Dormant well fund almost fully subscribed in single day

BC oil and gas companies quickly tap into $120 million in federal funding

Orphan well remediation, which includes reforestation, was already underway in B.C., but now will be accelerated. | BC Government

A program to fund the cleanup of dormant and orphan oil and gas wells in B.C. was almost fully subscribed in a single day, the Ministry of Energy, Mines and Petroleum Resources reports.

In April, as part of a federal economic recovery plan for the beleaguered oil and gas sector, Ottawa announced immediate funding to accelerate the cleanup of dormant and orphan oil and gas wells in Western Canada. It includes $120 million for B.C.

The provincial government put out a call for applications and, on May 25, received an overwhelming response.

"The applications we have received in a single day propose upwards of $152 million worth of reclamation work, which, if completed, will reclaim over 2,400 inactive wells," Bruce Ralston, Minister of Energy, Mines and Petroleum Resources, said in a press release.

 "The extraordinary interest in the program is great news as we work to get our economy moving again and help clean up the environment."

The B.C. government also has funding available for oil and gas well reclamation, and the companies receiving federal funding pay half the costs for dormant wells.

Dormant wells are those owned by companies that are still solvent and in operation. Orphan wells are those that have been abandoned by companies that are no longer solvent.

It was work that would have taken place anyway, but on a much longer timescale – over a decade. The federal funding will accelerate the work.

“The first application to the Dormant Sites Reclamation program was received within 15 minutes of opening on May 25, 2020, and by the end of the day the province had received over 1,100 applications from more than 80 service companies and contractors,” the ministry said.

“It is estimated that the program could support up to 1,200 jobs for British Columbians, many of them within the northeast region of the province.

A little over a year ago, the BC Oil and Gas Commission introduced a new levy on the oil and gas industry to raise $15 million a year for dormant well reclamation. The plan was to reclaim all orphan wells in B.C. over the next 10 years.

The bulk of the $120 million in federal funding will be used to accelerate the reclamation process, with $100 million earmarked for abandoned wells owned by companies that are still solvent.  Another $15 million will go to orphan well reclamation.

There are roughly 7,000 dormant wells in B.C., which are oil and gas wells that have run dry and been capped. Only 326 are deemed orphan wells. .

nbennett@biv.com

@nbennett_biv