By Carl Meyer, Local Journalism Initiative Reporter, National Observer
British Columbia recorded a liability of over half a billion dollars for the estimated cost of cleaning up contaminated sites in the province, including orphan oil and gas wells.
The $505-million liability for fiscal year 2020 was revealed in the province’s summary financial statements. It was highlighted by B.C. auditor general Michael Pickup in his March 2 report on financial audit work.
Contaminated sites, anything from abandoned industrial sites to pulp mills or maintenance yards, are where the concentration of toxic chemicals or other material in the soil or water go beyond allowable levels. They can be dangerous for human health and environmentally damaging.
One form of contaminated sites are orphan oil and gas wells, which are no longer in use and need to be cleaned up, but have no owners to pick up the tab since they have gone bankrupt or have disappeared. The issue has become a major problem in Western Canada, with billions of dollars in liabilities.
B.C.’s financial statements show that most of its estimated $505-million liability is connected to mine sites, Pickup’s report pointed out. Mine sites account for $315 million worth, or 62 per cent, followed by transportation infrastructure at $38 million, or eight per cent.
The BC Oil and Gas Commission, which manages the province’s Orphan Site Reclamation Fund, has reported an $81-million estimate for orphan site liability in its own financial statements, the auditor general noted — although it also said it could go as high as $116 million.
“It is important to realize that this figure is an estimate. While it is based on standard estimation processes and the best information available at the time, there is uncertainty in the figure because each site is unique, and both environmental standards and remediation costs may change in the future,” reads Pickup’s report.
The federal government has handed the province $120 million to clean up inactive oil and gas wells, part of a $1.7-billion promise to help western provinces clean up thousands of wells that Prime Minister Justin Trudeau made in April 2020.
Meanwhile, B.C. opened a new round of applications last month for a $100-million fund for dormant oil and gas wells. The province has over 8,500 dormant wells, according to The Canadian Press. B.C. has also committed $15 million for 770 orphan wells.