Fears grow in Alberta as orphan well crisis could leave taxpayers on hook for cleanup

A pumpjack draws out oil and gas from a well head near Calgary, Alta. THE CANADIAN PRESS/Jeff McIntosh

Driving across her sprawling farmland near the hamlet of Shouldice, southeast of Calgary, Kelly Nelson points out active oil wells, aging infrastructure and one rusted site that has sat abandoned for nearly a decade.

Nelson explains the well no longer produces oil and the company that once operated it is gone. Yet the site has still not been formally designated an orphan well by Alberta’s Orphan Well Association.

“It is just a spot that nobody looks after,” Nelson said. “Nobody owns it. Nobody claims it.”

Nelson said she now plans to contact the Orphan Well Association in hopes the site can formally enter the orphan well system and eventually be cleaned up.

The site includes a rusting storage tank and inactive pipelines cutting through land Nelson still farms around.

“We’d like to be able to farm through it,” she said.

Nelson’s frustrations come as Alberta faces mounting concerns over its growing inventory of inactive, aging and orphan oil and gas infrastructure following the collapse of Calgary-based Long Run Exploration.

The Orphan Well Association announced in April it had taken over more than 4,000 inactive wells and related sites from Long Run after the company entered receivership last year. Before the transfer, the association already had roughly 4,200 orphan wells and sites in its inventory.

The surge has intensified debate over who will ultimately pay to clean up Alberta’s aging oil and gas infrastructure.

Alberta’s orphan well system

Alberta’s orphan well system is primarily funded through an annual industry levy collected by the Alberta Energy Regulator from oil and gas companies operating in the province. The money is transferred to the Orphan Well Association to help decommission and reclaim abandoned sites.

The Alberta Energy Regulator set the levy for the 2026-27 fiscal year at roughly $154.6 million, up from about $144.5 million the previous year.

At the same time, the regulator estimates Alberta’s total oil and gas cleanup liabilities — including active and inactive sites — reached $36.6 billion in 2024.

Shaun Fluker, a University of Calgary law professor specializing in natural resources law, said the province’s orphan well system was never designed to absorb this scale of liabilities.

“The intentions back in the day were that these would be exceptions to the norm and that industry would always be there to look after its sites and clean them up when their economic life had ended,” Fluker said.

Instead, he argues Alberta’s regulatory framework allowed inactive and marginally producing wells to accumulate for decades without adequate financial safeguards.

“It’s regulatory failures is how we ended up here,” he said.

Fluker said Alberta regulators historically failed to require sufficient security deposits from companies to guarantee future cleanup costs and never imposed firm timelines for decommissioning aging infrastructure.

“Because of those deficiencies, there was a huge buildup in inactive and marginally producing sites in Alberta,” he said.

“We’re talking hundreds of thousands of wells.”

He called the issue “potentially the most significant public policy crisis facing Alberta,” and has been calling for a public inquiry into the province’s growing inactive and orphan well inventory for years.

“I don’t see us finding a viable solution to this problem without a true and full public inquiry,” Fluker said.

‘They can pollute the land and make the soil toxic’

Under Alberta law, surface landowners generally cannot block oil and gas development because subsurface mineral rights belong to the Crown and are leased to companies.

“When an oil company comes and says we’re drilling a well here, they get to drill that well there,” Nelson said. “We have no choice and we cannot say no.”

Nelson said many companies do eventually reclaim their sites responsibly.

“One company we have here capped their wells and they’re in the process of abandoning the pipelines and cleaning everything up,” she said. “Then you get other companies that don’t.”

She receives between $4,000 and $5,000 annually in lease payments tied to the wells on her land, but says the compensation does little to offset the long-term impact on the property.

“The province has definitely made it in favour of the oil companies,” Nelson said.

Phillip Meintzer with the Coalition for Responsible Energy has been travelling across Alberta hosting town halls to educate the public about the province’s growing inventory of inactive, aging and orphan oil and gas infrastructure.

He said many Albertans do not fully understand the potential environmental and financial risks tied to abandoned wells.

“They can leak, they can pollute the land and make the soil toxic,” Meintzer said.

“There’s also a huge health impact living next to these wells, especially if they’re venting.”

Meintzer said his organization fears Alberta’s proposed mature assets strategy could shift more cleanup responsibility away from industry and onto the public.

“All Albertans are at risk here because if those cleanup costs fall on the taxpayer, that’s public money,” he said. “That’s money that should be funding schools and hospitals.”

‘Where is it (the money) going to come from?’

Fluker noted public money has already entered the system.

He said the Orphan Well Association has received hundreds of millions of dollars in public funding over the past decade, while the federal government provided Alberta with roughly $1 billion during the COVID-19 pandemic to help address inactive wells.

“Even right there, we’re talking about $1.5 billion of public money that has already gone into this process,” Fluker said.

He also criticized the Alberta Energy Regulator for failing to more closely scrutinize transfers of aging assets between companies.

“How did these companies get to this size, with this many assets and have no money?” Fluker said of Long Run.

“That is unfathomable to me. The whole point of a regulatory system is to prevent that from happening.”

In a statement to CTV News Edmonton, Alberta’s Ministry of Energy and Minerals said the Orphan Well Association’s latest annual report shows “significant progress,” adding the levy system was designed to reduce liabilities steadily over time rather than eliminate all orphan wells at once.

“Cleaning up inactive oil and gas wells is a challenge facing all oil-and-gas-producing jurisdictions, not just Alberta,” the ministry said.

“This government is addressing this issue head-on, guided by the polluter-pays principle. No taxpayer dollars will be used to clean up private oil wells.”

Nelson remains skeptical taxpayers will avoid footing at least part of the bill.

“These companies have disappeared,” she said. “Where is it (the money) going to come from?”