THE

BIG CLEANUP
How enforcing the Polluter Pay principle
can unlock Alberta’s next great jobs boom

By
Regan Boychuk
Mark Anielski
John Snow, Jr.
Brad Stelfox
JUNE 2021

CREDITS
Authors: Regan Boychuk, Mark Anielski, John Snow Jr. & Brad Stelfox
Copywriters & Additional Research: Katie McKenna, Carissa Halton & Tina Faiz
Strategy & Media Consultant: Tina Faiz & Carissa Halton
Illustration, Design & Layout: Curio Studio
Produced with support from the Catherine Donnelly Foundation.
Special thanks to ALDP members David Cooper, Rob Lacey, Dianne Saxe and
Thomas Schneider, as well as the industry veterans and former regulators who
have shared their wisdom and expertise with us.
Jodi McNeill was a founding member of the Alberta Liabilities Disclosure Project
and her presence is sorely missed. This report is dedicated to her memory.
The Alberta Liabilities Disclosure Project (ALDP) is an independent and nonpartisan organization pushing for accurate and transparent government-level
data pertaining to Alberta’s oil and gas liabilities, and solutions to Alberta’s
growing liabilities crisis.

Alberta Liabilities Disclosure Project
Calgary, Alberta
aldpcoalition.com
© ALDP June 2021

Table of Contents
EXECUTIVE SUMMARY

4

INTRODUCTION

6

PART ONE: A HUGE MESS: HOW BAD IS IT AND WHO’S TO PAY?

9

Meet Polluter Pay
What’s involved in cleaning up an oil and gas well?
Hiding the true cost of cleaning up Alberta’s oil and gas wells

9
10
11

Our data set reveals the status of Alberta’s oil and gas wells

12

How many wells in Alberta are past their “best-before” date?

13

How much has been set aside for cleanup?

15

The story of one well’s “best-before” date

16

PART TWO: THE DINE AND DASH:
HOW DO POLLUTERS GET AWAY WITH IT?

18

How polluters became above the law in Alberta

19

How can we tell if a regulator is captured by industry?

21

Growing insolvency in traditional oil and gas—but not all over

23

How the public pays polluters’ bills

25

PART THREE: A RECLAMATION BOOM IN ALBERTA—
HOW TO MAKE IT HAPPEN

27

Recommendations for a clean, fair future

27

A. Get real about the cost of cleanup—and who made the mess

27

B. Fund the cleanup

28

C. Enforce the cleanup

30

A Reclamation Boom in Alberta

33

An alternative ending for Regan’s family well

35

PART FOUR: APPENDICES

37

Appendix A: How we arrived at a $40-70 billion dollar cleanup bill

37

Appendix B: Jobs involved in a Reclamation Boom

39

June 2021

3

EXECUTIVE
SUMMARY
Throughout 2020, the Canadian public spent
$4.3 million dollars a day on the cleanup of
Alberta’s oil and gas wells, totaling $1.56 billion
dollars.
This massive handout of public funds is just a drop in the bucket of
the bill coming due. Using the Alberta Energy Regulator’s (AER) own
methodology, our research reveals that the average projected cost
of cleaning up Alberta’s over 300,000 unreclaimed oil and gas
wells is $55 billion dollars.
Every dollar of public money that is spent on the cleanup of private
industry’s oil and gas wells undermines the Polluter Pay principle:
a foundational tenet of Canadian environmental law. It means that
polluting industries must pay for the social and environmental costs
of their economic activities, including returning land to its pre-drilling
state. Let’s be clear: the companies that have profited from Alberta’s
300,000 unreclaimed wells received their licenses to drill on the basis
of cleaning them up.
But is the oil and gas industry saving for this massive bill? While parts
of the industry remain massively profitable in Alberta, alarm bells are
ringing in the traditional drilling sector. From unpaid municipal taxes
and landowner compensation, to growing requests for grants, loans,
and delayed repayments, these public handouts reveal a growing risk
that some companies can’t fulfill their cleanup obligations.
Using the AER’s own data, our report reveals that 4 out of 5
unreclaimed oil and gas wells in Alberta are already past their
economic limit, the “best before date” where they still have enough
future revenue coming out of the ground to fund their own cleanup.
We explore the story of one of them—drilled more than 30 years ago
on our co-author’s family’s land—to demonstrate how companies are
able to profit for decades without setting aside anything for cleanup.
Digging deeper, we reveal that an astonishing 49% of oil and gas
companies licensed by the regulator are classified as insolvent
through the Licensee Liability Rating system.

4

The Big Cleanup

The oil and gas industry has dined on profits
from Alberta’s oil and gas wells for years, and
are now dashing out the door as the cleanup
bill comes due—leaving the public with the
tab. This must stop: polluting companies must
fund the cleanup of their infrastructure in full.
It’s the law.
The report details thirteen key recommendations to enforce the Polluter Pay principle
around the cleanup of Alberta’s oil and gas
wells, including:
• collecting cleanup costs before a well
reaches its economic limit;
• creating a non-profit Reclamation Trust to
wind down insolvent companies and use
remaining revenues to fund cleanup;
• ensuring the industry pays the full cost of its
annual levy to the Orphan Well Association,
who must also repay public loans;
• … and introducing an industry-wide levy
to cover cleanup costs not captured by
other means.
On the other side of these efforts is the
promise of a true “Reclamation Boom” in
Alberta. Our calculations show that industryfunded cleanup of the province’s 300,000
unreclaimed oil and gas wells could spark
an annual economic boom of:

• 10,112 full-time jobs;
• $727,632,421 in employment income;

… every year, for the next 25 years. Add in
the economic and social benefits of 410,000+
hectares of newly-remediated land opened
up for farming, hunting, recreation and
redevelopment—and you start to sense the
scale of benefits awaiting an Alberta that can
muster the political courage to enforce the law,
and make the polluter pay.
The massive cleanup ahead is also a chance
to advance reconciliation with Indigenous
peoples, with opportunities at every stage for
community leadership, economic development
for Indigenous businesses and strengthening
restoration efforts with traditional knowledge.
A better future is possible. This report is a call
to action for governments and regulators to
take control of our relationship with the oil and
gas industry, and for Albertans to take action
as well. It’s time to challenge our leaders to
enforce the Polluter Pay principle, and unlock a
reclamation job boom in the province that can
kickstart our next economy.

• $1.96 billion in contribution to Alberta’s
Gross Domestic Product (GDP);

June 2021

5

INTRODUCTION
Hardly a month goes by in Alberta without a new report about
the impacts of aging oil and gas wells and the increasingly
dysfunctional industry that runs them.
• A billion-dollar public bailout to spur the
cleanup of idle oil and gas wells in Alberta—
that ends up reducing the pace and scale of
the work in the province.1
• Families falling desperately ill from a well
leaking toxic gas on their property—and
there’s no operator to fix it.2
• Oil and gas companies refusing to pay over
$245 million in municipal taxes by 2020,
triggering tax increases and cuts to services
for rural Albertans—and a shrug from the
provincial government.3

• A regulator rubber stamps wells as ‘reclaimed’
with almost no due diligence—field checking
only 3% of the wells it certifies.4
• Almost 70,000 wells that changed hands in
western Canada between 2015-2018 were sold
to companies of dubious solvency.5
• Alberta’s government picked up the $20
million bill in unpaid surface compensation to
landowners last year on behalf of delinquent
and insolvent oil and gas companies.6
• A small town can no longer grow because so
much of its land is contaminated by oil and
gas development—with no path to cleanup.7

As Albertan researchers, scientists and industry veterans who have spent years deeply immersed
in the growing crisis of oil and gas well cleanup, we are heartened by the increasing media and
public attention to the issue in our province. After decades of inaction and inattention, pressure is
growing to finally face the unavoidable burden of retiring oil and gas wells.
But there’s a big problem—the funds for the cleanup are increasingly coming from the public
purse, rather than oil and gas companies who are legally responsible for the retirement of their
infrastructure under the “Polluter Pay” principle of Canadian law.

1

Riley, Sharon. (2021, May 7). $100 million in federal funding for clean up of Alberta oil and gas wells went to sites licensed to CNRL.
The Narwhal.

2

Page, Allannah. (2019, April 8). ‘Forgotten and ignored’: An Alberta couple fights a leaky oil well. National Observer.

3

Rural Municipalities of Alberta. (2021, February 18). Rural Municipalities continue to struggle as unpaid tax amounts owed by oil
and gas companies increase. [News release].

4

Riley, Sharon. (2020, January 23). Report ‘buried’ by Alberta government reveals ‘mounting evidence’ that oil and gas wells aren’t
reclaimed in the long run. The Narwhal.

5

Lewis, J., Jones, J., D’Aliesio, R., & Wang, C. (2018, November 23). Hustle in the oil patch: Inside a looming financial and
environmental crisis. Globe and Mail.

6

Riley, Sharon. (2021, March 9). Alberta covered $20 million in unpaid land rent for oil and gas operators in 2020. The Narwhal.

7

Haber, Paul. (2020, November 7). Alberta town on verge of collapse due to aging oil wells. CTV News.

6

The Big Cleanup

In 2020, Canadians contributed a staggering
$1.56 billion to the cleanup of Alberta’s oil
and gas wells through a mix of direct grants,
unnecessary loans, unpaid taxes, and other
subsidies (detailed in Part 2).
That’s $4.3 million in subsidies a day, every day
in 2020 for the cleanup of private companies’
oil and gas wells. And believe it or not, that’s
only a fraction of the bill that’s coming due.
Here’s the hard truth: it’s going to cost
$40-70 billion dollars to clean up the more
than 300,000 unreclaimed oil and gas wells
in Alberta, an amount our research shows is
2-3.5 times higher than estimates the regulator
has shared publicly.8

And even worse? These estimates are for
wells only—not the facilities that support
them, or the 433,000+ kilometres of pipelines
that connect them. With those thrown in, the
numbers stretch past $100 billion in cleanup
costs. Add in reclamation of oilsands mines
and tailings ponds, and the Alberta Energy
Regulator’s own cleanup estimate is at least
$260 billion dollars.9
This is a ticking time bomb. For years, we’ve
been ringing the alarm bell about these
numbers, and the weak regulatory and legal
enforcement of Polluter Pay in Alberta that
could leave all of us on the hook with the bill.
At the same time, we’ve tried to highlight the
upside of the cleanup challenge—that starting

8

Alberta Liabilities Disclosure Project. (2019, July). Description of ALDP’s Methodology for Completing the Alberta Energy
Regulator’s Internal Study of Oil and Gas Well Reclamation Costs.

9

De Souza, M., Jarvis, C., McIntosh, E., & Bruser, D. (2018, November 1). Cleaning up Alberta’s oilpatch could cost $260 billion,
internal documents warn. Global News.

