Asian Journal

Growing number of unrestored oil and gas SITES INCREASES ENVIRONMEN­TAL, FINANCIAL RISKS


Victoria: The Office of the Auditor General of British Columbia has released a new report: The BC Oil and Gas Commission’s Management of Non-operating Oil and Gas Sites.

In B.C., oil and gas operators are not required to decommissi­on wells and restore well sites unless the BC Oil and Gas Commission (OGC) explicitly orders them to do so to address specific safety or environmen­tal issues on a case-by-case basis. “We found that gaps in legislatio­n meant that the OGC lacked the regulatory tools to compel operators to decommissi­on and restore well sites in a timely way,” said Carol Bellringer, auditor general.

The number of inactive wells that had not been decommissi­oned almost doubled - from 3,800 to 7,474 - between 2007 and 2018. The OGC estimated that decommissi­oning inactive wells and restoring sites will cost operators $3 billion. When an oil and gas operator is bankrupt or cannot be located, the OGC designates the operator’s site as orphaned and the OGC becomes responsibl­e for the decommissi­oning and restoratio­n work.

“The Orphan Fund, which is funded through security deposits and a tax on operator’s production, is meant to cover the costs of restoratio­n, but it was short by $16.6 million in 2016 and $13.1 million in 2017,” Bellringer said. The number of orphan sites increased from 45 to 326 between 2015 and 2018. The OGC anticipate­s that the number of orphan sites and associated restoratio­n costs will continue to increase.

In 2018, the legislativ­e assembly passed amendments to the Oil and Gas Activities Act to provide the OGC with the authority to require operators to restore sites, as well as giving it greater flexibilit­y to collect and use revenue from operators to restore orphan wells. At the time of this audit, the OGC was developing accompanyi­ng regulation­s that will detail the requiremen­ts, including timelines to decommissi­on wells and restore sites.

The oil and gas industry is an important component of B.C.’S economy. The OGC is responsibl­e for regulating oil and gas activities to protect public safety and the environmen­t.

An inactive well is decommissi­oned by permanentl­y sealing it with cement. To restore a site means remediatin­g any contaminat­ion and reclaiming the land to pre-activity conditions.

 ??  ?? Carol Bellringer
Carol Bellringer

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