Federal money allocated to clean up Medicine Hat gas wells

By COLLIN GALLANT on July 10, 2020.

cgallant@medicinehatnews.com@CollinGallant

Some federal money is allocated for the cleanup of City of Medicine Hat gas wells, local administrators stated in financial documents present last week, but not how much from funds administered by the provincial governments of Alberta or Saskatchewan.

This spring work has begun to close-down, abandon and reclaim 2,000 unproductive wells in the city’s historic inventory as a way to cut operating costs and get liability off the books of the city.

Potential grants for well abandonment arose during discussions of the financing plan during the June 25 city audit committee meeting, with finance officials stating that the natural gas and petroleum division was cutting costs and seeking out grants to lessen an the unfunded liability.

“NGPR officials are actively pursuing grants,” said city accounting manager Vanessa Bonneville. “We’ve received word that Saskatchewan has allocated an amount, and we’re in contact with (Alberta-based) contractors who have told us grant applications are trickling in.”

Ottawa provided $2.4 billion for well reclamation on April 17, including $1.1 billion for Alberta to incentivize work in the oil service sector and another $200 million to the province’s Orphan Well Association. Saskatchewan, where the city has about 1,000 wells slated to be abandoned, also received funds, but has yet to announce any details about of how the money will be used.

This week, the Alberta program came under scrutiny in the media as some industry observers expressed concern the measure meant to spur activity and get oilfield service workers back to work had stalled ongoing projects as companies hit pause and await potential aid.

Alberta Energy Minister Sonya Savage stated Wednesday that $64.6 million of the $100-million initial phase had been allocated to that point after an “overwhelming response.”

The Alberta program has so far seen two equally sized phases rolled out, with the first involving and the second for landowners to nominate wells they wanted closed in case of disagreements with production companies over unpaid surface lease payments.

Wells turned over to the Orphan Well Association are dealt with separately, and the ministry says future phases are being developed.

Work proceeds

This week, city council was presented with the results of bidding for reclamation work in Saskatchewan and also heard down-hole work in Saskatchewan could be completed by September.

Two companies, Trace and Summit, were each awarded contracts of about $1 million to provide above ground reclamation work on a total of 750 wells in the Freefight gas field in Southwest Saskatchewan.

“We’ve already done the first phase of abandonment (on the 750 wells), and we believe the majority of subsurface work should be completed in August in Saskatchewan,” energy commissioner Brad Maynes told council. “At that time we’ll move to two non-legacy fields in Buffalo-Atlee and Eyremore (Alberta).”

Of the reclamation work, a total of 19 companies submitted proposals, and final packages were delivered to seven which pre-qualified.

“There was significant interest in the RFP, and it is a relatively large reclamation program to occur all in one area. But we’re confident in (our contractors).”

17
-16