the driving force for me to start getting involved in politics. As a farmer and rancher, and as a business person,

you’re always talking politics or taxation one way or another.”

He and his wife accepted an offer to sell the Mr. Lube business and Guthrie went on to win the UCP nomination for Airdrie-Cochrane in 2018.

Landing the job of Minister of Energy is a proud accomplishment for Guthrie. “It’s going well,” he reflects. “It’s a big file, there’s a lot to learn, but I’m engaging with as many stakeholders as possible to get their feedback on what they feel should first and foremost be on our agenda.”

With the general election only months away, he’s looking at what short-term wins can be had, as well as how to set the province up for mid and longterm success.

“We just went through a seven-year downturn in the oil and gas sector, and it’s a cyclical business, so the concentration on jobs and the economy is always important for this government,” he points out. “We’re looking at ways to stimulate the economy and the energy sector, while doing so with good, strong environmental stewardship. The Alberta oil and gas sector are great stewards, they’re highly technical. We will continue to lead in that area.”

The Alberta Sovereignty Within a United Canada Act is a tool Guthrie hopes never to have to use, as he thinks the best thing for all of Canada is to work collaboratively with the federal government. “My encouragement to the federal government is to work with us, work with industry, together,” he implores. “Stay away from the think tanks and work with us to achieve goals. If we can do that, then the Act can just stay in the holster.”

Achieving carbon neutrality is a goal Smith has highlighted for her government, and Guthrie highlights the potential for carbon capture and sequestration in Alberta as one viable means of achieving this goal. “It’s one of the areas that could be a big win for us,” he says. “So far there have been 25 proposals accepted for sequestration hubs in Alberta, and there are two that exist already, as well as the Alberta Carbon Trunk line. Alberta is a leader in this field.”

Further development of Alberta’s critical minerals sector, petrochemical and LNG

Pete Guthrie and Danilelle Smith.

industries are other areas with great potential, Guthrie notes. “Air Products announced a $1.3 billion project in Alberta’s heartland, ready to go with shovels in the ground next year,” he says happily. “Our government is contributing 10 per cent of that project from our Alberta Petrochemical Incentive Program. That program has garnered a lot of interest.”

Guthrie also highlights the many options his Ministry is looking at regarding the reclamation of orphan wells, a hot-button issue for many. “One of those options is a liability management incentive program, the purpose of which is to get those sites that are greater than 20 years inactive cleaned up. We’re looking at ways to incentivize companies to clean up those sites by providing an opportunity for a royalty credit at some point in the future on

new drilling. It’s a win-win: the sites get cleaned up and new jobs get created.”

One important stakeholder group Guthrie is keen to work with are Indigenous peoples and First Nations: “What we hear is that they want to continue working with the Alberta government. Through the Alberta Indigenous Corporation we put forward a billion dollars in loan guarantees to support Indigenous groups in becoming owners in the energy sector and others.” He adds the government’s encouragement for industry to work with First Nations on site rehabilitation and reclamation has been well received.

A man of many hats (including cowboy), Guthrie brings a unique perspective and experience to his role as Alberta’s Energy Minister. If his past is any indication, success is in the cards. BOE

Pete Guthrie being sworn in as Energy Minister.

FINDING A HOME FOR ORPHAN WELLS

EXPERTS POINT TO DIFFERENT INITIATIVES MEANT TO DRIVE DOWN INVENTORIES

by Jamie Zachary

The orphan well landscape in Alberta is expected to turn the page in 2023 after several years of “heavy lifting” by industry and government, say experts.

A recovery in oil and gas prices, regulatory changes and some industry muscle directed at closing orphan sites are being credited with making a significant impact on inventories in the province.

“We’ve made some tremendous progress. Obviously, we’re not done yet, but … we’re going to be through the bulk of these sites in the next five years,” says Lars De Pauw, president of the Orphan Well Association (OWA), a not-for-profit, industryfunded organization that works to decommission and reclaim the wells, facilities and pipelines left behind by defunct oil and gas companies.

As of Jan. 1, 2023, 3,240 orphan sites have been identified for decommissioning, comprised of 2,565 orphan wellbores and 330 orphan facilities. This compares with 3,022 orphan sites – 2,326 orphan wellbores and 315 orphan facilities – at the same time last year. These numbers include the 1,432 wellbores and 182 facilities that were designated as orphans during 2022.

