British Columbia Announces Funding to Clean Up Orphan and Inactive Wells

May 15, 2020

Written By Brad Gilmour, Keely Cameron, Stephanie Ridge

On May 13, 2020, British Columbia announced how it will administer the $120 million in federal funds earmarked to clean up orphaned and inactive oil and gas wells under COVID-19 Economic Response Plan for the Canada's Energy Sector. British Columbia is the second province to roll out its programming in relation to these federal funds. Alberta was the first jurisdiction to announce its Site Rehabilitation Program and continues to make adjustments as the program is implemented. Saskatchewan has not yet announced how it will administer the $400 million allocated to the Government of Saskatchewan to support work to clean up orphan and inactive oil and gas wells across the province.

In its news release, British Columbia states that it intends to invest this funding across three new programs:

• The Dormant Sites Reclamation Program will provide $100 million to reclaim dormant oil and gas sites. Dormant wells are wells that have been inactive for five consecutive years and are unlikely to be returned to service. This program will provide up to $100,000, or 50% of total costs of site cleanup, whichever is less.
• The Orphan Sites Supplemental Reclamation Program will provide $15 million to reclaim orphan oil and gas sites where the operator is insolvent, no longer exists or cannot be located. This program will be administered by the BC Oil and Gas Commission.
• The Legacy Sites Reclamation Program will provide $5 million to address the legacy impacts of historical oil and gas activities that continue to have environmental impacts, such as on wildlife habitat or on the traditional use by Indigenous peoples.

Applications for the Dormant Sites Reclamation Program will be accepted starting on May 25, 2020. Kick-off dates for the Legacy Sites Reclamation and Orphan Sites Supplemental Reclamation Programs have not yet been released.

Oil and gas field service companies and contractors based in British Columbia, with registration, office and operations in British Columbia, may participate in the programs.

Similarities and Differences

At this early stage, a few comparisons may be made between the two provinces' approaches:

• BC's Dormant Sites Reclamation Program is intended to have sites fully reclaimed, whereas in Alberta there is greater flexibility as to the types of work that can be applied for.
• The $100,000 ceiling for eligible clean-up costs provided by BC's Dormant Sites Reclamation Program will permit a greater variety of sites to benefit from program funds. In comparison, Alberta's program currently limits applications to $30,000 per activity.
• Alberta's Site Rehabilitation Program calls for licensees to contribute to proposed costs where the Department of Energy determines they are able to do so, but is currently not applying that criteria to this round of applications. BC's Dormant Sites Reclamation Program requires licensees to contribute to some of the clean-up costs associated with their sites.
• Both provinces' programs are billed as job creation and environmental initiatives and focus on contractors and oil and gas field service companies.
• At this early stage, it appears that, like Alberta, BC's programs will be administered on a first-come, first-served basis. Given the heavy demand seen for Alberta's Site Rehabilitation Program, companies wishing to participate in BC's programs may wish to act quickly to secure their application's spot in line.
• In both provinces, sites may be nominated by landowners.
• In BC, First Nations and municipal governments may also nominate sites, though no process has been set out by which to do so.

Next Steps

We will continue to provide updates as additional information on all three programs becomes available. We expect that as each of the programs develops and evolves, that the province's respective experiences may impact future iterations.

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