VICTORIA, B.C. – The B.C Auditor General (BCAG) just released their report on the BC Oil and Gas Commissions (OGC) management of non-operating Oil and Gas Sites.
The OGC did not require oil and gas operators to decommission their wells and restore well sites unless they explicitly ordered them to. This decision was decided on a case-by-case basis to address specific safety or environmental issues.
The BCAG says they found that gaps in legislation meant that the OGC lacked the regulatory tools to compel operators to decommission and restore well sites in a timely way and did not collect enough funding from operators to cover the costs to restore orphan sites.
The report shared the number of inactive wells that hadn’t been decommissioned almost doubled—from 3,800 to 7,474—between 2007 and 2018. The OGC estimated that decommissioning inactive wells and restoring sites will cost operators $3 billion.
An inactive well is decommissioned by permanently sealing it with cement. To restore a site means remediating any contamination and reclaiming the land to pre-activity conditions.
The OGC will designate a site as orphaned when an oil and gas operator is bankrupt or can’t be located. The OGC becomes responsible for the decommissioning and restoration work.
The number of orphaned sites between 2015 to 2018 was 326.
The report goes on to say that in 2018, the legislative assembly passed amendments to the Oil and Gas Activities Act to provide the OGC with the authority to require operators to restore sites, as well as greater flexibility to collect and use revenue from operators to restore orphan wells.
The BCAG says at the time of their audit, the OGC was developing accompanying regulations to detail the requirements, including timelines to decommission wells and restore sites.