Report ‘buried’ by Alberta government
reveals ‘mounting evidence’ that oil and gas
wells aren’t reclaimed in the long run
- The Narwhal
Hustle in the oil patch: Inside a
looming financial and environmental
crisis - Globe and Mail

‘Forgotten and ignored’:
An Alberta couple
fights a leaky oil well National Observer

Alberta ranchers, farmers furious over oil
and gas companies’ failure to clean up their
geriatric wells - Financial Post
Alberta town on
verge of collapse
due to aging oil
wells - CTV News
June 2021

7

to deal with this multi-billion dollar liability
will generate tens of thousands of high-quality
jobs in plugging, remediation, and reclamation
work for many of the same oil and gas workers
now facing layoffs and unemployment in an
increasingly volatile industry.
What alarms us today is how quickly the
narrative around job creation possibilities
in well cleanup have been co-opted by oil
and gas companies to subvert Polluter Pay.
They’ve successfully drawn over $1.5 billion
dollars of public funding into an increasingly
dysfunctional and unaccountable industry for
this work, all while delaying or watering down
reforms that would actually address the root
of the problem.
At issue? First, that companies and regulators
deliberately underestimate well cleanup costs
to minimize liabilities on their balance sheets.
Second, only a fraction of the multi-billion
dollar cleanup bill has been set aside by
industry, with the public already being asked to
pick up the unfunded liability that makes
up the difference.
Third, the rules that do exist to back Polluter
Pay are either too weak or not properly
enforced in Alberta—that needs to end.
We want to be absolutely clear: polluting
companies must fund the cleanup of their
infrastructure in full. It’s the law. They cannot
be allowed to dine on the profits from our
resources and dash from the cleanup at the
end. And if oil and gas companies are unwilling
or unable to set those funds aside, this report
has some concrete solutions to propose,
detailed in Part 3.

Our proposals offer the promise of a true
“reclamation boom” in Alberta: a quarter
century of cleanup jobs, funded by the
companies who have extracted hundreds of
billions of dollars in profits from the province
over decades. We can liberate over 410,000
hectares of land for other uses, bringing jobs
and new revenue to municipalities, rural areas
and First Nation communities.
Done right, the cleanup can also be a step
on the path towards reconciliation with
Indigenous peoples. Ensuring Indigenous
sustainability means starting the work from
the proper terms of reference: Treaty rights
under Treaties 6, 7, and 8; the Truth and
Reconciliation Commission’s Calls to Action;
and the United Nations Declaration on the
Rights of Indigenous Peoples.10
A better future is possible. This report is
our call for Albertans to take control of our
relationship with the oil and gas industry,
enforce the Polluter Pay principle, and unlock
a reclamation boom in the province that can
kickstart our next economy.

“My people must never lose their respect for
the wisdom of the elders, wisdom which will
balance all human activity. My people say:
If you destroy nature and the environment,
you are destroying yourself. But if you
protect the environment and safeguard the
water, ultimately you are protecting yourself.
Wisdom harnessed with technology can go a
long way in creating a better social order, a
world in which all creation can survive and
enjoy life to the fullest.”11
The late Reverend, Dr & Chief John Snow Sr.
Author, These Mountains Are Our Sacred Places,
Stoney Tribe

10

Government of Canada. (2013). Treaty Texts.
Crown-Indigenous Relations & Northern Affairs Canada; Truth and Reconciliation Commission of Canada. (2012). Calls to Action;
United Nations General Assembly. (2007, October 2). United Nations Declaration on the Rights of Indigenous Peoples.
A/RES/61/295.

11

Snow, Chief John. (2005). These Mountains Are Our Sacred Places: The story of the Stoney people (p. 212). Markham: Fifth House.

8

The Big Cleanup

PART ONE

A HUGE MESS: HOW BAD
IS IT AND WHO’S TO PAY?

MEET POLLUTER PAY
You make a mess, you clean it up: it’s not just a household rule to
manage Lego that litters the living room, or the aftermath of a party.
It’s a foundational principle of Canadian environmental law.
Enshrined in the Canadian Environmental Protection Act of 1999,12 Polluter Pay is now what
the Supreme Court calls “a well-recognized tenet in Canadian environmental law,”13 detailed in
provincial and territorial environmental legislation across the land.14
Polluter Pay means just that: polluters must pay for the social and environmental costs of their
economic activities.15 For the operators of oil and gas wells in Alberta and across Canada, this
means taking on the cost of returning the land to its pre-drilling state.
The fact that the Polluter Pay principle is entrenched across provincial and Canadian laws
reinforces a critical point: companies don’t just have a moral obligation to clean up after making
huge profits from public resources. Cleaning up is the law.

12

Government of Canada. (2004, December 10). Guide to Understanding the Canadian Environmental Protection Act, chapter 3.

13

Orphan Well Association v. Grant Thornton Ltd., (2019 SCC 5). p5, para 29.

14

Environmental Law Centre of Alberta. (2019, December). The Polluter Pay Principle in Alberta Law: An Introduction and Survey, p4.

15

Ibid., p. 21.

June 2021

9

WHAT’S INVOLVED IN CLEANING UP
AN OIL AND GAS WELL?16
Here’s a quick look at what happens after a well stops
producing oil or gas in Alberta.

1

When a well ceases to produce, it’s declared
inactive. Within 12 months of becoming
inactive,17 a well must resume production or its
status changes to suspended.

2

Operators of suspended wells are supposed
to follow a checklist of functional and safety
standards, annually inspect the site and report
their findings to the regulator. There is no
requirement to plug the well, except for the
few dangerous wells classified as “critical
sour”. Otherwise, wells can sit idle indefinitely.
Alberta’s oldest idle well has sat unplugged
since World War One..18

3

Plugging (or abandoning) a well involves
permanently sealing it and removing it from
production. At the surface, any pumpjack or
other production equipment is removed and
the site tidied. There is no set timeline for
when a company must complete plugging after
suspension.

4

The second-to-last stage is remediation—the
cleanup of any onsite spills or contaminations
from the hundreds of chemicals in the drilling
process.19 While remediation is often supposed
to occur at the time of the spill, it doesn’t always
happen. Contamination must be remediated
before reclamation can begin.

5

16

Reclamation is the work of returning the
wellsite to the functional equivalent of its
pre-dilling state. In Alberta, 80% of certificates
are automatically issued online, and field
inspectors only visit about 3% of sites to verify
reclamation.2021

GLOSSARY
OF WELL TYPES
Active: A well producing oil
and/or gas.
Depleted: A well nearing the end
of its production. Also called a
“marginal” or “stripper” well.21
Inactive: A well no longer
producing oil or gas, but also not
yet plugged.
Plugged: A well that has been
plugged with cement, its wellhead
removed, and casing cut below
surface and capped. This type of
well is also called “abandoned”.
Reclaimed: The well site has
been returned to an equivalent
land capability and a reclamation
certificate issued.
Orphaned: The well has no current
viable owner and has been officially
designated as an orphan by
regulators. The well is transferred to
the Orphan Well Association.

Way, N., & Simpson-Marran, M. (2019). Landowners’ Primer: What you need to know about unreclaimed oil and gas wells. Pembina
Institute.

17

Six months if a well is deemed “critical sour” by the regulator.

18

D’Aliesio, R., Lewis, J., & Wang, C. (2018, November 23). In Western Canada, surge of inactive wells a brewing ‘disaster’.
Globe and Mail.

19

Hryciuk, Dennis. (1991, October 30). Oil industry defends use of pits for toxic well waste. Edmonton Journal, D9. Marshall, Andy.
(1992, February 22). Toxic waste resurfaces to haunt oil industry. Calgary Herald, A8.

20

Riley, Sharon. (2018, December 6). Many of Alberta’s ‘reclaimed’ wells aren’t actually reclaimed: government presentation. The
Narwhal. Graney, Emma. (2021, January 14). Energy firms misled Alberta regulators on cleanup of well sites. Globe and Mail.

21

The AER calls active wells “marginal” if they produce less than 10 barrels of oil equivalent (boe) per day. In the U.S., “stripper”
wells are generally considered those producing less than 15 boe/d.

10

The Big Cleanup

450,000 oil and gas wells
have been drilled in
Alberta—one for every
ten people in the
province.

HIDING THE TRUE COST OF CLEANING UP
ALBERTA’S OIL AND GAS WELLS
Around 1906, near the First Nation community
of Fort McKay, a German aristocrat named
Count Alfred von Hammerstein drilled, and
walked away from, what is today Alberta’s
oldest orphan well.22
In the 115 years since, 450,000 oil and gas
wells have been drilled in Alberta—one for
every ten people in the province.
Over 300,000 of them need to be cleaned
up now, or in the near future. Geographically,
they are everywhere—from rural areas to
First Nation communities to cities. Each is an
economic liability, and the potential for creating
a health hazard increases as wells age.
Here’s the ugly truth: our research shows it’s
going to cost between $40-70 billion dollars
to clean up the over 300,000 unreclaimed oil
and gas wells in Alberta—a number that’s 2 to
3.5 times higher than estimates the Alberta
Energy Regulator has previously shared
publicly. In 2019, our research totalling those
numbers made national headlines when we
released it.23

The reason the findings were so explosive?
After a private Alberta Energy Regulator
(AER) presentation on oil and gas liabilities
by the Vice-President of Closure and Liability
Robert Wadsworth hit the media in 2018,24
we used a freedom of information request to
access the AER’s incredibly detailed cleanup
estimates for every well type in Alberta.25 And
then we finished the work they had started—
applying those costs to each of the 300,000+
unreclaimed oil and gas wells in the province to
reach our $40-70 billion total (for more detail
on this work, see Appendix A).
Bear in mind these estimates are for oil and
gas wells only—not the facilities that support
them, or the 433,000+ kilometres of pipelines
that connect them. With those included, the
numbers for conventional oil and gas approach
$100 billion in cleanup costs—before we even
start on the oil sands.
So this is the massive cleanup bill that’s already
coming due across Alberta. Under the Polluter
Pays principle, it’s the oil and gas industry
that should be funding the retirement of this
infrastructure. But have they been saving?

22

Morgan, Geoffrey. (2019, December 18). Alberta ranchers, farmers furious over oil and gas companies’ failure to clean up their
geriatric wells. Financial Post.

23

Bakx, Kyle. (2019, April 8). Old, unproductive oil and gas wells could cost up to $70 B to clean up says new report. CBC News.

24

De Souza, M., Jarvis, C., McIntosh, E., & Bruser, D. (2018, November 1). Cleaning up Alberta’s oilpatch could cost $260 billion,
internal documents warn. Global News.

25

Alberta Liabilities Disclosure Project. (2019, April 8). New coalition calls on party leaders for transparency on true costs of well
cleanup [News release].

June 2021

11

COSTS TO PLUG, RECLAIM AND REMEDIATE AN OIL OR GAS WELL IN ALBERTA26

HIGH
cleanup
estimate:
$279,086

AVERAGE
cleanup
estimate:
$219,658

LOW
cleanup
estimate:
$160,229
AVERAGE
security held by
AER per license:
$639

OUR DATA SET OF ALBERTA’S OIL AND GAS WELLS
The scope and detail of our data set is a gold mine for researchers, journalists and policy
makers. Landowners and communities who are building legal cases or making regulatory
applications will find great value in the data and analysis of wells and the companies
operating them. With 368 different well types and dozens of well-specific data points, we
can answer a wide range of questions, such as:
• What’s the cost of cleaning up all the wells in Two Hills, Alberta?
• How many abandoned wells are licensed to CNRL?
• How many were operated by the bankrupt Trident Exploration?
• Which wells were drilled in the 1970s?
• Which wells in our community are closest to watersheds?
• What is the health of the company operating on my land? How much cleanup are they
responsible for overall?
See Appendix A for more detail on the data set.