Meanwhile, the number of sites to reclaim sits at 6,640 sites, which compares with 5,421 in 2022. De Pauw notes 44 per cent are currently in vegetation monitoring only or final certification phase, meaning most of the work has already been completed.

Since beginning operations in 2002, the OWA has receive reclamation certificates for 1,642 sites, including 364 in 2022 alone. De Pauw expects to see a material increase in the number of annual reclamation certificates in 2023 and beyond based on the number of sites in the final stages.

“Alberta’s government is doing more work than ever with the Orphan Well Association to clean up orphan wells and sites,” says, Scott Johnston, press secretary to Alberta’s Minister of Energy.

Johnston adds it’s not just wells, either. In 2021-22, the OWA started closure work on the first-ever orphaned large facility, the Mazeppa Gas Plant, through the Large Facility Program, an additional program managed by the OWA that is financially separate from well closures, with its own industry levies and funding.

Founded in 2002, the OWA is primarily funded by the annual orphan fund levy, which is paid by the oil and gas industry in Alberta. De Pauw explains that the levy, which is forecasted to increase from $72 million to $135 million for the 2023-24 fiscal year, is based on estimated abandonment and reclamation activities for the upcoming year.

The levy is set by the Alberta Energy Regulator (AER) in consultation with the OWA, Canadian Association of Petroleum Producers and Explorers and Producers Association of Canada.

Between 2018 and 2021, the province also loaned the OWA $335 million to stimulate economic

activity and employment, along with helping clean up orphan wells. The loan will be repaid by 2031 with funding from industry levies.

De Pauw notes OWA’s approximately 30-person team oversees a group of about two dozen prime contractors that safely decommissions and reclaim orphan well sites. These prime contractors also work with subcontractors, of which there are approximately 1,600 currently within the province.

Experts note there are, in fact, two different kinds of wells that commonly get confused. First, an orphan well is a regulatory definition that the AER puts on a license when, after a review, it is

determined there is no viable party to perform the required closure work.

“An orphan well in Alberta is a specific term meaning that the owner of the well is no longer around, so it’s left to the OWA to decommission and reclaim,” says Lucija Muehlenbachs, associate professor in the Department of Economics at the University of Calgary.

While the bulk of orphan wells come from insolvency processes, De Pauw says there are some situations when a company has fulfilled its regulatory obligations to the standard of the day. Yet that standard has changed, and the company no longer

There are currently 6,640 orphan sites in Alberta requiring reclamation, with nearly half in vegetation monitoring only or final certification phase. Photo courtesy of the Orphan Well Association.

Expertsnotethereare,infact,twodifferentkindsof wellsthatcommonlygetconfused.First,anorphanwell isaregulatorydefinitionthattheAERputsonalicense when,afterareview,itisdeterminedthereisnoviable partytoperformtherequiredclosurework.

exists. De Pauw notes this is common with wells that were drilled before Alberta was a province.

The other type is an abandoned well site that is permanently dismantled – either plugged or cut and capped – and left in a safe and secure condition. It also includes removing all the on-site infrastructure. These are also often referred to as decommissioned sites.

Johnston says companies must follow the AER’s strict requirements, primarily set out in Directive 020: Well Abandonment, to ensure the public and environment are protected before, during and after a well is abandoned.

Looking ahead, De Pauw says he is not concerned about managing the future demand of orphan wells.

“As far as what we’re able to see right now with the increase in commodity prices is, we don’t foresee any new receiverships in the near future – nothing as imminent as what we saw four to five years ago,” he says.

Muehlenbachs, however, exercises caution when looking at the larger picture.

“A lot of people focus on the current number of orphan wells, but those numbers are relatively small in comparison to the inactive wells in the province,” she says.

Inactive wells are defined as those that have not produced oil or gas, injected fluids or disposed of waste for six or 12 months, depending on the type of well and its potential risks to the public or environment. The AER reported more than 156,000 inactive wells in 2022.

“In many cases, the likelihood of reactivating an inactive well is really low, meaning those decommissioning steps are not taking place,” says Muehlenbachs.

That said, she also points to recent regulatory changes, which include annual mandatory spending minimums with the intent of reducing inactive inventory.

“Having a mechanism that forces companies to do more clean-up is a step in the right direction,” says Muehlenbachs.

Further, the province initiated a Site Rehabilitation

Mazeppa gas plant. Photo courtesy of the Orphan Well Association.

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