Alberta may have to return $130M in unspent federal funding for oil and gas well cleanup

The Alberta government may have to return $130 million in leftover funding to the federal government after not spending the money to clean up old oil and gas wells.

The cash is part of the federal government's $1.7-billion program in 2020 aimed at addressing the environmental risk of the aging oil and gas infrastructure, while also providing jobs to the beleaguered energy services sector after the pandemic began and oil prices crashed.

The federal money was divided between B.C. ($120 million), Alberta ($1 billion) and Saskatchewan ($400 million). Alberta's Orphan Well Association received a $200-million loan to support the cleanup of wells left over when companies go bankrupt.

Initially, Alberta's program ran into problems as government staff were overwhelmed by a flood of applications. Eventually, tens of thousands of projects were approved to use up all of the federal funding. 

Alberta requesting funds stay in province

However, some of the money has still not been spent as some of the approved cleanup work was not completed. The government did not provide a specific reason why.

CBC News has learned Alberta is expected to return about $130 million, which the provincial government has confirmed as a fair estimate. 

In total, after almost three years since the funding was announced, Alberta approved 37,589 applications, although 3,445 of those were not completed, according to the government's website.

Final invoices from oilfield service companies are still being received.

"A few other ministers and I have written to the federal government to keep the left-over funds here in Alberta. We are still awaiting a response," wrote Energy Minister Pete Guthrie in an emailed statement.

According to the Alberta Energy Regulator, the province still has tens of thousands of inactive oil and gas wells, which pose an environmental risk because of the potential soil and water contamination, in addition to the release of methane gases. 

First Nations lobby for left over funds

Last week, officials with the Indian Resource Council (IRC), which represents more than 100 First Nations with oil and gas reserves, met with the province's environment and energy ministers to lobby for the $130 million to be spent on the continued remediation of wells on First Nation land. 

"It's a challenge," said Stephen Buffalo, president of the IRC, pointing out how the federal funding included a clause that required the provinces to follow a specific timeline and noted that any unspent money had to be returned.

As part of Alberta's program, the government allocated more than $100 million for cleanup projects for First Nations.

"It was very beneficial and very positive. So, we're doing what we can to keep that program going," said Buffalo, noting that about 350 community members received skills training.

Removing the aging wells and pipelines can free up land for First Nations to use for housing and other purposes, he said.

"Our community land mass is not getting any bigger, but their populations are," Buffalo said. "So we have to start looking at protecting the land, cleaning the land, so we can use it for the needs of our communities."

To date, the federal government says that more than 7,135 full-time jobs in B.C., Alberta, and Saskatchewan have been supported, and over 49,000 wells have been addressed. 

"The Department of Finance is in contact with all participating provinces as they wind down their respective well closure programming," said spokesperson Benoit Mayrand, in an email, about whether the federal government will allow Alberta to keep the leftover funds.

Saskatchewan's Accelerated Site Closure Program wrapped up last week and spokesperson Natosha Lipinski said, "We are confident that all $400 million in program funding has been spent in the province in support of Saskatchewan businesses and workers. No program dollars will be returned to the federal government."

About 8,800 wells were reclaimed, in addition to some pipelines and other infrastructure, Lipinski said.

A B.C. government spokesperson said the province will release final numbers for its well cleanup program in the coming weeks.