26

12

Based on our 2019 analysis of the AER’s internal study on cleanup estimates. Full methodology and details can be found at
https://www.aldpcoalition.com/research. Per-license estimate based on data from the AER’s June 2021 LLR report: $219,435,452.13
in security held / 343,456 licenses evaluated = $638.90/license.

The Big Cleanup

HOW MANY WELLS IN ALBERTA
ARE PAST THEIR “BEST-BEFORE” DATE?
Every well in Alberta and around the world
has a “best-before” date—the point when
the value of the oil or gas left in the ground
beneath the well is equal to the cost of cleaning
up the well. In industry terms, this is known
as the well’s economic limit.

That means about four out of five remaining
wells are past the point of insolvency, in
that they can no longer fully fund their own
cleanup. This crucial detail is laid out on Slide
12 of the AER presentation, under the title
“Current State: Financial Capacity.”

If the well’s owner or operator has not set aside
any bonds or deposits for the cleanup, the
best-before date marks a second important
milestone. It’s the day the well owner’s
cleanup costs begin to transfer to the public.
When oil and gas companies don’t save for
cleanup, all of us get left with the bill.27

Amongst a lot of detail about the overall health
of the industry is a key fact: the majority (61%)
of the wells categorized as “Active” by the AER
are actually only marginal producers, pumping
less than 10 barrels a day. At that rate of
production, they are highly unlikely to be able
to fund their own cleanup costs.

We’ve uncovered another jaw-dropping
statistic from the now-renowned AER
presentation on liabilities: about 80% of the
wells that still need to be retired in Alberta
are already past their “best-before” date.28

ECONOMIC LIMIT

THE BALANCING ACT
OF ECONOMIC LIMIT

REMAINING
REVENUE
CLEANUP
COSTS

27

“In the end, the provinces and regions may be responsible for the costs of aging infrastructure where a company is insolvent.”
Marion, M. A., Massicotte, M.G., & Duhn, J.L. (2014, December). Canada’s Aging Oil and Gas Infrastructure: Who will pay? The public
and private cost recovery frameworks. Alberta Law Review, 52(2): p. 343.

28

Wadsworth, Robert. (2018, February 28). Liability Challenges. [Public presentation by Alberta Energy Regulator vice president for
closure and liability]. FoIPP #2018-G-0051: slide 12.

June 2021

13

“CURRENT STATE — FINANCIAL CAPACITY,” SLIDE 12
OF AER “LIABILITY CHALLENGES” PRESENTATION, 2018

From the speaker’s notes:
“...looking a little closer
at the inventory (graphic
on the left). Out of our
active well populations
61% of them are marginal
producers which means
they are producing 10 or
less barrels of oil or oil
equivalent a day.”

Adding those marginal wells to the tens of thousands of inactive and abandoned (plugged) wells
on the chart led to the eye-popping total: about 80% of unreclaimed wells in Alberta are already
past their best-before date.29

ALBERTA WELLS PAST THEIR ECONOMIC LIMIT
Well Type

All Wells

All Unreclaimed

Reclaimed

24.3%

0%

Abandoned (Plugged)

15.7%

20.7%

Inactive

20.2%

26.7%

Active (Marginal)

24.2%

31.9%

Active

15.6%

20.6%

Total

100%

100%

Total Past Economic Limit

60.1%

79.4%

Our calculation of the data from Slide 12 of the AER’s “Liability Challenges” Presentation, 2018,
adjusted for economic limit. Red = past economic limit.

29

14

To make this calculation, we removed the 24% of reclaimed wells from the AER’s total well count, and calculated the percentage
totals of the remaining wells. Abandoned, Inactive and Marginal made up 79.4% of the unreclaimed total.

The Big Cleanup

HOW MUCH HAS BEEN SET ASIDE FOR CLEANUP?
The huge cost of well cleanup and the fact that
4 out of 5 unreclaimed wells in Alberta are past
their best-before date would not be a problem
if, following the Polluter Pay principle, the oil
and gas industry has set aside the funds for the
cleanup of their infrastructure. But have they?
The next slide in the AER presentation
answered the question in a way that was
simple enough for a kid to understand. There
was a huge, huge bag of money representing
“Liability Estimated”—the AER’s internal
calculations of what the oil and gas industry’s
entire cleanup bill would cost.

“MAGNITUDE OF LIABILITY”
SLIDE FROM AER PRESENTATION30

And in case there was any confusion about the
discrepancy, the presenter added a note:
“The bags are to scale.”
Once this presentation made national
headlines, the regulator walked the findings
back, calling it a “worse case scenario”—even
though its author, the AER’s Vice-President of
Closure and Liability Robert Wadsworth, had
said in the talk that his estimates were “likely
less than the actual cost.”
When we did our own calculations using the
AER’s detailed methodology, our estimated
cleanup costs were $55 billion for oil and gas
wells alone, based on the average costs of
wellsite reclamation. Our totals were actually
more conservative than the estimates in the
presentation—but crucially, still more than
double the $18.5 billion estimate the regulator
had shared publicly for the cleanup of oil and
gas wells.
These multi-billion dollar cleanup costs are a
debt—a future liability—owed by industry in
exchange for their license to damage, extract, and
profit from the land and water that sustains us.

Slide 13 of the AER’s 2018 “Liability Challenges”
Presentation, titled “Magnitude of Liability”
Next to that giant bag of money was a tiny,
almost invisible little dot, labelled “Security
Collected.” That was the amount the regulator
had collected from industry for cleanup.

30

In this way, everyone in Canada has involuntarily
become the oilpatch’s environmental creditors.
The oil and gas industry has been massively
underestimating their cleanup debts, and have
saved almost nothing towards repaying them.
They’ve accumulated profits for decades—
and now hope to walk out the door before
the cleanup bill comes due.
The dine-and-dash approach to cleanup is
playing out right now across Alberta, through
wells drilled in farmers’ fields, First Nation
communities, public lands, and even in the
middle of cities.

Wadsworth, Robert. (2018, February 28). Liability Challenges. [Public presentation by Alberta Energy Regulator vice president for
closure and liability]. FoIPP #2018-G-0051: slide 13.

June 2021

15

To find out how we let so many wells reach their end of life without
saving for cleanup, we’ll dig into the story of one of them, drilled 30
years ago on Regan Boychuk’s grandfather’s farm near Rycroft, Alberta.

The story of one well’s “best-before” date
Meet oil well #0776062502000.
It was drilled on Regan Boychuk’s grandfather’s
farm near Rycroft, Alberta in the summer
of 1986.
Regan was a young hockey nut who switched
to goaltending after watching Patrick Roy’s
breakout rookie season in Montreal. That
year, his grandfather began receiving $3,500
annual cheques from the well operators, as
compensation for not being able to farm that
corner of their canola field.

date”, or economic limit. This was the date
when the well’s remaining oil revenues were
equal to the costs of cleaning it up.
In the spring of 2016 the well fell idle and was
sold to Rising Star Resources, a newly-formed
junior company.32 Rising Star was not required
to pay any cleanup deposits on the well when it
changed hands.

By the winter of 1992, when Regan was in
middle school, the well was producing 950
barrels a day—worth about $32,300 per day in
today’s dollars.31

In March 2020, as Regan’s second daughter
finished grade four, the well was plugged
permanently. Between 1986 and 2016, it had
produced 1.6 million barrels of oil, worth over
$61 million in 2021 dollars.33 No profits were set
aside for cleanup in that time, and there is no
fixed timeline for reclamation.

But the oil flow slowed significantly in just a
few years. As Regan prepared to graduate high
school, a pump jack was installed to extend
extraction. Then an acid treatment was used
to re-stimulate the oil well’s production in the
summer of 2000.

In 2021, as Regan’s youngest son awaits his
second birthday, the farm hosts a plugged
well in a canola field that still can’t be farmed.
And without proper cleanup, the farm’s value
is impaired, and any suspected contamination
could complicate a potential sale.

The well was assessed in 2003: were there
any other depths worth perforating for
production? Nothing attractive was found. The
seventeen year-old well continued to decline
in production. Regan was 24 and about to
graduate from university.

Based on the year drilled, well depth, and
surrounding soil type, the remaining cleanup
could cost another quarter million dollars. But
#0776062502000 never produced a barrel
for Rising Star, who is now responsible for the
remaining cleanup bill.

In the spring of 2012—when Regan’s first
daughter was almost as old as he was when it
was first drilled—the well hit its “best-before

How is Rising Star going to pay $250,000 for
the cleanup, when it hasn’t set aside a penny
for it?

31

Alberta’s 1992 oil price of $20.36 per barrel translates to $34.06 today.

32

Healing, Dan. (2016, July 17). Private equity firms zeroing in on Western Canada oilpatch bargains. Canadian Press.

33

Production data from Enervus for the well’s first five and final two years were extrapolated using straight line decline fit to match
total lifetime production. Alberta oil prices from the Canadian Association of Petroleum Producers’ Statistical Handbook, adjusted
to 2021 dollars using Bank of Canada’s online inflation calculator.

16

The Big Cleanup

THE LIFESPAN OF WELL #0776062502000

Economic limit/
Best-before date

Well stopped
producing and sold
to Rising Star

Well plugged

June 2021

17

PART TWO

THE DINE AND DASH:
HOW DO POLLUTERS
GET AWAY WITH IT?
“It’s a shell game that we have no ability… to control.”34
Al Kemmere, then-president of the Rural Municipalities of Alberta, 2019

“The commerce of the business is to take high-value producing wells,
produce them as much as you can, and then, as soon as the economics
become marginal, hand them off to someone else and include the liability
within it.”35
Keith Wilson, Edmonton-based surface rights lawyer

“It’s a disaster waiting to happen. Everybody’s sort of pushing it down the
road hoping prices are going to come back [but] if they don’t, then we as
the citizens are going to have one humongous liability.”36
David Speirs, founder of the Freehold Owners Association

“The current rules are so weak that companies can delay setting aside
money to cover cleanup costs until they are out of business and can no
longer afford to pay anything.”37
National Observer

34

Lewis, J., Jones, J., D’Aliesio, R. & Wang, C. (2018, November 23). Hustle in the oil patch: Inside a looming financial and
environmental crisis. Globe and Mail.

35

Ibid.

36

Ibid.

37

De Souza, M., Jarvis, C., McIntosh, E. & Bruser, D. (2018, November 1). Alberta regulator privately estimates oilpatch’s financial
liabilities are hundreds of billions more than what it told the public. National Observer.

18

The Big Cleanup

HOW POLLUTERS BECAME
ABOVE THE LAW IN ALBERTA
Skyrocketing oil prices in the 1970s led
to widespread oil and gas development
in Alberta—and vast profits for industry.
But there was also a gusher of oil and gas
regulation. Under Premier Peter Lougheed, the
Alberta government introduced the province’s
first environmental laws, quadrupled oil and
gas royalty rates, and enacted Alberta’s first
reclamation standards.38
As the oil and gas industry became a
bigger part of the Albertan and Canadian
economies, its power grew. Oil and gas
companies donated to political parties, funded
university programs, and hired an army of
lobbyists to advance their interests with
regulators and various levels of government.39
Increasingly, Canada’s banks and public
pension plans were themselves invested
heavily in the industry.40 Governments,
investors, pensioners, and the public all
began to understand their economic
fortunes as tied to oil and gas.

