City cashes in on well reclamation fund

The City of Medicine Hat’s effort to abandon gas wells has now received $5 million from a federal program to help provinces tackle the problem while putting oilfield service companies to work.

That information comes Friday as Alberta Energy Minister Sonya Savage detailed the new phases of the program that totals $1 billion in the province.

Medicine Hat’s share of the latest $100-million phase totals $2 million, said Kevin Redden, manager of the city’s natural gas and petroleum resources department.

Combined with earlier grant outlays and amounts for city well sites in Saskatchewan, which runs a separate but similar program, the total upside for the city is now about $5 million.

“It’s going very well,” said Redden. “And that’s $5 million that we didn’t have before.”

The dollar amount equates to less than 5 per cent of estimated $100-million plus costs to abandon the wells and get liabilities off its books.

Redden said even a small percentage of a substantial figure is significant and improves the city’s bottom line.

As well, there is still $300 million in total available combined from both provinces in yet-to-announced phases.

“We’ll keep trying on those funds,” he said.

The province announced two new phases of the “Site

Rehabilitation Program” on Friday, with general figures but no specifics on winning applications.

The ministry also provided a map of the province outlining the sites where work was proceeding.

The Alberta program requires contractors to apply for grants that are then applied to invoices paid by companies, while the Saskatchewan program pays amounts directly to well licensees.

Permanently closing in a well is a twophase process, requiring the capping of the well underground and removing surface infrastructure, then environmental work to certify the land is in pre-disturbance condition.

Redden said the city currently has 1,700 wells awaiting reclamation certificates, while physical work is underway at another 850 to 900 sites in Alberta, said Reddon.

Those totals include work that pre-dates the announcement in late 2019 that 2,000 wells — the bulk of city’s portfolio — would be abandoned.

Physical work on the 2,000-well batch is expected to cost about $125 million.

Last spring city council approved borrowing $80 million at low rates through the province in order to preserve $125 million fund it holds in a long-term investment fund earmarked for well-abandonment and which backstops the loan.