MRO Magazine

Regulator yanks thousands of wells from troubled oil company, transfers for cleanup

By Bob Weber   

Environment & Sustainability Facilities Maintenance Machinery and Equipment Maintenance Resource Sector

Alberta’s energy regulator has transferred control of thousands of oil and gas wells and other facilities held by a troubled Calgary company to the group that’s responsible for cleaning up poorly maintained or abandoned sites.

In an order issued Wednesday, the regulator told the Orphan Well Association that it would be responsible for the care and operation of more than 3,000 oil and gas wells, 2,700 pipeline segments and 350 facilities owned by AlphaBow Energy.

“AlphaBow and any contractors of AlphaBow are not permitted to take any actions at the licences and the sites without first obtaining the approval from the (Orphan Well Association),” said the letter to association president Lars DePauw.

The Alberta Energy Regulator’s documents state AlphaBow’s entire environmental liability is $154 million.

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The regulator has told the association to suspend AlphaBow’s wells, meaning surface structures must be safely locked and the drill hole plugged with concrete. Suspending a well is not a complete cleanup.

“AlphaBow will be responsible for all costs and expenses incurred by the (association),” the letter reads.

An AlphaBow representative declined to comment on the regulator’s move.

It comes at the end of a years-long saga that has already seen hundreds of wells transferred to DePauw’s group, which is funded mostly by industry levies.

AlphaBow, privately held, was created after the 2018 collapse of Sequoia Resources, another Calgary-based energy company, said Drew Yewchuk, a lawyer formerly with the University of Calgary Public Interest Law Clinic, who has followed the case.

“This company was supposed to operate longer ? holding the aging infrastructure,” he said. “From the time it was created, it looks like the company was probably doomed.”

AlphaBow has a long history of regulatory problems.

In June 2022, the regulator rated it as an “unreasonable risk” after not spending enough on cleanup and outstanding debt, including municipal taxes. That October, AlphaBow failed to tell the regulator about a pipeline leak.

By February 2023, it was being cited for not fulfilling its remediation plans. In March, it told the regulator it wasn’t monitoring groundwater at contaminated sites. The company faces non-compliance orders for 296 wells inadequately abandoned after their leases expired.

In August, inspectors found an AlphaBow gas plant had been shut down with fluids in its tanks and pipelines unpurged. Power had been shut off to systems that protect those lines from corrosion.

“No additional steps had been taken to properly suspend the gas plant, pipelines and sites in the field,” the regulator says.

It says other sites had been improperly suspended and spills not cleaned up. In August, only 42 per cent of field inspections to AlphaBow sites were rated “satisfactory.”

DePauw said it will take about a week for association staff to determine what work needs to be done to ensure the sites are safe.

“Our first step is to inspect the sites,” he said. “We have a lot of sites to look at.

“This would be the largest (instance) on reasonable care and shut-in order that we’ve been asked to take over.”

Dealing with the legacy of decades of oil and gas drilling is a growing – and increasingly expensive – problem in Alberta.

Alberta government figures say there are 459,000 oil and gas wells in the province. A 2022 report from the Parliamentary Budget Officer says about two-thirds are inactive – although that category includes wells slated for cleanup as well as those that have been properly abandoned or suspended.

The Orphan Well Association’s annual report found that over the last fiscal year, wells were being added to its inventory at almost twice the pace as they were being reclaimed, reversing the trend of previous years.

The total cost of remediating orphan wells – wells for which no owner exists or can be found – is estimated at $890 million.

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