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On December 22 2025, The Fraser Institute published commentary stating that “from 2007 to 2022, Albertans’ net contribution to federal finances (total federal taxes paid by Albertans minus federal money spent or transferred to Albertans) was $244.6 billion – more than five times the net contribution from British Columbians or Ontarians (the only other two provinces considered as net contributors).”
Disproportionate funds have been remitted by Albertans to Ottawa and now more than ever, federal funds that have been retained through taxation, need to be put towards the energy sector’s environmental cleanup effort.
Opponents to this framework would argue that the producers (polluters) should pay for their own mess. However, we are in an economic and geopolitical environment where it is evident that oil and natural gas producers are unwilling or unable to solely fund the cleanup efforts within a reasonable time horizon. At the current rate at which oil and natural gas producers spend money to retire their inactive wellsites, and an estimated liability of $75-$100B on conventional wellsites within Alberta, the cleanup effort will last as long as an entire century. Lastly, and perhaps most damming, is the representation of the liability. The Alberta Energy Regulator estimates that nearly 50% of the industry liability is held by financially distressed oil and natural gas producers. If right in their estimate, as much as $50B worth of inactive wellsite liability could land in the Orphan Well Association. To this point, the Mature Asset Strategy (“MAS”) is not reflective of this logic. One of the purposes of the MAS is to “harvest” cashflows off inactive and marginal wells to produce enough free cashflow to cover the cost of the wellsite cleanup. This document lacks technical, pinpoint accuracy and reality. Capital costs for producers to restimulate and optimize low netback, high-decline, tier-2 wells within tired reservoirs, carry zero cost-benefit to this ‘strategy’ and 100% risk on their capital.
The answer to the inactive and marginal wellsite problem in Alberta is simple: We need real dollars contributed by real stakeholders to effectively, efficiently, and expeditiously extinguish the non-producing wellsites. There will be imminent pushback and opposition, but the reality is that we cannot change the past. However, we can change the outcome of the future by applying stringent rules and regulations around producers’ liability management practices, license transfers, capital securitization for cleanup costs, and real-time tracking of liability per producer.
We believe now is the right time to have real discussions with the federal government, industry participants, and the Major Projects Office to address the need to collaboratively fund the program that we are proposing: the National Remediation Program.
Hope you find the framework below insightful,
Cameron Peckham
Chief Executive Officer
Branded Energy Solutions
National Remediation Program:
In the context of ongoing national support for Canada’s oil and gas sector, that is evidenced and reinforced by the recent Memorandum of Understanding (“MOU”) signed between the government of Alberta and the federal government of Canada, we believe the adoption of a corresponding project, of national interest, intended to make meaningful and timely progress in addressing the need to properly abandon and reclaim inactive and marginal wellsites in Western Canada, referred to below as the National Remediation Program or the “Program”. We believe this National Remediation Program will assist the Government of Alberta in achieving at least one of the conditions outlined in the MOU, as it will represent a significant step forward in achieving the targeted 75% reduction in sector-related methane emissions. Aggressively tackling the inactive and marginal wellsites in Alberta alone would be a prudent way to reduce the sector’s carbon output.
Although most of the comments and examples provided in the following are focused on the situation in the Province of Alberta, where approximately 80% of the basin’s inactive and marginal wells remain, similar situations exist in Saskatchewan, British Columbia and Manitoba, including on reserve lands – which fall under the jurisdiction of Canada’s federal government. Implementing a solution across all affected provinces, including relevant federal lands, will be most efficient and effective if applied consistently. In our view, adopting the National Remediation Program, outlined below, needs to be recognized as a project of national interest and assigned to Canada’s Major Projects Office to facilitate the approval process and to understand the critical sources for funding.
Scope of the Problem
Today, there are at least 78,000 inactive wellsites within Alberta. Another 110,000 marginal wells – those that are producing 10boe/day or less – that will imminently fall into the inactive well category. The current mandate for Alberta’s oil & natural gas producers requires them to spend, in aggregate, approximately $750 million per year in abandoning and reclaiming inactive wells. Based on extensive infield experience, data collection, and forecasting, we believe the total amount that the industry will be obligated to spend, to fully abandon and reclaim all existing inactive and marginal wellsites (the “Industry ARO Liability”) in Alberta, is now at approximately $72 billion, adjusted for inflation. External estimates peg the Industry ARO Liability even higher as supported by the Alberta Energy Regulator’s internal estimates – citing the liability as high as $200 billion – while research among a consortium of North American industry professionals and professors, led by Professor Martin Olszynski of the University of Calgary, indicates that the industry’s total liability has now breached $320 billion, adjusted for inflation and inclusive of non-conventional liabilities (i.e., oilsands mines).
