By Marla Orenstein and Juli Rohl
Published in the Calgary Herald and Edmonton Journal
April 26, 2021
Alberta has almost 100,000 inactive and orphaned oil and gas wells; more than eyesores, they represent a massive, and daunting, financial and environmental liability.
In many cases, the wells also represent an untapped asset. These sites often have pads, roads and electricity grid tie-ins that are a valuable resource for anyone looking to develop a new energy project. In fact, Alberta’s ugly inventory of inactive wells may be the province’s ultimate upcycling project.
But that can only happen if the government finds a way to address regulatory gaps that thwart energy entrepreneurs who want to repurpose the sites.
A report released this week by the Energy Futures Lab and the Canada West Foundation urges the provincial government to create regulatory certainty for projects intended to repurpose old well sites.
There have been numerous attempts by energy entrepreneurs to repurpose inactive sites for hydrogen, solar, wind, lithium, geothermal or carbon capture and storage projects. The value for the entrepreneurs is clear: by reusing the well pad, the roads and the power transmission, they can avoid building from scratch, and lower their costs. But there is also value for the rest of us if new energy projects can repurpose brownfields instead of building on previously untouched land and further disturbing the environment.
On paper, this makes sense. In reality, things are a little messier.
For example, oil and gas wells are regulated by the Alberta Energy Regulator. Solar facilities that sell power to the grid, on the other hand, are regulated by the Alberta Utilities Commission. But there is no clear path for handing off a project from the AER to the AUC. Entrepreneurs who want to use an inactive site to build the solar project are welcome to do so … after the site has been closed by the AER and restored to its previous condition, with all roads, pads and transmission lines removed.
Occasionally, a company has managed to find a way through. RenuWell — which has a pilot in Taber that is repurposing legacy oil and gas infrastructure for community solar power — is one of the few that has been able to make it happen. But it took over five years for RenuWell to navigate regulatory hurdles involving the AER, the AUC, Alberta Environment and Parks and the Orphan Well Association.
Most proposed projects don’t find the success that RenuWell did, but instead die as interested companies get bounced around between regulatory bodies and government ministries.
But this problem isn’t unfixable. The government just needs to decide to fix it.
The Leveraging our Energy Assets for Diversification (LEAD) project brought together key stakeholders from oil and gas, new energy entrepreneurs, regulators, landowners, remediation companies and legal experts. The project was tasked with finding a way to make redevelopment and reuse of previously disturbed oil and gas sites more desirable than greenfield development, and more desirable than delaying closure of those sites.
The efforts are not about letting polluters avoid environmental commitments, but about creating a win-win scenario that benefits landowners, communities, energy entrepreneurs and responsible oil and gas companies.
The LEAD project’s report presents a short but impactful bill for the Alberta government to consider. The bill states that a) the government will prefer natural resource development to occur on previously disturbed land, and b) regulators will co-operate and co-ordinate to remove blockages towards achieving that goal.
Fixing this problem makes sense for the provincial government, as much as for energy entrepreneurs. It will reduce red tape, create jobs, diversify the energy sector, create new economic opportunities for landowners, and ease taxpayer burden around site liability, all principles that the current government stands behind. It also complements the government’s efforts to modernize the oil and gas liability management framework and develop a geothermal policy framework.
There is a win in this for everybody, but first the Alberta government must decide it’s a problem worth solving.
Marla Orenstein is the director of the Natural Resources Centre at the Canada West Foundation and Juli Rohl is the lead animator at Energy Futures Lab. They are co-authors of a new report: The LEAD Project: Leveraging our Energy Assets for Diversification.