Cost to clean up orphan wells in Alberta reaches all-time high

The expected be to strip up orphan oil color and cancel gaseous state wells in Alberta has surpassed one billion dollars — reaching an all-time high.

The number of orphan wells in need of cleanup nearly doubled over the last year to reach 3,388 compared to 1,719 the previous year.

In Alberta, any unsold wells, pipelines and facilities following the bankruptcy of an oil and gas company are declared orphans and become the responsibilities of the Orphan Well Association (OWA) to decommission and remediate.

The recent spike in workload for the OWA follows the end of Sequoia Resource's insolvency process, which began in 2018. There are 1,800 Sequoia wells that need to be decommissioned, in addition to 565 sites requiring only reclamation.

"The Sequoia impact is huge. We kind of knew it would be huge. I still think it might be a little bigger than I expected," said Drew Yewchuk, a former staff lawyer with the University of Calgary's Public Interest Law Clinic who closely follows the issue.

As of March 31, 2025, the OWA estimate total cleanup costs to total about $1.12 billion, according to the organization's annual report released this summer.

The OWA could face another rise in cleanup costs as another five oil and gas companies are in the midst of bankruptcy, which are expected to wrap up in the next year or two. The OWA is involved in the insolvencies and the organization anticipates the result will be an influx of orphans.

"It's tough to predict exactly how much they'll pick up from those bankruptcies, but it's probably going to be in the few-hundred-million-dollar range," said Yewchuk.

The OWA is funded largely through an annual levy determined by the Alberta Energy Regulator (AER) and paid by the oil and gas industry. The levy was increased two years ago to $135 million.

"That does depend on a number of components, such as what happens with the levy. The AER did increase it and we are expecting to see some other increases [in the future]," he said.

The number of orphans has continued to increase, although DePauw expects that trend to slow in a few years as regulatory changes by the AER are proving to be effective so far.

The record level of clean-up work facing the OWA underscores the need for increased funding for the agency, said Yewchuk.

The annual levy "should go to at least a few multiples of what it is now," he said, since "there will be problems. It's an up and down industry. There are lots of foreseeable problems for the oil and gas industry coming, and it's aging in Alberta."

"Instead of having these really long-term plans, the industry should be using periods of high prices to clean up and prepare for downturns. And instead they are still sort of assuming that good times will last forever, and planning to have long, long periods of good oil and gas prices," said Yewchuk.

Some of the levy funds are used each year to pay back loans from the provincial and federal government, which currently total about $360 million.

In some previous years, the OWA has been able to decommission about 1,000 wells a year.

"That's sort of our peak, and so we are expecting to ramp up to that level again," said DePauw.

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