The industry used its influence to erode the
regulations that had been enacted under
Lougheed. They pushed to loosen rules and
enforcement around cleanup. They lobbied
to release former well owners of their
responsibility for cleanup costs. And they
persuaded regulators and lenders to ease
how cleanup costs were accounted for.
This is how we find ourselves in a cleanup
crisis today.

In Alberta, the Energy
Regulator is 100% funded
by the industry that it is
mandated to both regulate
and promote. It is, arguably,
captured by design.

38

See Bott, R., Chandler, G., & McKenzie-Brown, P. (2016). Footprints: The evolution of land conservation and reclamation in Alberta.
Cochrane: Kingsley.

39

Taft, Kevin. (2017). Oil’s Deep State: How the Petroleum Industry Undermines Democracy and Stops Action on Global Warming—in
Alberta, and in Ottawa. Ottawa: Lorimer.

40

Storrie, J., Kinney, D., & Boychuk, R. (2020, April). Alberta’s Failed Oil and Gas Bailout: How AIMCO invested more than a billion
dollars of pensioners and Albertans money into risky oil and gas companies with more than $3 billion in environmental liabilities
and how the people running those companies got rich through huge salaries, share buybacks, dividends and conservative political
connections. Progress Report.
DeRochie, P., & Scott, A. (2020, October 5). Canada Pension Plan fuels the climate crisis with our own retirement savings. National
Observer.

June 2021

19

A TIMELINE OF INDUSTRY INFLUENCE
1989-1991: When Alberta energy regulators
first tried to limit the trade in depleted wells
and put former owners on notice they would be
held liable for cleanup, the oil and gas industry
was able to have the reforms reversed barely
a year later.41
1997-2000: The Long Term Inactive Well
program aimed to make the industry plug
all wells that had been idle for more than a
decade. But the five-year program was gutted
and cancelled before it produced its second
annual report.42
2000-2002: When a new regulatory program
was introduced in October 2000 that could
have solved the unfunded oilfield cleanup
problem, industry complaints led to a new
round of consultations by Christmas.43 The
program was soon modified, suspended and
replaced by one of industry’s design44—the
same program in place today.45

1997-2016: The oil and gas industry also
lobbied the government for lower royalty rates,
and over time, it paid off. Royalty rates shrank
to historic lows under successive Conservative
governments. And when Albertans elected
a New Democratic Party (NDP) government
for the first time in a century on a promise to
review the regime—the NDP lowered them
even further.46
2021: Today Canada captures roughly 32% of
oil and gas profits through royalties, taxes and
fees. When compared to Saudi Arabia (85%),
Norway (78%), China (63.5%) and Australia
(58%),47 one can start to understand how much
the public is giving up in the interest of oil
and gas profits—all while Alberta accumulates
what’s expected to reach $115.8 billion in
provincial debt this year.48

41

Energy Resources Conservation Board. (1989, December). Recommendations to limit the public risk from corporate insolvencies
involving inactive wells;
Nichol, John. (1991, April). Orphan wells: Who is responsible, for how long, and at what cost? Canadian Association of Drilling
Engineers/Canadian Association of Oilwell Drilling Contractors Spring Drilling Conference Paper 91-30.

42

Alberta Energy and Utilities Board. (1997, November 17). Long term inactive well requirements. Interim Directive 97-08;
Alberta Energy and Utilities Board. (2000, October 24). Replacement of the Long-Term Inactive Well Program with the monthly
corporate licensee liability rating. Informational Letter 2000-4.

43

Alberta Energy and Utilities Board. (2000, October 24). Energy development license transfer requirements and monthly
corporate licensee liability rating. Interim Directive 2000-11;
Alberta Energy and Utilities Board. (2000, December 18). Clarification: Energy development license transfer requirements
and monthly corporate licensee liability: ID 2000-11 and Guide 69. General Bulletin 2000-28.

44

Alberta Energy and Utilities Board. (2001, January 31). Important information on the expanded orphan program.
General Bulletin 2001-5;
Alberta Energy and Utilities Board. (2001, December 4). Revised Licensee Liability Rating (LLR) program and energy d
evelopment license transfer requirements. Interim Directive 2001-8.

45

Alberta Energy Regulator. (n.d.). Liability Management. Last Accessed May 30, 2021.

46

Boychuk, Regan. (2016, February 7). Royalty decision compounds past mistakes. Edmonton Journal.

47

Wilt, James. (2018, August 14). Are Albertans collecting a fair share of oilsands wealth? The Narwhal.

48

Hudes, Sammy. (2021, February 26). How Alberta went from Klein’s ‘paid in full’ years to record debt in 2021 budget.
Calgary Herald.

20

The Big Cleanup

ALBERTA OIL AND GAS ROYALTY RATE BY BY YEAR & PROVINCIAL PREMIER
45%
40%
35%
Alberta oil and gas royalties as % of $ value of oil and gas sales
30%
Lougheed
(1971-1985)
28%

25%

Getty
(1985-1992)
15%

Klein
(1992-2006)
16%

1990

2000

Stelmach
(2006-11)
12%

20%

Redford
(2011-14)
+ Prentice
10%

Notley
(2015-19)
6%

Kenney
(2019-22
forecast)
7%

15%
10%
5%
0%
1970

1980

2010

2020

HOW CAN WE TELL IF A REGULATOR
IS CAPTURED BY INDUSTRY?
“Regulatory capture” takes place when a
regulator ceases to be independent and
instead advances the commercial interests of
the industry it is charged with regulating.49
In Alberta, the Energy Regulator is 100%
funded by the industry that it is mandated
to both regulate and promote. It is, arguably,
captured by design.
Perhaps that’s why today in Alberta:
• companies don’t have to put up any cleanup
deposits to drill a new well, while across the
border in North Dakota, companies post a
$50,000 bond—and a new bill proposed in

the U.S. would increase the deposit amount
for wells on public lands to $150,000;50
• unlike in many U.S. states, there are no
enforced timelines for oil and gas well
cleanup, meaning companies can “put off
remediation work indefinitely”;51
• the regulator calls its own liability system
for oil and gas companies “not an accurate
measure” of whether a company will be able
to pay for cleanup;52
• only 3% of wells that have been certified
as “reclaimed” by the regulator are
inspected first;53

49

See Taft, Kevin. (2017). Oil’s Deep State: How the Petroleum Industry Undermines Democracy and Stops Action on Global
Warming—in Alberta, and in Ottawa. Ottawa: Lorimer.

50

Groom, Nichola. (2021, April 8). US House bill seeks $8 billion for abandoned oil and gas well clean up. Reuters.

51

D’Aliesio, R., Lewis, J., & Wang, C. (2018, November 23). In Western Canada surge of inactive wells a brewing ‘disaster’. Globe and
Mail.
Johnson, Tracy. (2017, February 9). Report calls for Alberta to put a time limit on inactive oil and gas wells. CBC News.

52

Alberta Energy Regulator. (n.d.). Liability Management. Last Accessed May 30, 2021.

53

Riley, Sharon. (2020, January 23). Report ‘buried’ by Alberta government reveals ‘mounting evidence’ that oil and gas wells aren’t
reclaimed in the long run. The Narwhal.

June 2021

21

• almost 40% of wells drilled before 1964 still
have not been remediated;54
• almost 50% of the wells that changed hands
in Western Canada between 2015-18 were
sold to companies of “subpar financial
status”55—unlike in Alaska, where regulators
negotiate Financial Assurance Agreements
with each company, typically requiring thirdparty independent estimates of cleanup
costs and upfront bonding before a sale
takes place;56
• the province faces a growing backlog of
unfunded orphaned wells, while North
Dakota—despite being the second-largest
crude oil producer in the U.S.—has almost no
orphan wells;57
• the Orphan Well Association collects only a
fraction of the cleanup costs of new orphan
wells from industry each year, even though
the law requires them to collect the full
amount;58
• the oilpatch received an unprecedented
$1.56 billion in federal and provincial
subsidies in 2020 for the cleanup of their
aging oil and gas wells;59
• …all while managing to reclaim less wells in
2020 than they had in 2019.6061

“In Alberta, we live by a simple
rule: if energy companies
are going to profit from the
province’s energy resources,
they must be responsible and
properly abandon, remediate,
and reclaim their sites.”
Alberta Energy Regulator, “Liability
Management Programs and Processes”61

Despite what the AER claims, it has been
serving—not regulating—Alberta’s oil and
gas industry. It fails to enact the basic tools of
oil and gas well regulation, such as accurate
cleanup estimates and strict cleanup timelines
and deposits; it doesn’t collect sufficient
funds from industry to clean up the growing
backlog of orphan wells; it hasn’t prevented big
companies from sellings billions in aging well
assets to smaller players who will never be able
to pay for their cleanup; and it barely enforces
the regulatory tools it does have, like inspecting
wells before issuing reclamation certificates.
With some of the lowest oil and gas royalty
and tax rates in the world and a captured and
permissive regulator, companies in Alberta’s
traditional oil and gas sector have made record
profits, but are increasingly walking away
without paying their cleanup bill.

54

Morgan, Geoffrey. (2019, December 19). Alberta ranchers, farmers furious over oil and gas companies’ failure to clean up their
geriatric wells. Financial Post.

55

Lewis, Jeff, Jeffrey Jones, Renata D’Aliesio, and Chen Wang. (2018, November 23). Hustle in the oil patch: Inside a looming financial
and environmental crisis. Globe and Mail.

56

Nelson, Kristen. (2020, March 22). Primer on financial assurance agreements. Petroleum News, vol. 25(12).

57

Morgan, Geoffrey. (2016, March 28). North Dakota’s last orphan: Why is America so much better at cleaning up the oil bust?
Financial Post.

58

In October 2020, the AER warned of 12,000 new orphan wells, but ‘Ultimately, the Alberta Energy Regulator will decide what sites
land with the OWA’. Graney, Emma. (2020, October 4). Number of new stranded oil, gas wells in Alberta on pace to hit 12,000,
regulator says. Globe and Mail; that same year, the AER only increased the industry’s Orphan Levy by $5 million, or about $417/
potential orphan. Alberta Energy Regulator. (2021, April 6). 2021/22 Orphan Fund Levy - LLR and OWL Programs. Bulletin 2021-09.

59

See Page 25-26 for breakdown of subsidies to the industry in 2020 to clean up oil and gas wells.

60

Riley, Sharon. (2021, May 7). $100 million in federal funding for clean up of Alberta oil and gas wells went to sites licensed to CNRL.
The Narwhal.

61

Accessed on June 9, 2021.

22

The Big Cleanup

GROWING INSOLVENCY IN TRADITIONAL
OIL AND GAS—BUT NOT ALL OVER
So far we’ve seen how both Alberta’s
industry and regulators have publicly
underestimated the costs of cleaning up
Alberta’s oil and gas wells—despite the
AER having the ability to determine detailed
well-by-well cleanup estimates.
We’ve explored the concept of economic
limit, a well’s “best-before date,” when its
remaining profits are equal to the cost of
cleaning it up—and how thousands of families
like Regan’s have ended up with aging and
leaking wells on their land with no path or
funding to clean them up.
We’ve shared the AER’s data that about 80%
of unreclaimed wells in Alberta are likely
already past their “best-before date”—the
period of time when they’d still have enough
future revenue to fund their own cleanup.
And we’ve laid out a short story of how
Alberta ended up collecting some of the
lowest royalties and taxes in the world
from the oil and gas industry, and how the
industry-funded AER has weakly-enforced the
regulatory regime around it.
With all of these gifts from the government
and regulator, you would think the owners of
Alberta’s oil and gas wells would be thriving.
But instead, this aging part of the industry
is increasingly insolvent: a state where a
company’s liabilities (their debts) are greater
than their assets. And as that happens, the
public is increasingly being asked to pick up
their cleanup bills.

