Canadian oil province Alberta cleans up 5% of inactive wells in 2023

By Nia Williams

(Reuters) - The number of inactive oil and gas wells in Alberta, Canada's main fossil fuel-producing province, fell 5% in 2023 from a year earlier, showing progress in decommissioning and reclamation work, a regulatory report said on Thursday.

Alberta now has 79,000 wells classed as inactive versus 83,000 in 2022. Inactive wells no longer produce oil or gas and need to be permanently plugged and the land around them restored.

Canada is the world's fourth-largest oil producer and sixth-largest gas producer, and its western provinces are dotted with hundreds of thousands of active and inactive wells. Some of those wells are orphans, meaning the companies that owned them have gone bankrupt or ceased to exist.

Companies spent C$769 million ($548.23 million) directly on well closures. The Alberta government's Site Rehabilitation Program spent another C$174 million, and the industry-funded Orphan Well Association spent C$149 million.

"This year's data indicates the industry is making notable progress on cleaning up oil and gas wells, pipelines, and facilities," said Laurie Pushor, CEO of the Alberta Energy Regulator said in a statement.

"The report also shows ongoing attention and effort will be essential to keep the count of inactive wells moving downward."

Alberta's inactive well count grew 5% a year between 2000 and 2020 as the province's energy sector expanded rapidly. Environmental campaigners warned taxpayers could end up having to pay billions of dollars in well clean-up costs unless energy companies were held to account.

The AER introduced a mandatory closure spending quota in 2022, requiring industry to spend collectively on closure and cleanup work. This year the quota was C$700 million, meaning companies' spending exceeded that by about 10%.

The regulator said 91% of companies holding well licenses in Alberta complied with their spending quota, leaving 54 companies collectively owing about C$5 million.

This included Sunshine Oilsands, which last month was ordered to suspend operations by the AER due to non-compliance with environmental and public safety rules.

($1 = 1.4027 Canadian dollars)

(Reporting by Nia Williams in British Columbia; Editing by Bill Berkrot)