Rick Koechl & Mike Kroecher: The slow slog of reclaiming B.C.'s orphan wells

In late November of 2014, the residents of Old Hope Road were mysteriously being subjected to dangerous waves of unknown and fugitive emissions of H2S gas, a deadly toxin. Although, the Oil and Gas Commission was immediately notified, the source of the poisonous gas remained a mystery. The company that owned several gas wells in the neighbourhood had also been informed and alerted to the problem.

By the morning of December 12, residents found relief when the company in question was able to identify the deadly source of the H2S gas. One employee managed to locate the Wilder 7-02 gas well site, which was found spewing an alchemical brew of gas and liquids to the atmosphere under high pressure.

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The problem turned out to be a breached casing. Some residences were as close as 500 metres to this source. We were lucky with wind directions and atmospheric air pressure. Otherwise, it’s quite possible that we might not be here writing this today.

Wilder 7-02 was a suspended gas well, which had not been properly abandoned and reclaimed under official OGC guidelines and regulations. The owner of this well was Calgary-based Terra Energy Corp. Within a year of this near-death episode, Terra declared bankruptcy, leaving behind an additional 175 abandoned well sites in B.C. alone.

Because the company was now bankrupt, responsibility to cover the necessary cleanup requirements for all these wells was transferred to the Oil and Gas Commission. Reclamation costs for these 175 sites was estimated at a whopping $54 million.

The OGC, now stuck with the remaining cleanup costs, looked towards it own orphan well fund, established exactly for this kind of purpose. But, as of March 2016, the fund had barely $1 million available in deposit holdings, leaving a shortfall.

The intent of this orphan well fund was, theoretically at least, to be covered by levies on all other active energy companies in B.C. The other default funding option would be the taxpayer.

Meanwhile, Auditor General Carol Bellringer began investigating the critical situation faced here in B.C. regarding orphaned gas wells. Her comments speak volumes regarding the status of these wells: “While the Oil and Gas Commission had clear standards in place for how to decommission inactive wells and remediate sites, it lacked the tools to compel operators to decommission and restore well sites in a timely way.”

Decommissioning means pouring cement down the well casing. Full restoration would mean cleaning up other environmental risks and returning the surface soil and flora to its previous status prior to becoming a well site. In the case of Wilder 7-02, it became officially abandoned by sealing it with concrete after this incident. But to this day, the site has not been reclaimed.

In fact, there is no indication of any new plant growth in the immediate vicinity of the 7-02 well site after four years. Zero. It remains a contaminated site and has a new status as an orphan well.

Bellringer also noted that B.C. had many more inactive wells. These sites had not been reclaimed, and within 10 years, the figure had doubled to 7,474.

The OGC now estimates that the total reclamation costs for all these additional well sites will run at $3 billion. Again, we hear the mantra that gas and energy companies are on the hook for this cost. The present value in the orphan well fund, however, is miniscule in comparison to the demand.

On one positive note, the Supreme Court of Canada recently ruled that all energy companies must fulfill their obligations of cleaning up well sites, even if they are bankrupt. Realistically, how will the OGC be able to bleed a stone when an energy company is already in dire financial circumstances?

Bellringer did issue another doable recommendation to the OGC. She is now urging the OGC conduct a review concerning the liability of all energy companies and how much money they will contribute to maintain its orphan well fund.

Funny story: 13 years ago, the residents of the Old Hope Road, with the help from a local lawyer, wrote a letter to the OGC and to our then-provincial energy minister, Richard Neufeld.

Our lawyer put forward an identical recommendation that energy companies contribute to a security fund, which we called back then a performance bond fund. This request was rejected outright by the minister at the time. In contrast, the OGC has willingly accepted this very same recommendation, along with numerous others from Bellringer.

Isn’t it odd that our request was rejected by the energy minister, and in 2019 the Auditor General’s identical recommendation was a good idea and acceptable? Clearly, our letter was missing the appropriate letterhead.

Mike Kroecher is a long retired resident of the Peace, expressing his deep roots in the land through his art. Rick Koechl is a recently retired teacher of the Peace with an enthusiasm for politics and energy.

© Copyright Alaska Highway News

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