OTTAWA: The oil industry in Canada’s resource-rich Alberta will be on the hook for a C$235 million ($172.7 million) government loan to clean up a rising number of oil wells abandoned by owners who have gone bankrupt, the province said on Thursday. The loan, repayable over 10 years, will go to the government-run, industry-funded Orphan Well Association (OWA), which cleans up wells for which no party is legally responsible, Alberta Premier Rachel Notley said at a news conference. The number of so-called orphan wells in Canada spiked after the 2014 oil price crash as layoffs swept the oil patch and companies went bankrupt. Alberta, which produces about 80 percent of Canada’s crude, had more than 1,500 orphan wells in February, up from 26 in 2012. The loan is lower than the C$500 million an industry group asked for in 2016.
The OWA will double indefinitely its levies charged to all petroleum producers to a total of C$60 million a year, starting in 2019, Notley said. That, however, could be adjusted in the future based on how many orphan wells are left, said Brad Herald, OWA chairman and vice president of western Canadian operations for the Canadian Association of Petroleum Producers industry lobby group. Notley said part of the loan, C$30 million, comes from the federal government, which in this year’s budget allocated C$30 million to Alberta to stimulate economic activity and employment in the resource sector. Cleaning up the wells will create 1,650 jobs over three years, she said.
