National Post (National Edition)
ALBERTA’S IDLE OIL WELLS FIND NEW LIFE AS SOURCE OF HEAT.
Tens of thousands of non-productive oil and gas wells scar Alberta’s landscape and their numbers are growing as the province’s brutal recession drags on.
The most recent count from the Alberta Energy Regulator (AER) shows there were 84,100 inactive wells in the province in September, up from 77,600 in March. Meanwhile, the number of orphaned wells — those for which there is no financially responsible company — has almost doubled during the same time period, to 1,285 from 698.
The province is concerned taxpayer money may be needed to clean up after the energy industry if the number of idle wells continues to grow. Alberta Energy Minister Marg McCuaig- Boyd said her government is developing a plan to tackle “this growing issue.”
But Mitchell Pomphrey, an Edmonton-based entrepreneur, may already have a solution. He has spent several months meeting with government officials in various ministries, including McCuaig-Boyd and the AER, to pitch them on an overlooked fix for the problem.
Pomphrey, manager of a group called the Living Energy Project, has tried to convince bureaucrats and politicians that his group can retrofit older, unproductive wells into geothermal heat sources — trying, he said, “to reuse things that would otherwise be wasted.”
Next month work crews are scheduled to arrive at the Leduc No. 1 Energy Discovery Centre, a museum south of Edmonton that celebrates Alberta’s first oil boom, and begin capping, scrubbing and cleaning an old well bore so that it can be transformed into a geothermal well.
Once operational, the geothermal well would be used to help heat the museum, Pomphrey said. The technology uses a system of tubes that are inserted into the well bore.
Water is then pumped down the hole, where the tubes absorb the earth’s natural heat before it is recirculated to the surface and the heat is transferred in a furnace system.
The work is part of a pilot project that could demonstrate that idle oil and gas wells in Alberta could be repurposed as geothermal wells, which would help solve a growing environmental problem and put unemployed oilfield service personnel back to work.
“This has the potential to create work and create new business opportunities and put our members back to work sooner rather than later,” said Mark Salkeld, president of the Petroleum Services Association of Canada. The work required to retrofit and service a geothermal well could be performed by the same types of workers who have lost their jobs in the industry during the prolonged oil price collapse of the past two years. “We’ve got tens of thousands of these (idle) wells,” he said.
The Alberta government has provided a grant to the Canadian Geothermal Association (CanGEA) to study which wells — there are 447,100 operating and idle wells in Alberta — could be retrofitted to produce geothermal heat or geothermal electricity.
Alison Thompson, managing director and founder of CanGEA, said old oil and gas wells around the world — including in Wyoming, North Dakota and France — have successfully been converted into geothermal energy sources, usually with an energy company sponsoring the transition.
CanGEA’s study should reveal many locations where geothermal energy can be produced from old wells, Thompson said, given the amount of data produced by the industry on the province’s geology, and the number of wells that exist.
“There are 440,000 of these wells in Alberta alone and while they’re not all going to be in the right place and at the right cost, certainly when you have that big of a sample set, there’s going to be lots of promise,” Thompson said.
An added bonus is that geothermal power could help the province meet its goal of generating 30 per cent of its electricity from renewables by 2030, she said.
McCuaig-Boyd also said geothermal power would play a role in the government’s plan to transition away from coal-fired power and toward renewables. She said she has met with Pomphrey’s Living Energy Project and that her department will evaluate its proposal.
“We’re working with a couple of ministries and the AER as we’re looking at the matter and we’ll be consulting with industry,” she said.
Po mp h r e y said converting an oil or gas well into a geothermal well could take as little as three days. The well needs to be plugged, cleaned and pressure-tested before the tubing system is inserted down the hole. He expects that once the conversion is complete at the Leduc pilot project it will generate 100,000 British thermal units of heat at its peak — enough to heat two houses.
He cautions, however, that part of the reason for the pilot project is to measure exactly how much heat output is possible, and how long the well can generate heat.
Other geothermal wells else have shown they can last for more than 50 years, he said.
But before either the Living Energy Project, CanGEA or anyone else converts oil and gas wells into geothermal wells, Alberta will need new laws and regulations to oversee a geothermal industry. Ottawa may need to make a few changes, too.
“The existing legislation doesn’t permit this,” said Cliff Johnson, energy group leader at Alberta law firm Field Law.
Johnson, a lawyer who has served on the board of directors of junior oil and gas companies and who has become involved the Living Energy Project, said the province will need to change its Oil and Gas Con- servation Act and its Public Utilities Act, which currently do no not allow for geothermal energy production.
The role of the AER, which oversees oil, gas and coal production, may also need to be expanded to include geothermal energy.
In addition, Canada’s tax code recognizes geothermal power as a renewable energy source, but does not recognize geothermal heat as a renewable energy source. CanGEA’s Thompson was to meet with Finance officials Friday to make the case for changes to the code, which she said penalizes geothermal heat producers and is an impediment to the technology’s adoption.
McCuaig-Boyd said Alberta is considering whether to allow oil and gas companies to count oil wells that are converted to geothermal wells as productive assets.
That, Pomphrey said, would be a huge financial benefit to oil producers.
The Alberta government currently uses two liability measures to stress test oil and gas producers and gauge their financial ability to reclaim old, non-producing wells. Companies that fail those tests are obligated to either post new bonds with the AER or reclaim their old wells.
The cost to reclaim a non-productive oil and gas well can total $300,000, while converting it into geothermal should cost roughly half of that. As a result, Pomphrey said, energy producers could prolong the economic lives of their wells and reduce their liabilities geothermal conversion.
Thompson, ho w e v e r, said she does not want a system in which oil and gas companies can indefinitely avoid cleaning up their old wells. She also wants the government to convert only wells that be will be productive geothermal wells. Pomphrey is in full agreement there, and notes that many of the oil and gas wells in the province may not be good candidates for conversions.
But there are so many wells in the province, and so much data on Alberta’s geological formations, that he hopes many will be turned into productive renewable energy sources.
“There are over 144,000 reasons in the province to give this (project) a fair assessment,” Pomphrey said, referring to the number of inactive wells in Alberta that have been either suspended or partially remediated.