Alberta auditor general says province needs to change how it manages oilpatch liabilities

Alberta's system for managing environmental risks from old oilpatch facilities still hasn't spelled out how it will collect security to ensure cleanups and doesn't do enough to check that the work gets done, the province's auditor general said Thursday.

"We conclude that [the Alberta Energy Regulator] had liability management processes in place during the audit period, but not all those processes were well designed and effectively mitigating risks associated with closure of oil and gas infrastructure," said Doug Wylie's report.

The report acknowledges that the United Conservative Party government has failed to come to grips with Alberta's increasingly pressing problem of what to do with the thousands of abandoned and inactive wells and kilometres of pipeline that remain on the landscape, said University of Calgary resource law professor Martin Olszynski.

"There are obvious things that can be done and they refuse to do those things," he said.

Wylie acknowledged the regulator is reforming how it evaluates and ensures the cleanup of old energy sites.

However, he said that program has yet to deal with two major issues — the so-called "legacy sites" that have been abandoned and inadequate security collected to ensure the number of such sites doesn't increase. Wylie said current programs that mandate spending on well closures may not be getting at the problem sites.

"Licensees have focused more on low-risk and lower-cost sites," Wylie wrote.

He noted that 74 per cent of reclamation certificates have been issued for sites that were never brought into production.

Wylie said the regulator should develop and release targets to ensure the public can gauge whether enough old sites are being cleaned up.

He also pointed out that Alberta still lacks timelines for operators to remediate their sites. The report contains a graph showing an increase in the number of inactive wells in the province every year since 2000 — save for 2021, when the federal government provided $1 billion for cleanup.

The report emphasizes that, despite some reforms, important questions remain on how Alberta collects security from energy companies.

"We recommend that the Alberta Energy Regulator determine how much security needs to be collected, when it will be collected, and how collection will get enforced," it says.

The government has had three years since it began its reforms to answer those questions, said Olszynski.

"They refuse to do anything that might cost the industry money."