The Canadian Government has launched a billion-dollar oil and gas site rehabilitation program.
Although Canada is a nation at the forefront of the oil and gas industry, a crowded history of exploration and construction activity has resulted in a significant number of out of service assets in need of proper clean up.
With the COVID-19 pandemic causing economic hardship across the world, the energy industry has not remained immune, with job losses and project cancellations or postponements becoming a reality for many countries. The Canadian Government has enacted its energy-inclusive COVID-19 Economic Response Plan to combat this and has pledged CA$1.72 billion (US$1.2 billion) in funding to support an oil and gas clean up program that will support the creation and sustainment of new industry jobs.
About CA$1 billion (US$725.275 million) of the funding will go to the Government of Alberta to support clean work across the province, CA$400 million (US$290 million) will go to the Government of Saskatchewan for work in that region, CA$120 million (US$87 million) for the Government of British Columbia and CA$200 million (US$145 million) to the Alberta Orphan Wells Association (OWA) to support its work, although the group will fully repay the amount.
With approximately 91,000 inactive oil and gas wells in Alberta, the bulk of the work will be done in the province, with Alberta Energy Minister Sonya Savage saying the energy industry there was one of Canada’s biggest job creators.
“We are creating almost 5,300 jobs for Alberta’s energy workers, while completing important work decommissioning and reclaiming abandoned pump jacks, pipelines and wells. This will ensure that sites are properly addressed, benefiting landowners and Albertans across the province,” she says.
The Alberta Government says the program’s goals are to immediately get the province’s oil and gas labour force back to work, accelerate site abandonment and reclamation efforts and quickly complete a high volume of environmentally significant work.
Funding was made available to contractors in CA$100 million (US$72 million) increments across two phases, the first being for projects that required 100 per cent government funding and contracts of up to CA$30,000 (US$22,000) per application, per closure activity.
The Alberta Government accepted applications in the second phase of CA$100 million of funding for oil and gas sites on land where the government was paying compensation to landowners, as well as those projects with no contract cost limit.
Future funding increments will be made available as the situation progresses and the government says these may focus on larger projects with larger contract values.
Eligible contractors for the work include those who can complete pipeline abandonments, pipeline segment removals and wellsite and facility abandonments, while contractors for environmental remediation and reclamation work were also accepted.
Clean up costs per project can range from CA$100,000 (US$73,000) to several million dollars depending on the complexity and size of the job.
This article was featured in the July 2020 edition of Pipelines International. To view the magazine on your PC, Mac, tablet or mobile device, click here.
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