Alberta Energy Regulator underestimated oil well liability, internal documents show

Internal documents from Alberta's energy regulator suggest the province's environmental liability for oil and gas wells could be nearly triple earlier amounts. 

Internal documents from Alberta’s energy regulator suggest the province’s environmental liability for hundreds of thousands of oil and gas wells could be nearly triple the figure the agency announced earlier this week.

In a report released Wednesday, the Alberta Energy Regulator said the cost of cleaning up the province’s 466,000 wells would be $33.3 billion. That figure is derived partly from estimates of what it would cost to remediate individual wells in different areas of the province, contained in a 2015 document called Directive 11.

But in 2018, the agency produced discussion papers on something called the Closure Liability Assessment Model, designed to create “greater understanding and transparency of liabilities,” one of the papers indicates.

Those documents were obtained under Freedom of Information legislation by University of Calgary researcher Drew Yewchuk and provided to The Canadian Press. They provide a different estimate of the costs faced by industry and, potentially, Alberta taxpayers.

For almost every region of the province, the documents suggest Directive 11’s estimates of what it would cost to clean up a well are too low.

The documents suggest that for the boreal region, Directive 11’s estimates are 65 per cent too low. In the parkland, they’re 173 per cent short. Costs for the foothills region were underestimated by 334 per cent, and the figure for the alpine was 675 per cent shy.

In total, the documents suggest the liability estimates derived from Directive 11 that inform Wednesday’s report were low by 263 per cent.

The documents suggest the total cost of well cleanup to be about $88 billion.