Understanding the B.C. Dormant, Orphan & Legacy Site Reclamation Programs
On April 17, 2020, the Government of Canada announced $120 million in funding to support the clean up of oil and gas sites in British Columbia.
On May 13, 2020, the Government of BC announced three separate programs to spend the $120 million by funding the restoration of more than 2,000 orphan and inactive wells.
Overview
There are approximately 25,000 oil and gas well sites in British Columbia. Of these sites, approximately 7,685 are considered dormant and 357 are considered orphan.
The $120 million in funding is distributed between the three programs as follows:
Dormant Sites Reclamation Program – $100 million
Orphan Sites Reclamation Program – $15 million
Legacy Sites Reclamation Program – $5 million
For details on each program, please see the relevant sections below.
Start and completion timelines
Applications for the Dormant site program opened on May 25, 2020.
The start dates for the Orphan and Legacy programs have not been announced.
All work is to be completed within the next two years, ending in 2022.
Site qualification and nomination
In BC, sites must be fully reclaimed to qualify for program funding.
When a site is designated orphan in BC, the BC Oil and Gas Commission (BCOGC) can use the industry-funded Orphan Site Reclamation Fund to decommission and restore the land.
Under these new programs, landowners, municipal governments, and First Nations can all nominate sites for reclamation.
Limitations on workers, companies, and contractors
To qualify for funding through the BC programs, oil and gas field service companies and contractors must be based in BC with registration, offices, and operations in BC.
The BCOGC has been tasked with ensuring that only BC workers work on these sites.
Dormant Sites Reclamation Program
The first program, the Dormant Sites Reclamation Program has the majority of the funding at $100 million.
This program is intended as a supplement to operator’s liability obligations to clean up their dormant well inventory.
Funding limitations
The program will provide up to $100,000, or 50% of the total cost of site cleanup, whichever is less. The remainder of the cost is to be paid by the operator.
Site qualification
In BC, an oil and gas site is classified as dormant if it does not produce for at least 720 hours per year for five consecutive years.
Start date and application period
BC will begin accepting applications for this program on May 25, 2020.
Orphan Sites Supplemental Reclamation Program
The second program, the Orphan Sites Supplemental Reclamation Program will provide $15 million to reclaim orphan oil and gas sites where the operator is insolvent, no longer exists, or cannot be located.
Site qualification
This program will be administered by the BCOGC and will be a supplement to the $27 million already planned by the BCOGC for clean up of orphan wells in 2020-21.
Start date and application period
No start date for this program has been announced.
Legacy Sites Reclamation Program
The third program, the Legacy Sites Reclamation Program will provide $5 million towards reclaiming historical oil and gas sites that continue to have environmental impacts.
Site qualification
Qualifying sites include environmental impacts on wildlife habitats or on the traditional uses of the site by Indigenous peoples.
Start date and application period
No start date for this program has been announced.
How does this compare to the Alberta or Saskatchewan programs?
The British Columbia Site Reclamation Programs and the Alberta Site Rehabilitation Program are funded by a $1.72 billion Government of Canada initiative to support site rehabilitation across the Canadian energy industry.
$1.2 billion of the total funding was assigned to Alberta, $120 million to British Columbia, and the remaining $400 million to Saskatchewan.
For more information, see our detailed articles about the Alberta and Saskatchewan programs.
There are important differences between the BC and Alberta programs, summarized as follows:
Under the BC Dormant Sites Reclamation Program, sites must be fully reclaimed. Under the Alberta Site Rehabilitation Program, there is greater flexibility in the types of rehabilitation work that qualify for funding.
In the BC program, there is a $100,000 or 50% ceiling for eligible costs but it will permit a greater variety of sites to benefit from program funds. In the Alberta program, there is a funding limit of $30,000 per application.
In the Alberta program, the Department of Energy will determine if licensees are able to contribute to rehabilitation costs (but not in the first round of applications). The BC program will fund up to a maximum of 50% or $100,000 — whichever is less.
In both provinces, it appears that the funds will be distributed on a first-come, first-served basis.
In both provinces, landowners can nominate sites.
In the BC program only, First Nations and municipal governments can also nominate sites.
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Sources
News Release, New program support jobs, clean up environment | Office of the Premier, Ministry of Energy, Mines and Petroleum Resources, viewed May 18, 2020 https://archive.news.gov.bc.ca/releases/news_releases_2017-2021/2020PREM0026-000871.htm
Jen Holmwood, Press Secretary, Office of the Premier
Comprehensive Liability Management Plan | British Columbia Oil and Gas Commission, viewed May 18, 2020
https://www.bcogc.ca/node/15483/download
Bennet Jones, British Columbia Announces Funding to Clean Up Orphan and Inactive Wells – May 15, 2020, viewed May 18, 2020
https://www.bennettjones.com/Blogs-Section/British-Columbia-Announces-Funding-to-Clean-Up-Orphan-and-Inactive-Wells
Brad Gilmour, Keely Cameron, Stephanie Ridge