Alberta’s energy regulator rates the solvency of
its oil and gas companies each month through
the Liability Management Rating (LMR), using a
simple formula: if a company’s ‘deemed assets’
are greater than their ‘deemed liabilities,’
their LMR remains above 1.0, and they are
considered to be solvent.
If their rating falls below 1.0, demonstrating
insolvency, they are required to pay a deposit
equivalent to the difference to the regulator to
restore their solvent rating. You read that right:
the regulator doesn’t collect any cleanup
deposits from a company until they judge
them insolvent.62
By the regulator’s own measure, 49% of all
licensed oil and gas producers are insolvent
in Alberta. The June 2021 LMR report listed
342 Alberta oil and gas licensees—49% of
the total—as being insolvent, designated by
a rating below 1.0. Collectively, these 342
companies hold 34,683 licenses with a ‘deemed
liability’ totalling over $2.6 billion dollars.63

TRIDENT EXPLORATION WENT
BROKE, BUT CASH STILL
FLOWED
Trident Exploration collapsed in
May 2019 despite producing more
than 10,000 barrels of oil equivalent
generating approximately $100,000 in
daily revenue.62 Even failing companies
still produce significant revenues that
can be directed towards cleanup.

62

Boychuk, Regan. (2019, May 2). Kenney already facing Alberta’s reckoning over mismanaged oilfield cleanup. National Observer.

63

Alberta Energy Regulator. (2021, June 5). Liability Management Rating (LMR) Results Report #44024.

June 2021

23

PERCENTAGE OF INSOLVENT OIL & GAS COMPANIES
Alberta Energy Regulator Liability Management Rating (LMR) Results Report
Liability Run Date: June 5, 2021 - Modified to organize & show % of licensees per category

Number of
Licensees

% of Total
Licensees

Number of
Licences/
Approvals

Total Deemed
Liabilities

Total Insolvent (<1.00)

342

48.93

34,683

$2,629,484,539.00

Total 1.00 - 1.99

137

19.60

104,673

$6,569,290,921.40

Total 2.00 - 4.99

121

17.31

154,829

$14,023,012,984.77

Total 5.00 - 9.99

54

7.73

24,066

$3,181,295,764.44

Total 10.00 or >

45

6.44

25,205

$3,507,592,560.58

Total

699

100.00

343,456

LMR Range

We need to be clear: while the growing
number of insolvent companies and unfunded
cleanup liabilities are hugely alarming, they
are not an indicator that Alberta’s oil and gas
industry, as a whole, is going broke.
For example, in the first quarter of 2021,
six of the largest oil, gas, and bitumen
producers in Canada generated $3 billion in
profits. This stark divide between billions and
bankruptcy is an indicator of what the
Financial Post recently called “a split in industry
fortunes” between increasingly insolvent
drillers, and more profitable companies
operating in the oilsands.64
And from reporting in the Globe and Mail
and other outlets, we know resurgent profits
in the oilsands are partly a result of the industry
successfully dumping billions of their well
cleanup liabilities to small companies with
no ability to clean them up.65

AN INSOLVENCY CASE STUDY:
PRICEWATERHOUSECOOPERS V.
PERPETUAL ENERGY (2021 ABCA 16)
Perpetual Energy owned many assets in
Alberta’s oil and gas fields. Then in 2016,
they sold thousands of their “uneconomic
assets”—wells which carried hundreds of
millions in cleanup debts—for one dollar
to Sequoia Resources Corp., a new firm
created by foreign investors.
A year and a half later, Sequoia filed for
bankruptcy. The bankruptcy trustee,
PricewaterhouseCoopers, is now
attempting to reverse the sale based on
the argument that Sequoia was insolvent
when the transfer occurred.
The challenge is that the Bankruptcy
and Insolvency Act’s 1919 definition of
insolvency excludes oilfield cleanup costs.
That has got to change—and we have
recommendations on how in Part 3.

64

Varcoe, Chris (2021, May 12) A $10B turnaround: After tough 2020, biggest oil and gas producers generate more than $3B in
earnings. Financial Post.

65

Lewis, J., Jones, J,. D’Aliesio, R., & Wang, Chen. (2018, November 23). Hustle in the oil patch: Inside a looming financial and
environmental crisis. Globe and Mail.

24

The Big Cleanup

The oil and gas industry has made billions
in drilling profits for decades—and are now
walking away from the cleanup, pleading
poverty and leaving the mess for the public
to deal with.
Despite the “we’re all in it together” rhetoric, it’s
the public who are getting ditched with the bill.
And we need to hold the industry as a whole to
account—not just the small companies who got
left holding the hot potato of unreclaimed wells.
This is not a far-off crisis: Albertans are feeling
the effects today. Last year alone, oil and gas
companies refused to pay over $20 million
dollars in compensation to landowners who
were hosting their wells, leaving the public (via
the provincial government) to foot the bill.66
And oil and gas companies—many of which
are still operational—have engaged in a
massive, multi-year tax strike in Alberta,
withholding an astonishing $245 million dollars
in municipal taxes in the past three years, and
forcing municipalities to make drastic cuts to
services or implement tax increases of up to
500% to make up the difference.67
The bills are piling up. And it’s the public
who are increasingly being asked to pay
them—from the industry’s compensation to
landowners, to their municipal taxes and their
cleanup bills, to name just a few.

HOW THE PUBLIC PAYS
POLLUTERS’ BILLS
Despite the federal Liberal’s promises to cut
“inefficient fossil fuel subsidies” by 2025,68
Canada ranks last among G20 countries in
actually phasing them out.69
In fact, Canada’s oil and gas subsidies actually
increased by 200% between 2018 and 2020.70
So how much in public handouts are going
to the cleanup of the industry’s wells?
Last year, owners and operators of Alberta’s
oil and gas wells received $1.565 billion in
public subsidies via:
• a $1,000,000,000 grant from the federal
government for idle well cleanup;71
• $245,000,000 in unpaid municipal taxes
from oil and gas companies;72
• a $200,000,000 loan from the federal
government to the Orphan Well Association;
• a $35,000,000 investment in methane
reduction programs for oil and gas operators
by the Alberta government;73
• $65,000,000 in delayed payments by
industry to the Orphan Well Association,
for well cleanup in 2020;74

66

Riley, Sharon. (2021, March 9). Alberta covered $20 million in unpaid land rent for oil and gas operators in 2020. The Narwhal.

67

Seskus, Tony. (2020, January 21). Cash-strapped rural Alberta ‘can’t wring money’ from struggling oil and gas firms, premier says.
CBC News.

68

Government of Canada. (n.d.). A Healthy Environment and a Healthy Economy. Last accessed May 25, 2021.

69

Geddes, A., Gerasimchuk, I., Viswanathan, B., Suharsano, A., Corkal, V., Mostafa, M., Roth, J., Picciariello, A., Tucker, B., Doukas, A.,
& Gençsü, I. (2020, November). Doubling back and doubling down: G20 scorecard on fossil fuel funding. International Institute for
Sustainable Development.

70

Corkal, Vanessa. (2021, February). Federal Fossil Fuel Subsidies in Canada. International Institute for Sustainable Development.

71

Prime Minister of Canada. (2020, April 17). Prime Minister announces new support to protect Canadian jobs [News release].

72

Rural Municipalities of Alberta. (2021, February 18). Rural municipalities continue to struggle as unpaid tax amounts owed by oil
and gas companies increase. [News release].

73

Government of Alberta. (n.d.). Reducing methane emissions. Accessed on May 26, 2020.

74

Riley, Sharon. (2020, May 13). Alberta delays $65 million in oil and gas company payments for orphan well clean up. The Narwhal.

June 2021

25

• $20,000,000 in surface rights
compensation for landowners hosting oil
and gas development, paid by the Alberta
government on behalf of oil and gas
companies.75
For a total of $1,565,000,000 in subsidies.

OIL AND GAS WELL CLEANUP SUBSIDY
TOTALS IN 2020

For taxpayers outside of Alberta, their
payments were a more modest $44 each78—
but they didn’t have to absorb the additional
indignities of the provincial government
slashing health care and education budgets,
service cuts in their municipalities due to
unpaid taxes, unsellable land due to abandoned
wells, or the negative health effects of aging
and leaking wells around their family homes.

Municipal
$245,000,000

DAILY PUBLIC SUBSIDIES FOR
OIL AND GAS COMPANIES IN 2020

Provincial
$120,000,000

The Public

Federal
$1,200,000,000
Total Subsidies
$1,565,000,000
When the polluter doesn’t pay, the public
does. And when we apply those costs to every
one of us, they add up. In 2020, the Canadian
public paid about $4.3 million a day, every day
for the cleanup of private companies’ oil and
gas wells.76
You read that right.
Put another way, each and every Albertan
taxpayer handed over $145 to the oil and gas
industry in 2020 to cover the cost of their
cleanup bill.77

$4.3M/day in public
subsidies for O&G well
cleanup in 2020

Alberta’s situation is in some ways uniquely
dysfunctional—a combination of a permissive
government, a captured regulator and weak
enforcement of the rules that are in place.
But the situation is not inevitable, and can
still be turned around. We have the power
to enforce Polluter Pay, hold the industry
to account, and unlock a quarter-century
reclamation boom in the process.
So let’s reimagine Alberta’s future and
start the work of building it.

75

Riley, Sharon. (2021, March 9). Alberta covered $20 million in unpaid land rent for oil and gas operators in 2020. The Narwhal.

76

$1.565 billion / 365 days = $4.27 million per day.

77

There are 30,754,887 adults 18+ in Canada, which we used as a proxy for taxpayers. 3,445,146 (11.2%) live in Alberta, 27,309,741
(88.8%) outside. Alberta’s provincial + municipal subsidies divided by every Albertan taxpayer = $106 + Alberta’s 11.2% portion of
federal government subsidies divided by every Albertan taxpayer = $39 for a total of $145.

78

We assigned each non-Albertan adult Canadians their portion of the 88.8% of $1.2 billion in Federal subsidies, leading to a
calculation of $44/per person.

26

The Big Cleanup

PART THREE

A RECLAMATION BOOM
IN ALBERTA—HOW TO
MAKE IT HAPPEN
RECOMMENDATIONS FOR
A CLEAN, FAIR FUTURE
There is no question that
the Polluter Pay principle in
Alberta has been weakened
through decades of giveaways,
deregulation and weak
enforcement. But it doesn’t
have to be this way.
Strengthening, funding and enforcing the
Polluter Pay principle isn’t complicated.
There’s a range of ways politicians, regulators
and even landowners can make it happen,
and help spur an industry-funded reclamation
boom in Alberta in the process.
We’ve divided our recommendations into
three areas: getting real about the cost of
cleanup, funding the cleanup, and enforcing
the cleanup.

A. GET REAL ABOUT THE
COST OF CLEANUP—AND
WHO MADE THE MESS
For years the oil and gas industry has used
lowball estimates and accounting tricks to

mask and minimize their real cleanup debt,
while profiting from Alberta’s resource riches.
To get real about the costs of cleanup—and
who made the mess—we need to:

1.

