There is a growing public interest in understanding how the Commission is managing this complex file, so we are including a list of frequently asked questions to help.
What are ‘Orphan Sites’?
- If a permit holder in B.C. becomes insolvent or cannot be located, the Commission may designate its wells, facilities, and pipelines as orphan sites.
- Once sites have been designated as orphans, the Commission may use the Orphan Site Reclamation Fund (OSRF) to decommission and restore the sites.
- Before the Commissioner declares an orphan site, every possibility is exhausted to ensure those responsible, even in bankruptcy, are held financially accountable and there is no direct cost to British Columbians.
Where can I find a list of orphaned oil and gas sites in B.C.?
- The Commission publishes updated stats on orphan sites on its website, on a monthly basis. Find that list here: List of Orphan Sites.
What is the percentage of orphan sites in B.C. currently?
- In B.C., we have nearly 25,000 oil and gas wells, of which less than 1.5 per cent are considered orphan sites.
What are the number of orphan sites, per year, for the past five years?
Why have the numbers of orphan sites been growing?
Largely as a result of economic challenges due to low commodity prices and the Redwater court decision and bankruptcy of Terra Energy and Quattro Exploration, the Commission has seen an increase of Orphan Well Sites in B.C. from 45 in 2016 to 326 as of Nov. 7, 2018.
What is being done to address the growing number of orphan sites?
This May, the provincial government took action to address the growing number of orphaned well sites by passing Bill 15, amendments to the Oil and Gas Activities Act (OGAA). Those amendments provide the Commission with additional tools to protect the environment and improve funding for orphan site restoration, by replacing the current tax structure with a levy to be paid into B.C.’s Orphan Site Reclamation Fund (OSRF)—an industry-funded program that addresses the cost of restoration and environmental clean-up.
What has been the spending on orphan treatment for the past five years?
Annual Orphan Site Reclamation Fund (OSRF) spending – from annual reports posted on our website:
- 2017/18 $5.7 million (annual report not yet posted)
- 2016/17 $643,000 https://bcogc.ca/node/14849/download
- 2015/16 $1.2 million https://bcogc.ca/node/14040/download
- 2014/15 $1.3 million https://bcogc.ca/node/12939/download
- 2013/14 $2.8 million https://bcogc.ca/node/11647/download
How many orphan sites have been restored?
Currently, there have been 16 sites restored, and there will be 20 by March 2019. Completion of restoration follows extensive decommissioning, investigation/remediation, reclamation, and monitoring work.
What is the Commission’s plan to address orphan sites?
The Commission has been implementing a significantly accelerated plan to address orphans, including:
- Spending on orphan treatment has tripled to almost $15 million in 2018/19.
- Engaging with industry, and supported by recent Oil and Gas Activities Act (OGAA) amendments (Bill 15), to ensure the industry-funded OSRF can sufficiently address the costs associated with timely orphan site treatment.
- Policy and work plan for orphan treatment maintains protection of public safety and the environment as the top priority, while accelerating restoration timeframes.
- Partnering with First Nations on restoration work to develop ecologically and culturally appropriate reclamation plans.
- Enhanced engagement with private landowners to provide compensation for missed rental payments, address concerns and identify suitable future land uses.
- Establishing an Orphan Technical Committee involving the Commission and industry, geared at finding synergies and efficiencies in well abandonment and restoration programs.
What is the geographical breakdown of the sites in B.C.?
Maps of orphan sites can be referenced on the Commission’s website: https://bcogc.ca/public-zone/orphan-site-management.
How many of the Orphan Sites fall within the Agricultural Land Reserve (ALR)?
- 145 unrestored sites fall within the ALR.
- It should be noted that less than two per cent of the Agricultural Land Reserve in the Northeast is occupied by oil and gas activities. Before proceeding, these activities are subject to review against the criteria established by the Agricultural Land Commission in the delegation agreement it negotiated with the Commission.
What is Liability Management Rating (LMR) program?
- The LMR program ensures permit holders carry the financial risk of their operation through to regulatory closure by identifying those whose deemed liabilities exceed deemed assets and to require security for any risk identified.
- A permit holder’s LMR is used to determine the amount of required security.
How much security is being held to offset the risks posed by financially weak companies? And how much further security is due but has not been paid?
The Commission holds around $150 million in security under the Liability Management Rating (LMR) program at this time, an increase of over $100 million in the past three years. There was around $14 million in outstanding security as of October 2018.
What is the Commission doing about licensees who have not paid their required security deposits? What action is being taken?
Permit holders that have not complied with security deposit requirements are deemed non-compliant under Section 30 of the Oil & Gas Activities Act (OGAA) and enter a compliance and enforcement framework. If the security deposit was required to approve a permit transfer application, the application will not be approved. If the security deposit was required under a monthly assessment, additional compliance action will be taken against the permit holder. This may result in the cancellation of permits or orders to cease operations.
Why doesn’t the Commission name which companies have not paid required security and how much they owe?
- The LMR Summary Report (https://bcogc.ca/lmr-summary-report) is updated daily and provides the names of operators, whether they have a security deposit, and their associated LMRs.
- As outlined in FOIPPA legislation, disclosure of operators’ financial information could be harmful to their financial and/or economic interests or to the Commission’s financial and/or economic interests.
Does the Certificate of Restoration (CoR) process include assessments by the Commission?
- The Certificate of Restoration (CoR) application process involves the permit holder retaining qualified professionals to conduct assessments and submit applications to the Commission.
- The Commission has professional engineers and agrologists on staff to review every application.
- The Commission may require more information or further investigation / remediation prior to issuing a CoR.
- Field sampling and assessment targets a random sample of the CoR submissions to verify if the information provided in support of the application accurately depicts the site condition.
How many audits have been performed in the last three years and what are the findings?
- 2018 10 sites audited 5 fully acceptable, 4 acceptable, 1 unacceptable
- 2017 15 sites audited 6 fully acceptable, 9 acceptable
- 2016 0 sites audited Audits deferred
Since the Commission implemented a Restoration Verification Audit Program in 2012, there have been 50 sites audited and two found to be unacceptable (96% of sites acceptable).
For more information:
- Orphan Site Management
- Liability Management Rating Program
- Levy Rate Increase to Fund Orphan Site Restoration
- Commission Developing Comprehensive Liability Management Plan