The amount of improperly capped oil wells has grown to a meteoric number, with millions estimated globally and over 25,000 in just Alberta alone
As Canada struggles with even more abandoned wells caused by the recent plunge in crude prices, and as stories of major gas leaks in California sending people from their homes float the press, the economic and environmental costs associated with aging wells no longer producing is intensifying.
Summarized in a report approved by the National Petroleum Counsel, the economic effects of properly plugged wells can increase oil and gas production from a reservoir. As the environment is concerned, sufficiently plugged wells are less likely to contaminate water sources, preventing excess health costs and suppressed land values. However, plugging wells requires extensive overhead for little economic return to the firm engaged in oil production.
Outlined in the same paper, two barriers blocking the progress of insulating our economies from these environmental time bombs were listed. First, the report cited a lack of research in improving plugging technology and second, a lack of long-term vision looking toward shielding future generations from these hazards. Both stem from an industry reluctance to invest in plugging and abandoning technology. Where private finance fails, government finance could step in to mediate these barriers.
A recent proposition from the Premier of Saskatchewan Brad Wall, upon counsel from Valleyview Petroleum’s President Matt Cugnet, advocated for $156 million in federal aid to cap one thousand wells, stressing Canada’s benefit from a more secure environment, and stimulating employment within the industry.
Regardless if such policy is economical, a federal finance structure could provide the incentive needed to develop this technology, addressing the two barriers preventing the development of adequate plugging and abandonment technology.
Such a decision would hedge not only vulnerable communities in Alberta and Saskatchewan from the implications of an oil spills and gas leaks, but perhaps lead the way in a global fight against one of the energy industry’s biggest white elephants.