Adopt independent and transparent
estimates of well cleanup costs

We can’t solve a problem we can’t see. For
too many years, the real cost of cleaning up
Alberta’s over 300,000 unreclaimed oil and gas
wells has been minimized and obfuscated by
both industry and regulators.
We need the regulator to provide full and
accurate estimates of the scale and cost of
the cleanup required. And that starts with
independent and transparent cleanup estimates,
updated, and shared with the public every year.
We know the Alberta Energy Regulator has
the data and methodology to apply accurate
cleanup costs to every well in Alberta—because
we used them for the estimates in this report.
The AER should release detailed, independent
estimates for the plugging, remediation, and
reclamation of every well in Alberta. Cleanup
estimates for each wellsite are a key part of
a company’s Abandonment and Reclamation
Obligations. They establish the true cost to
responsibly sunset their operations and are
recorded as liabilities on their balance sheet.
And here’s the rub—because the calculation of

June 2021

27

liabilities are such a key part of how the AER
measures a company’s health, when cleanup
costs are inaccurate, we can’t get a true picture
of a company’s solvency.

2.

Reform industry accounting

Once we have accurate cleanup costs, the
industry needs to use them. In Alberta, we
need the AER to help hold the oil and gas
industry fiscally accountable to their real and
growing liabilities. Once the AER has posted
independent well cleanup estimates (see
recommendation #1), they should require
industry to use or disprove them. Currently,
firms are allowed to keep the details of their
estimates secret since they are considered
sensitive internal information. This is wrong—
they should be disclosed in full detail.
Oil and gas companies should have to publicly
report their full, undiscounted cleanup
liabilities and explain any large variances from
the regulator’s estimates. Shining a light on
liabilities and compelling companies to justify
questionable estimates will ensure the public
and investors can accurately gauge the health
of these companies—and how close their wells
are to their economic limit, the point when
the value of the oil or gas left in the ground
beneath the well is equal to the cost
of cleaning it up.

3.

Start tracking polluters

Stories like that of well #0776062502000 on
Regan Boychuk’s family’s farm provide a good
picture of the millions of dollars in revenues
that companies extract from a single well when
the oil and gas is flowing. Alberta regulators
don’t keep a public register of the different
owners of a well over time. So if we don’t know
who owned the well when it was profitable, we
won’t be able to make them pay for the mess
left behind when it’s not.
We need the AER to create a public ‘licensee
registry’ for every well in Alberta, so that

28

The Big Cleanup

cleanup costs can be traced back and equitably
distributed amongst the companies that
profited from it; more on that below.

B. FUND THE CLEANUP
Once we get real about the full extent of
the cleanup bill and which companies are
responsible for it, we need to make sure the oil
and gas industry funds the work ahead.
These recommendations are a mix of ways to
make sure industry doesn’t walk away from their
cleanup bill, and leave the public with the tab.

4.

Stop paying polluters

We can’t get polluters to pay for cleanup when
we’re paying them to pollute. Despite their
wealth, oil and gas companies have benefitted
from a huge range of public subsidies for
decades that artificially lower the cost of doing
business and inflate corporate profits.
In this report, we’ve shown how Alberta’s oil
and gas industry received $1.56 billion in public
subsidies for the cleanup of their oil and gas
wells. The public needs to stop paying the
industry’s cleanup bills. And governments need
to stop undermining our polluter pay laws,
and put an end their handouts to industry with
public funds.

5.

Collect cleanup costs before
companies become insolvent

Under the Alberta Energy Regulator’s liability
management rating (LMR) program, the
regulator doesn’t require any bonds before
drilling an oil or gas well, and only tries
collecting a cleanup deposit from a company
after it becomes insolvent. That’s way too late.

For active wells, cleanup security should be
collected during the course of its productive
life—it’s just common sense. Economic limit79 is
an easy way to map the well’s cleanup cost to
its remaining production value. When a well has
only double its economic limit (2EL) remaining
in oil or gas output, then the AER should
begin collecting the well’s cleanup security
from the owner.80 By the time the well hits its
economic limit, at 1EL, full funds for plugging,
remediation, reclamation, and monitoring
should be collected. And if companies can’t or
haven’t set the cleanup costs aside before their
wells reach their economic limit? We have a
proposal for them, too.

6.

Create a Reclamation Trust to
responsibly wind down failing
companies and fund the cleanup
of their wells

We know from the AER’s own data that 49%
of their oil and gas licensees are already
insolvent, with an LLR rating below 1.0 (see
table in Part 2).81 If these companies can’t
afford to put up the cleanup costs for their
wells before they reach their economic limit,
we need another way to uphold the Polluter
Pay principle.
We need to create a Reclamation Trust in
Alberta: an independent, non-profit body that
can take over end-of-life companies and use
their remaining revenue to fund the cleanup of
their wells.

How would it work? For example, Calgarybased Trident Exploration went bankrupt
in 2019 leaving perhaps an up to $1 billion
unfunded cleanup liability, after being
foreclosed on by ATB Financial. In addition to a
massive cleanup debt, Trident left behind more
than 4,000 wells that will require cleanup and
reclamation.82
A Reclamation Trust would make lemonade
out of lemons like Trident.83
Typically, Trident’s wells would be sold off or
given away for the benefit of the company’s
creditors. But rather than fire-selling the
assets, a Reclamation Trust would instead
step in and operate Trident’s >10,000 barrel/
day of oil equivalent production, and use that
approximately $100,000/day in revenue to
pay landowners, royalties, and taxes—with the
remainder creating good jobs in cleaning up
Trident’s end-of-life wells.
A Reclamation Trust helps answer the
question: If so much of the drilling industry
is insolvent, how can it fund its own cleanup?
The truth is, many failing companies are like
Trident: insolvent on paper, but still pumping
thousands of barrels of revenue every day.
Companies like Trident need to be taken into
a form of conservatorship before it’s too late.
The Reclamation Trust would wind down their
operations in the public good. Wells would be
retained and operated to pay for cleanup, and
holding licenses, surface and mineral rights
would further enable the Trust to fund ongoing

79

Every well has a “best-before” date—the point when the value of the oil or gas left in the ground beneath the well is equal to the
cost of cleaning up the well. In industry terms, this is known as the well’s economic limit. Economic Limit is the point at which a
private liability becomes a public liability.

80

The solution we’re proposing was the basis of an effective regulatory program introduced in 2000, and in place until industry
lobbying had it cancelled and replaced with today’s LLR, which measures the economic health of companies, rather than their
wells. Alberta Energy and Utilities Board. (2000, October 24). Replacement of the Long-Term Inactive Well Program with the
monthly corporate licensee liability rating. Informational Letter 2000-4.

81

Alberta Energy Regulator. (2021, June 5). Liability Management Rating (LMR) Results Report #44024.

82

Boychuk, Regan. (2019, May 2). Kenney already facing Alberta’s reckoning over mismanaged oilfield cleanup. National Observer.
NOTE: Contemporary Trident daily production volume and estimated liability data were provided by CanOils.

83

The main inheritor of Trident wells was Ember Resources, which has gone to great lengths trying to shortchange landowners:
Morgan, Geoffrey. (2021, June 9). Oil is at $70—pay your bills: Farmers fume as frustration mounts over oil companies’ unpaid
leases and rural taxes. Financial Post.

June 2021

29

reclamation work. In managing an inventory
of liabilities, the Trust could carry out cleanup
work efficiently, organizing it by region and
utilizing economies of scale.
And because the Reclamation Trust would be a
non-profit entity, profits from its wells wouldn’t
flow to executives or shareholders, but generate
good-quality reclamation jobs for Albertans, pay
surface compensation to landowners, and taxes
and royalties to the government.
The creation of a Reclamation Trust isn’t
a catch-all solution. As we described in
Part 2, only some of Alberta’s oil and gas wells
are still pumping enough to potentially fund
cleanup through the Trust model, but there is a
massive opportunity in taking them over now,
once as a company demonstrates it can’t pay
for well cleanup.
For wells that are orphaned and have no
company which can be held liable for their
cleanup costs, we’ll need another solution.

7.

Require the Orphan Well Association
to collect their full industry levy

The Orphan Well Association (OWA) is
designed to be industry-funded, and by law it is
required to collect sufficient levy (or fees) from
industry to fund the cleanup of all the orphan
infrastructure in its inventory each year.84
If the OWA applied accurate cleanup costs
to its inventory, and collected the full annual
levy from industry, it would never have any
unfunded inventory or any need to borrow
from the public—and it would create thousands
of jobs in the process.
Instead, the OWA collects only a small
percentage of the funds required for the full
cleanup of their growing inventory. In response,

provincial and federal governments have lent
$535,000,000 to the Orphan Well Association
since 2017 to help close the gap.85
Instead of needlessly subsidizing industry with
public dollars, let’s enforce the Oil and Gas
Conservation Act to make sure the OWA is fully
funded by polluters every year—and that every
cent of public loans to the OWA are repaid.

8.

Introduce an industry-wide levy to
recoup public investments in cleanup

Grants. Loans. Tax breaks. Payments to
landowners. Methane reduction supports. The
list of public subsidies to oil and gas companies
for the cleanup of their wells goes on and on.
Will the public ever get paid back?
Australia has modeled a simple solution
for recouping public investments in private
infrastructure cleanup: earlier this year, the
Australian government hit oil producers with
a $200 million dollar levy to cover the cost of
removing facilities and cleaning an oil field off
northwest Australia, after the small company
that owned the project collapsed.86
Governments here could use a similar model
to recoup public investments in cleanup that
are not covered by the solutions outlined
above: we can simply send the entire industry
the bill. All it takes is political will.

C. ENFORCE THE CLEANUP
Once we have real cleanup costs, and find the
cash to pay the cleanup bill, system change is
needed to enforce the Polluter Pays principle.
Our governments must take a hard look at
our banking, regulatory, and public disclosure
systems and close the loopholes through which

84

Sections 73(2) & 70(1) of the Oil and Gas Conservation Act.

85

Bankes, N., Fluker, S., Olszynski, M., & Yewchuk, D. (2020, April 24). Governance and accountability: Preconditions for committing
public funds to orphan wells and facilities and inactive wells. Ablawg.

86

Paul, Sonali. (2021, May 11). Australia hits oil producers with levy to decommission abandoned Timor Sea field. Reuters.

30

The Big Cleanup

industry has dashed, leaving a mess in their
wake. We need effective monitoring by the
regulator and significant enforcement penalties
through the courts.

9.

Stop the fraudulent transfer and
dumping of oil and gas wells87

Tens of thousands of aging and idle wells have
been sold by big producers to small operators
as a way of offloading cleanup liabilities from
their balance sheets, in what the Globe and
Mail deemed a “hustle in the oilpatch” in their
bombshell 2018 report on the practice. The full
impact of the “hustle” becomes obvious when
the small operators go belly up (see sidebar on
Perpetual Energy on page 24), leaving a huge
legal, economic and cleanup mess behind.
According to the Bankruptcy and Insolvency
Act, dumping assets remains legal because
the court’s test of a company’s solvency
currently excludes oilfield cleanup costs.
This has to change to stop companies from
restructuring to keep still-profitable wells
while downloading cleanup liabilities on small
companies for as little as $1. Thankfully, the
necessary changes were recommended by the
Uniform Law Conference of Canada in 2012 and
endorsed by the Alberta Law Reform Institute
in 2016.88
But until the Bankruptcy and Insolvency Act
is updated to close this loophole, the dumping
will continue.

