Alberta Returns $137M to Ottawa: A Lost Opportunity for Inactive Well Cleanup
In a disappointing turn of events, Alberta has returned over $137 million to the federal government after failing to utilize the funds allocated for cleaning up inactive oil and gas wells. This unspent money raises questions about the provincial government's ability to address the extensive issue of aging oil and gas infrastructure, given the large number of inactive wells across the region.
Industry groups and local companies are particularly disheartened by the return of these funds, as the money was intended to not only tackle environmental risks but also to support reclamation work in the oilfield sector. The federal funding was part of a $1.7 billion pledge made in 2020 to mitigate the environmental impact of old oil and gas infrastructure, while also providing economic support to the oilfield service industry in the wake of the COVID-19 pandemic and a downturn in oil prices.
The funding was allocated to British Columbia ($120 million), Alberta ($1 billion), and Saskatchewan ($400 million). Alberta's portion included a $200 million loan for the Orphan Well Association to clean up wells abandoned by bankrupt companies. While Saskatchewan successfully used its entire allocation and British Columbia returned only a small fraction of its funds, Alberta struggled to spend its share in time.
Despite Alberta's efforts to negotiate with the federal government for an extension to continue remediation work—especially on Indigenous lands—the request was denied. Alberta Energy Minister Brian Jean expressed frustration, noting, "Though much effort was spent in trying to convince the federal government to see the value in this continuation, they demanded the return of the unexpended funds.
Last month, Alberta returned $137 million in unspent federal funds designated for cleaning up inactive oil and gas wells. The funds will now be redirected to the government's general revenue, as confirmed by Katherine Cuplinskas, press secretary for Federal Finance Minister Chrystia Freeland.
Political science professor Duane Bratt from Mount Royal University in Calgary questioned why the money was not fully utilized. He noted, "The sector agrees it's important, the provincial government thinks it's important, the federal government has said it's important, resources were put in play and they weren't used or they weren't fully used." Bratt also highlighted the political implications, considering Premier Danielle Smith and her cabinet frequently criticize federal spending practices and perceived inequities in transfer payments between Ottawa and Alberta compared to other provinces.
The Alberta government initially faced challenges launching its Site Rehabilitation Program (SRP) due to an overwhelming number of applications. Although tens of thousands of projects were eventually approved, some of the cleanup work remained incomplete, leaving a portion of the funds unspent. Industry leaders, such as Gurpreet Lail, president and CEO of Enserva, attributed the unfinished work to severe weather conditions and labor shortages. "You can't expect us to spend all of this in minus-35 degree weather when the ground is frozen," Lail explained. Additionally, some SRP funds were allocated for cleaning up wells on Indigenous lands, which required additional time for community training and involvement.
The unspent funds and the challenges faced underscore the complexities of managing large-scale environmental projects and the need for effective planning and execution.
The unused $137 million in federal funds is described as "1,000 percent a lost opportunity," according to Gurpreet Lail, president and CEO of Enserva. Despite this setback, Lail acknowledges that the overall Site Rehabilitation Program (SRP) was vital in supporting the oil and gas sector during an exceptionally challenging period. She regrets that the remaining funds could not stay in the province to further cleanup efforts, particularly on Indigenous lands. "This is the first time we've been able to train Indigenous people to work on their own land in reclamation and dealing with abandoned wells alongside all our member companies. And why wouldn't you want to continue that work?" she said.
The Alberta government initially agreed to a federal deadline of March 31, 2022, for committing the funds to specific cleanup projects, which was later extended to May 15, 2022. The cleanup work itself had to be completed and invoiced by February 14, 2023. Joe Chowaniec, executive director of the Environmental Services Association of Alberta, expressed disappointment over the unspent money. "I'm sure they are disappointed," he said, referring to how his member companies feel about the missed opportunity to put people to work.
While the SRP was beneficial, critics argue that it represented a missed chance to address Alberta's inactive well problem effectively. The program's slow rollout and the allocation of funds to wealthy oil and gas companies, which may not have needed additional support, have raised concerns. Drew Yewchuk, a former staff lawyer with the University of Calgary's Public Interest Law Clinic, questioned the program's impact, noting that oil and natural gas prices had rebounded to multi-year highs by early 2022, less than a year after the initial crash.
By the time the Alberta government managed to ramp up its cleanup efforts and begin putting people back to work, oil and gas prices had already started to recover, leaving the original goals of the program largely unmet. “They couldn’t get it going fast enough, and the money they did manage to spend quickly was allocated to companies that could have afforded to do the work anyway,” said a critic of the program.
Despite the influx of federal funds intended to address Alberta’s numerous inactive and marginal wells, the number of such wells in the province has only seen a slight decrease, from 206,800 in 2020 to 177,801 this year, according to the Alberta Energy Regulator. This modest decline underscores the challenges in achieving more significant progress within the program’s constraints.
For more on the impact of these developments and other economic and business stories, Calgary-based business reporter Kyle Bakx covers stories across Canada and internationally for CBC News. You can contact him with story ideas at This email address is being protected from spambots. You need JavaScript enabled to view it.. Senior business correspondent Peter Armstrong provides a weekly analysis of economics and finance in the "Mind Your Business" newsletter, arriving in your inbox every Monday morning.
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