Alberta urged to remove hurdles to turning dormant oil wells into 'major' opportunity

Thousands of dormantoil and gas sites inAlberta could be a "major" economic opportunity in the province, with the potential for many to be repurposed foralternative energy uses, according to a new report.

But it says for sucheffortsto take off potentially turningunused sites intogeothermal, hydrogen or lithium recovery projects the provincial governmentneeds to address the regulatory gaps holding thingsup.

The report,preparedby the Energy Futures Lab and the Canada West Foundation, calls onpolicymakers to take legislative action and urgesbetter co-ordination between regulators.

Participants from the oilpatch, new energy ventures, landowners,law firms and others contributed tothe report.

"There are entrepreneurs that are trying to reuse old oil and gas infrastructure for new purposes and what they're finding is that there are a number of roadblocks," said Julie Rohl of the Energy Futures Lab.

"One of them is just the quagmire of the regulatory environment and how these sites are managed and regulated by a number of different regulatory bodies."

Alberta had more than 2,600 orphan oil and gas sites as of April 1, facilitiesthat haven't been remediated by their often-bankrupt owners.There are nearlyof3,400orphan pipelines needing to decommissioned.

According to the new report, there are more than 95,000 inactive wells in Alberta.

Such wells can pose an "enormous public financial and environmental liability,"the report says. Last year, the federal government provided Alberta with$1 billion to help clean up the sites.

But the dormant infrastructurealso represents a variety opportunities,the report adds.

"Many although not all of these sites are good candidates for repurposing for other energy uses, including geothermal, micro-solar, hydrogen, recovery of lithium or other minerals, or carbon capture and storage," it says.

Finding new uses for old energy infrastructure, it says, will create jobs, help diversify the economy, create new economic opportunities for landowners and ease the taxpayer burden around site liability.

For instance, an old well site could be used for a solar project because itmay already have road access, lease, a gravelled surface andnearby power lines that it couldtie into.

"There's really an opportunity to try to move a problem forward before it grows any larger and at the same time stimulate other things that we want," said Marla Orenstein of the Canada West Foundation, a public policy think tank.

"The legislative changes that we're proposing really set out an opportunity the size of which is almost the same size as the number of inactive facilities that we have in the province."

That includes new opportunities foroil and gas workers, she said.

But the report saysmany innovativeprojects have died due toeither inflexible regulations that do not allow for site repurposing and/or difficulties in assigning financial liability.

Among the issues, it cites poor co-ordination across the regulators, particularly the Alberta Energy Regulator, Alberta Environment and Parks and the Alberta Utilities Commission.

In one case notedby the report, it took five years for a solar project to navigate all of the regulatory hoops before it could use legacy oil and gas infrastructureto help providepower for irrigation farming.

Co-ordination between regulators

The report saysregulators lack a clear mandate for the them to collaborate on such matters. There is a hesitancy by regulators to act when processes or policy guidance is not clear, it adds.

The authors suggest fixing this problem can largely be accomplished if the government directs regulators to collaborate and address the issueby applying existing legislation to new circumstances where interpretation allows.

The report recommends passage of alegislative "skinny bill," which states the governmentwill prefer natural resource development to occur on previously disturbed land.

"It clarifies the government's intention and directs action, but does not introduce additional regulations," it says.

The report also dives into more specific concerns, ranging from those oflandowners, those related to repurposingsurface and subsurface uses, plus the trickyissue of transferringliability from an existing licensee.

The report and its recommendations have been sent to the provincial government.

Province reviewing report

Alberta Energy Minister Sonya Savage said the department is reviewing the report and its recommendations.

"The government continues to work on a number of priorities raised in the report," Savage said in an emailed statement.

That includesmodernizing the oil and gas liability management framework, developing a geothermal policy frameworkand updating and modernizing the mineral tenure and regulatory frameworks, she said.

"We welcome further discussions on these important issues," Savagesaid.