10.

Use lookback powers to assign cleanup
liabilities to previous
well owners

Another way to get around the practice of
dumping wells is to use lookback powers to
assign cleanup liabilities retroactively.
Tracking previous owners, like a proper
regulator would do, would identify polluters to
pay and help distribute eventual cleanup costs
equitably amongst previous beneficiaries. It
would also take the point and power out of
dumping wells, and push the cleanup costs
back uphill to where they belong, to profitable
companies that dashed on their bills.
Regulators have the authority to issue
environmental protection orders directing well
operators to perform any work necessary for
reclamation, even if a reclamation certificate has
already been issued. But because our regulator
regularly waits until it is too late and an operator
is insolvent, it needs to establish its power
to enforce orders against failed companies.
Regulators launched the Northern Badger case
as a test whether regulators have a “superpriority” in bankruptcy to step in front of secured
creditors and were successful.89 Unfortunately,
before Alberta’s Chief Justice delivered the
unanimous Appeal Court decision in Northern
Badger, the regulator had shifted course,
ensuring it would not look back to previous
owners.90 That fateful promise not to make
polluters pay remains in place today.91

87

Adkisson, Jay. (2019, July 8). Fraudulent transfers and the Statute of 13 Elizabeth translated to contemporary legal english. Forbes;
Comerford, M. E., & Delano, C.C. (2014, February 12). Tronox v. Kerr-McGee: Game changing ruling on fraudulent transfer and spinoffs to shed legacy liabilities. Strafford; In economic terms, this problem is known as Judgment Proofing—see in particular Ringleb,
Al H. and Steven N. Wiggins. (1990, June). Liability and Large-Scale, Long-Term Hazards. Journal of Political Economy, 98(3): 57495; and Boomhower, Judson. (2019, February). Drilling Like There’s No Tomorrow: Bankruptcy, insurance, and environmental risk.
American Economic Review, 109(2): 391-426.

88

Uniform Law Conference of Canada. (2012). Uniform Reviewable Transactions Act, p. 11; Alberta Law Reform Institute. (2016,
March). Reviewable Transactions. Final Report #108, p. 47, para. 102.

89

PanAmericana de Bienes y Servicios v. Northern Badger Oil & Gas Limited, (1991 ABCA 181).

90

Nichol, John. (1991, April). Orphan wells: Who is responsible, for how long, and at what cost? Canadian Association of Drilling
Engineers/Canadian Association of Oilwell Drilling Contractors Spring Drilling Conference Paper 91-30.

91

“Even where other parties may fall within the relevant definitions of ‘operator’ and ‘person responsible’ in the reclamation and
release provisions of the EPEA, [regulators] will, generally speaking, pursue the last licensee only. ...this practice differs markedly
from the language of the current legislative schemes governing these two liabilities [remediation and reclamation] in Alberta.”
Vlavianos, Nickie. (2000, September). Liability for well abandonment, reclamation, release of substances and contaminated sites in
Alberta: Does the polluter or beneficiary pay? [Master’s thesis, University of Calgary Faculty of Law], p. 70.
Newton, Mike. (2018, August 15). What happens to chain of title during insolvencies? XI Technologies.

June 2021

31

The courts have been clear: regulators have
the power to make the polluter pay. Now the
AER needs to finally use it.

11.

Create a public list of tax strikers

By the end of 2020, oil and gas companies
had refused to pay over $245 million in taxes
to municipal governments across Alberta,
triggering layoffs, service cuts, and tax
increases for rural Albertans—but a shrug
from the provincial government.
We need to know who they are. Municipal
governments have lists of these tax striking
companies. Many still operate wells, pay
executives, and even receive public funds
through the billion-dollar federal grant for
idle oil and gas wells, among other subsidies.
Municipalities should be required to post a list
of oilpatch tax strikers in an accessible manner
to allow journalists to investigate and citizens
to apply pressure to them.
Currently, municipalities are required by law
to publicly post tax delinquents, but these are
listed by land location and hard to parse. To
find the owners, researchers must do a title
search to see the nature of the property and,
only then, can they see whether any oil or
gas company is involved. In other words, the
public data is posted according to the law, but
is so inaccessible that it’s hard to track down
the companies behind Alberta’s $245 million
dollar tax strike.

12.

Increase transparency and
public accountability at the
Orphan Well Association

We need a transparent, accountable
organization dedicated to orphan wells in
Alberta whose job is to protect the public
interest, not industry. Alberta’s secretive,

32

The Big Cleanup

industry-run Orphan Well Association
should be subject to Alberta’s Access to
Information laws, and needs to “open their
books” to the public. Another crucial reform
to the OWA would be to openly recruit public
representatives of communities affected by oil
and gas development to its Board, increasing
public accountability.

13.

Reform the AER

We need the Alberta Energy Regulator to
operate without fear of, or favour to, the
industry it oversees. A public inquiry can help
Albertans understand the role the regulator
has played in undermining the Polluter Pay
principle, and drive desperately needed reform.
In this report, we’ve already called on the AER
to transparently disclose their best internal
estimates for the projected costs of oil and gas
infrastructure cleanup—no one should have to
FOIP the regulator to get them, as we did.
They can also go much further in enforcing
the powers they do have, like ending the
automation of reclamation certification;
inspectors should be required to visit every site
they certify.
The AER could also do much more to draw
on legal precedents to flex their regulatory
muscle. Using lookback powers to assign
cleanup costs to previous well owners, detailed
above, is one idea. Another would be for
the AER to issue Environmental Protection
Orders against companies that are entering
receivership, allowing them to exercise the
regulators’ environmental “super-priority” to
fund cleanup ahead of the company’s debts.
The AER has much more power than it uses to
hold the oil and gas industry to account and
uphold the Polluter Pay principle. We need
them to use it.

A RECLAMATION BOOM
IN ALBERTA
We believe a better future for Alberta is not
just possible, but within our reach. Enforcing
Polluter Pay can spur a massive cleanup of oil
and gas wells that will help heal our land, air
and water—and create decades of good jobs
in the process.
An industry-funded cleanup of Alberta’s
300,000 unreclaimed oil and gas wells could
spark an annual economic boom of:
• 10,112 full-time jobs;
• $727,632,421 in employment income;
• $1.96 billion in contribution to Alberta’s
Gross Domestic Product (GDP);
… every year, for the next 25 years.
By getting real about the true cost of
cleanup, making sure industry follows the
law and pays that bill, we could kick off a
province-wide jobs boom totalling 252,803
job years, generating $18.2 billion in wages
(average salary = $72,000) and $48.97 billion
in GDP benefits.92
And these numbers are a conservative
calculation—using our medium-level estimate
of cleanup costs for each wellsite, and
conservative economic coefficients for the jobs,
wages, and GDP impact of the cleanup work.
And in reaching our totals, we only counted the
direct economic impact of the cleanup work
itself, and not all of the secondary industries
(restaurants, lodging etc.) that support it.
It’s also important to note that our numbers
don’t include the cleanup of Alberta’s
433,000+ kms of pipelines (there’s enough

pipeline in Alberta to reach from the earth to
the moon) and tens of thousands of facilities
supporting these wells. These are likely to
cost at least another $30 billion to clean up,
generating tens of thousands more jobs in the
process. And that’s before we turn our sights
to cleaning up the oilsands.
In short: over 10,000 quality jobs a year for
a quarter century is a floor, not a ceiling of
the economic and employment benefits of a
reclamation boom in Alberta.
Appendix B gives an overview of the many types
of workers that would benefit from this work.
It’s an exciting list: jobs that require little or no
retraining are awaiting thousands of energy
workers who have lost work in recent years.
Add in the economic and social benefits of
410,000+ hectares of newly-remediated land
opened up for farming, hunting, recreation
and redevelopment93—and you start to sense
the scale of benefits awaiting an Alberta that
can muster the political courage to enforce the
law and make the polluter pay.
The massive cleanup ahead is also a chance
to advance reconciliation with Indigenous
peoples, with opportunities at every stage for
community leadership, economic development
for Indigenous businesses and strengthening
restoration efforts with traditional knowledge.
The rollout of a province-wide oil and gas
well cleanup effort can unfold in a manner
that reaffirms the Treaty rights of First
Nations, answers the Truth and Reconciliation
Commission’s Calls to Action, and upholds the
United Nations Declaration on the Rights of
Indigeneous People (UNDRIP)—including free,

92

These estimates are based on our site-by-site detailed cleanup costs for the reclamation of the 282,877 oil and gas wellsites
(many with multiple wells) that were unreclaimed as of 2018. We used a 25-year theoretical reclamation period assuming the same
number of wells would be reclaimed every year from the inventory. Reclamation estimates assume a constant inflation adjusted
cost over the 25 year time period. We used land remediation sector coefficients, drawn from Statistics Canada for Alberta, and
applied these to our remediation costs estimates per well to generate our estimated impacts.

93

Because the information of land use by oil and gas wells is not transparent or publicly available, each wellsite was assumed to
average 1.45 hectares; total area of the 282,877 wellsites (2018 count - many with multiple wells) would be 410,173 hectares of total
landscape footprint and potential (an area ~72.5% of the land area of Prince Edward Island).

June 2021

33

prior and informed consent for any reclamation
activities taking place.
The cleanup is a massive opportunity to
incorporate Indigenous knowledge about
the land itself in the restoration process: in
what wellsites to prioritize for cleanup, the
surrounding areas that should not be disturbed
in the process and what restoring land to its
functional equivalent of its pre-drilling state—
the original promise of reclamation—means in
a local context. Both the Alberta94 and British
Columbia95 regulators have experimented with
collaboration with Indigneous communities
around reclamation work, and much more

can be done. This work has the added
benefit of creating quality jobs in Indigenous
communities, including targeting cleanup
contracts to Indigenous-owned companies.
The municipalities with the biggest oil and gas
well liabilities also have the most potential
benefit from an industry-funded cleanup—
tens of thousands of jobs generating billions of
dollars in employment income and activity in
their local economy. We list just the top twenty
here. You can find your municipality on the full
list posted on the Alberta Liabilities Disclosure
Project website.

TOP 20 MUNICIPALITIES’ MEDIUM-ESTIMATE
CLEANUP COSTS AND ASSOCIATED ECONOMIC BENEFITS
Average Total
Reclamation Spending

Estimated Wages Paid

Job Years Employment

Cypress County

$4,827,623,236

$ 1,597,943,291

22,207

M.D. of Greenview No. 16

$3,212,919,488

$ 1,063,476,351

14,779

Yellowhead County

$2,959,841,264

$ 979,707,458

13,615

County of Newell

$2,702,729,407

$ 894,603,434

12,433

Brazeau County

$2,221,198,745

$ 735,216,785

10,218

Clearwater County

$2,206,577,892

$ 730,377,282

10,150

Special Areas 2

$2,085,436,954

$ 690,279,632

9,593

County of Vermilion River

$1,668,842,381

$ 552,386,828

7,677

Mackenzie County

$1,259,753,878

$ 416,978,534

5,795

M.D. of Wainwright No. 61

$1,259,753,530

$ 416,978,418

5,795

County

M.D. of Provost No. 52

$1,195,419,814

$ 395,683,958

5,499

Saddle Hills County

$1,062,047,636

$ 351,537,768

4,885

Wheatland County

$1,014,126,751

$ 335,675,954

4,665

Big Lakes County

$979,099,253

$ 324,081,853

4,504

Lacombe County

$900,042,076

$ 297,913,927

4,140

Leduc County

$883,602,973

$ 292,472,584

4,065

County of Grande Prairie No. 1

$880,298,996

$ 291,378,968

4,049

Red Deer County

$857,628,967

$ 283,875,188

3,945

Flagstaff County

$846,085,612

$ 280,054,338

3,892

Special Areas 4

$845,148,320

$ 279,744,094

3,888

94

Alberta Energy Regulator. (2019, May 23). Wihtamâtotan – Telling Each Other: Indigenous Knowledge Remediation, Reclamation
and the AER: A Project with the Woodland Cree First Nation.

