Sask. launches program to distribute $400M in federal money for cleaning up inactive oil wells

Mark Scholz says a new program to help clean up inactive wells comes at a critical time for the oil industry.

Scholz, the president and CEO of the Canadian Association of Oilwell Drilling Contractors, said his members are barely working at all right now.

"There are companies in Saskatchewan that this program could be the only work available for them for the remainder of the year," he said.

On Friday, the Ministry of Energy and Resources officially launched the Accelerated Site Closure Program (ASCP), which will work with oil companies to abandon wells that currently aren't producing.

The $400-million program, funded through the federal government's COVID-19 economic response plan and administered by the Saskatchewan Resource Council (SRC), is expected to clean up as many as 8,000 inactive wells and create the equivalent of 2,100 full-time jobs.

The programwill allocate money directly to service companies to clean up the sites.

"It's something we were advocating for quite aggressively," said Scholz.

"It's really important that the dollars get put directly into the into the companies that desperately need the revenue."

Phase one of the project will distribute $100 million over the first year.

Inactive wells

Minister of Energy and Resources Bronwyn Eyre noted there is a distinction between inactive wells, which have not been producing for at least 12 months, and an orphan well, which has been abandoned by a company that no longer exists.

Eyre said there were roughly 160 orphan wells that needed to be decommissioned, but that the firstphase of the program would only deal with inactive wells.

"Leaking wells do not dot the landscape here in Saskatchewan," she said.

Under the program, oil companies will nominate wells they want cleaned up. Then, the system will allocate money based on the company's share of inactive wells across the province.

The SRC will then contact eligible service companies to carry out the work.

"The idea is to make sure that smaller companies also receive a share of the funding and that the program is as administratively streamlined and simple as possible," said Eyre.

The ministry said that last year, Saskatchewan oil and gas producers cleaned up more than 2,000 wells, 40 per cent more than in 2018.

The program is part of a $1.7 billion federal initiative to clean up oil sites across the country.

Saskatchewan is expected to spend its $400-million share of the money over two years.