All this to say, industry is not spending a proportional amount each year to make a meaningful, material decrease in the rising inactive and marginal well populations. For example, between 2020 and 2022, the Site Rehabilitation Program utilized federal funding to accelerate site closure in Western Canada, with amounts totaling $1.2 billion. A step in the right direction, however, mathematically, that effort reduced Alberta’s total Industry ARO Liability by 1.7%. The bottom line: Industry participants lack the necessary capital to consistently reduce the total liability and their efforts are focused on their own assets and, as a result, fragmented and less effective. The goal must be to compress the total number of inactive and marginal wellsites, while systematically decreasing the total Industry ARO Liability obligation. For most of the twenty-first century, the result has been the inverse, as the total number of reported inactive and marginal wells significantly outpace those that are reclaimed, resulting in a total Industry ARO Liability that has continued to balloon.
The Solution
Our submission is that a National Remediation Program be initiated to responsibly address the current situation over a reasonable time horizon, such as 25 years, offering a clear path to cleaning up the growing number of inactive and marginal wellsites throughout Western Canada. Calculating a total industry ARO liability of $72 billion, and amortizing this over 25 years, requires an annual funding commitment of almost $3 billion per year – requiring producers to kick in an additional $210 million per year, above the $750 million they’re currently obligated to spend through the inventory reduction program mandated by the Alberta Energy Regulator.
In terms of financial contribution to the National Remediation Program, it is clear to us that expecting that level of contribution to be borne solely by industry participants would have a significantly adverse effect on economic activity in the country and would be unlikely to achieve the desired objectives in any event. At the same time, over a prolonged period, the oil and gas industry has been a significant contributor to the Canadian economy and it is well documented that, through the taxation levied on the economic activity driven by Western Canada’s energy sector, the residents of the provinces in which that economic activity has taken place have made dis-proportionately larger contributions to federal and provincial government revenues. This disproportionate contribution has indirectly supported services throughout the country, including through the federal equalization and transfer programs. Provincial revenues have also been supported by resource royalties. In our submission, this significant support to provincial and federal governmental revenues imposes an obligation on government to contribute to reducing the Industry ARO liability.
Accordingly, our proposal is based on funding for the National Remediation Program being divided equally among (i) Industry Participants, (ii) Provincial Governments, and (iii) the Federal Government.
Given the magnitude of the total aggregate liability in industry, the National Remediation Program ensures proportional annual spend to adequately and expeditiously reduce the liability with appropriate sources of funding coming from the three major stakeholders.
Net Cost to Federal and Provincial Governments – Economic Multiplier Effect
Although our proposal requires significant governmental expenditures, consideration should be given to the net cost to the government sector. Research suggests that the multiplier effect from government spending can typically result in incremental economic activity of approximately 1.5 to 2.5 times. Therefore, as a baseline, each level of government can expect that the Program will increase economic activity by more than 150% of the amount expended.
Environmental Benefit
Proper abandonment and reclamation of inactive wellsites will eliminate the greenhouse gas emissions from high-risk, methane-emitting wells. Reduction of the total number of sites with abnormal levels of hydrocarbon and chloride contamination in soils and groundwater will also have significant benefits to owners of surface rights over the lands in question.
Indigenous Socioeconomic Benefit
It is evident that job creation, skill development and economic diversification for indigenous peoples will be a direct result of the National Remediation Program. Strengthened relationships – such as collaborative cleanup efforts between indigenous communities and companies or governments – can help build trust and strengthen an alliance with indigenous groups with respect to future energy development projects
Cleaning the Slate
By accelerating wellsite closure in Alberta and the other Western Canadian provinces, capital investment will flow back into the energy sector. As noted by the Fraser Institute, each year, $47 billion in capital investment – that is crucial for economic growth and job creation throughout Canada – avoids Alberta’s energy sector due to legislative barriers, regulatory burdens, and growing inactive well liability that producers are carrying. The federal government, and Canadians from afar, have benefited greatly from the resource development in Alberta’s oilpatch and therefore, as a matter of principle, the federal government ought to be proportionally responsible for the resource cleanup.
Ensuring a stringent qualification process for service companies to complete the field work, deploying capital through efficient conduits such as area-based closure and the amalgamated producer approach, while independently monitoring and auditing spend per inactive wellsite, is equally critical for this initiative to be seriously considered for implementation through the Major Projects Office.
In an environment where global macroeconomic pressures are mounting, including declining oil and natural gas prices, and geopolitical stresses such as the newly-elected Federal Minister of Environment – Julie Dabrusin – “a proponent of phasing out oil and gas”, the National Remediation Program supports the mandate of the Major Projects Office to secure Canada’s position in leading the planet as a “National Energy Superpower”.
Cameron Peckham
Chief Executive Officer
Branded Energy Solutions