95

BC Oil & Gas Commission. (2019, May 31). The BC Oil and Gas Commission and Saulteau First Nations announced today that they
are working together to advance several new land restoration initiatives in northeast British Columbia. [New release].

34

The Big Cleanup

The opportunity is clear: we can defuse the
ticking time bomb of oil and gas liabilities with
twenty-five years of good jobs for oil and gas
workers. It’s work that will heal and restore
Alberta’s land, air and water.

But only if Albertans and Candians can muster
the political courage to make the polluters
pay. Most of what we have to do is enforce our
existing laws and develop the mechanisms to
activate them.

AN ALTERNATIVE ENDING FOR REGAN’S FAMILY WELL
Let’s imagine how the story of oil well
#0776062502000 could play out differently,
in a province governed by Polluter Pay:
Shortly after the oil well was drilled near
Rycroft in 1986, two independent assessors
came to estimate cleanup costs at the end of
its life cycle.
The detailed cleanup estimates, based on
the well type, geographic area, drilling depth
and soil type, averaged $306,107. Everyone
involved knew that unless the company set
aside that amount either in advance of drilling,
or in portions year-by-year while the well was
producing, the day when there was $306,107
in profit left in the well would be circled on
the calendar. That was the well’s “best-before
date”—its economic limit—and ownership of
the well and its future profits would be held as
the collateral on that $306,107 bill.
Over the years of active drilling, the company
didn’t set aside that $306,107 for cleanup. So
as the well’s economic limit approached, the
lien was called in and the company and the
independent Reclamation Trust prepared for
the transfer of ownership.
Alberta’s Reclamation Trust took over
ownership and operation of the well on the
day it reached its economic limit in 2012.
For Regan’s family, nothing was different
about how the well was running day-to-day—
it was still being maintained, pumping oil, and
paying compensation to landowners and to
all Albertans in royalties and taxes.
But the change of ownership also meant a
change in priority for the well.

Instead of the well’s remaining profits going to
executives and shareholders, the Reclamation
Trust was setting aside that money for the
well’s upcoming abandonment, reclamation
and remediation—work that was getting closer
every day as the oil began to run dry.
The week after the well stopped producing in
2016, the cleanup began. And because the cost
of that $306,107 liability had been set aside
in advance, that liability quickly turned into a
positive economic generator—good jobs for the
dozens of workers and specialists involved in
every stage of the cleanup, who then had more
money to spend to support their families and
contribute to Alberta’s economy.
Because the land was carefully restored to
the same state of ecological health it
had been in before the well was drilled,
the air around it was clean
with no methane leaks, the soil
decontaminated and the water
around it ran clean. After three
decades, a few-acre shadow was
lifted from Regan’s family’s farm.
Instead of being left with a
multi-billion dollar environmental
disaster, Alberta was in a massive
reclamation boom—and would
continue to be for years. By
strengthening and enforcing its
regulations and bankruptcy law, our
province-wide well cleanup became
the jumping-off point for our next
energy economy—an economic
future beyond oil and gas.

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CONCLUSION
As researchers, scientists, academics and
industry veterans, we’ve spent years working
to untangle the challenges of Alberta’s unpaid
oil and gas well cleanup. In the process, the
solutions have become clear to us too.
We wrote this report in an effort to make
both the problems and solutions to this crisis
accessible to the public and all the public
servants, political leaders, and activists
working to address it.
We believe the situation we are in—a
$40-70 billion dollar cleanup liability and an
industry pleading poverty in the face of it—is
outrageous. And we think Albertans should
be outraged, too.
The power of the Polluter Pay principle as a
solution to this mess lies in its simplicity: by
law, the polluter must pay for the cleanup
of their infrastructure. Any solution to the
oil and gas well crisis that isn’t based on this
principle—whether billion-dollar grants of
public funds to industry, updates to the AER’s
broken liability management system that don’t
start with accurate cleanup costs, or vague
reforms to clean up standards without teeth for
enforcement—are a distraction from the real
work ahead: holding the industry to account.
We hope readers of this report will raise two
important questions every time a new policy or
regulatory solution to the oil and gas well crisis
is proposed: first, how does it make polluters
pay? And second: how will it be enforced?
The challenges presented in this report
are significant—the true cost of cleanup,
the drilling industry’s growing insolvency,
the paucity of wells still generating revenues—
can feel overwhelming. But there is still
plenty of money coming out of the ground
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36

in Alberta, and it’s not too late to hold the
industry to its debts.
Enforcing the Polluter Pay principle can
create hundreds of thousands of quality jobs
in Alberta, generating billions in wages and
GDP, and liberating hundreds of thousands
of hectares of land for other use. And we
can do so while advancing reconciliation
with Indigenous peoples through informed
participation respecting Treaty rights and
implementing the Truth and Reconciliation
Calls to Action and UNDRIP.
We believe this better future is possible.
We’re calling on Albertans to take control of
our relationship with the oil and gas industry,
enforce the Polluter Pay principle—and unlock
a quarter-century of good jobs in the process.
Let’s get to work.

“Life is not only human life, but the life of
the forest, the trees, the elements of nature,
and so on. The elders were saying that unless
modern society is in tune with those things,
it will continue to destroy, pollute, and make
bigger machines and greater weapons that
eventually will destroy the planet Earth.
The elders believe we must teach all of
our brothers and sisters that life is sacred
and very valuable and was created for a
purpose. Everything is interrelated, and we
must live in harmony in the renewal process
of the seasons.
The fundamental basis of our
teachings is to respect the Great Spirit’s
creation—Mother Earth and her
inhabitants—and to remember them in our
prayers and our ceremonies.”96
The late Reverend, Dr & Chief John Snow Sr.
Author, These Mountains Are Our Sacred Places,
Stoney Tribe

Snow, Chief John. (2005). These Mountains Are Our Sacred Places: The Story of the Stoney People (p. 239). Markham: Fifth House.

The Big Cleanup

PART FOUR

APPENDICES
APPENDIX A: HOW WE ARRIVED AT A
$40-70 BILLION DOLLAR CLEANUP BILL
Our $40-70 billion cost estimate for the cleanup of Alberta’s over
300,000 unreclaimed wells is 2-3.5 times higher than the costs
estimates the Alberta Energy Regulator shares publicly.
In 2019, AER’s Vice-President of Closure and Liability, Robert Wadsworth made a startling
presentation, pegging the cost to clean up Alberta’s entire oil and gas industry—wells, pipelines,
oilsands mines and tailings ponds—at $260 billion++. It made headlines and the regulator quickly
backtracked, issuing a press release that said “using these estimates was an error in judgement and
one we deeply regret.”97
As researchers, we were interested in how Alberta’s industry-funded regulator arrived at the $260
billion++ number. So we filed a Freedom of Information request for the methodology behind the
presentation. To our surprise, they released impressively detailed estimations of oil and gas wellsite
reclamation costs.
In their internal study, the AER had organized every wellsite in Alberta into 128 different categories
based on the relevant well and site characteristics. They then solicited detailed cleanup cost
estimates from four experienced private sector service companies active in Alberta, and applied
them to each wellsite type.
But the AER did not finish their work—all those detailed estimates were never properly applied to
all the different kinds of wells in Alberta.
We were intrigued by the prospect of a true well-by-well cleanup estimate, so we decided to finish
the work.

97

Alberta Energy Regulator. (2018, November 1). Statement from the Alberta Energy Regulator. [News release].

June 2021

37

In 2019, we completed the project the AER had abandoned. We applied the AER’s data and
methodology to create site-tailored high and low estimates for the plugging, remediation, and
reclamation of every unreclaimed wellsite in Alberta, and compared them with the AER’s public
estimates. That gave us three estimates each for almost 300,000 oil and gas wells, resulting in
approximately one million data points.
Using the AER’s methodology, our data set shows that we are facing a $40-70 billion cleanup bill
on oil and gas wells alone.98
Next, we partnered with ALCES’ industry-leading modelling and simulation software to map the
data geographically to each wellsite, using their data to add in:
• each well’s location, soil type, depth and proximity to watersheds;
• each well’s current operator;
• an outline of each well’s production history.
Since then, we’ve added new layers of data to the research, including organizing our cleanup
estimates by municipal and reserve jurisdictions so we know the level of liabilities within every
county, riding, or reserve.

DETAILS OF OUR DATA SET

Year Drilled

Well ID

Geographic Location

Well Depth

Operating History

Annual Output

Soil Type
Projections Of Profits
and Royalties Paid
Proximity To Watersheds

License Granted To

Low, Medium, and High
Cleanup Estimates

We believe the ALDP estimates are close to a global gold standard for detail and comprehensiveness
of well cleanup costs. We’re committed to utilizing this data in the public interest and offering it
to landowners, municipalities, First Nations and journalists. For more information, contact us at
aldpcoalition@gmail.com.

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38

Alberta Liabilities Disclosure Project. (2019, July). Description of ALDP’s Methodology for Completing the Alberta Energy
Regulator’s Internal Study of Oil and Gas Well Reclamation Costs.

The Big Cleanup

APPENDIX B: JOBS INVOLVED IN A RECLAMATION BOOM
JOBS DIRECTLY INVOLVED IN WELL ABANDONMENT, REMEDIATION AND RECLAMATION
Job title
(Alphabetized)

Agrologists

Assessment
Stage 1 &
Stage 2

Plugging
Sealing well &
tidying site

ü

Drilling and service rig managers

Remediation
Spills & leaks
remedied

Reclamation
Returning land
to near original
state

ü

ü

ü

Environmental advisors and assessors

ü

ü

ü

Environmental geophysicists

ü

ü

ü

Environmental engineers

ü

ü

ü

Hazardous waste management technologists
Health and safety personnel

ü
ü

ü

Heavy equipment operators

ü

ü

ü

ü
ü

Hydrologists

ü

ü

Laboratory technicians

ü

ü

Oil and gas well loggers and testers

ü

Oil and gas transportation services occupations
Project managers

ü

Qualified wetland science practitioner

ü

ü

Remediation and reclamation specialists
Regulatory specialists

ü

Service rig personnel
Site audit and reclamation advisors
Snubbing services operators and supervisors

ü

ü

ü

ü

ü

ü

ü

ü

ü

ü

ü

ü
ü

ü
ü

Soil scientists

ü

ü

Tree planters

ü

Truck drivers

ü

Valve technicians

ü

Well service equipment operators

ü

Well testing services supervisors

ü

Wireline operators

ü

ü

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