Written by Brad Gilmour, Keely Cameron, Stephanie Ridge and Shimon Sherrington
On September 18, 2020, the British Columbia government announced that the first half of a $100-million fund earmarked for cleaning up dormant wells has been disbursed. The Dormant Sites Reclamation Program is dedicated to cleaning up wells which have been inactive for five or more consecutive years and are unlikely to return to service.
As we noted in our earlier blog, British Columbia received $120 million in total from the federal government under the COVID-19 Economic Response Plan for Canada's Energy Sector. In addition to the $100 million set aside for reclaiming dormant wells, British Columbia allocated $15 million to the Orphan Sites Supplemental Reclamation Program and $5 million to the Legacy Sites Reclamation Program.
Applications for the second $50 million available under the Dormant Sites Reclamation Program will be accepted starting November 1, 2020, from oil and gas companies and contractors with an office and operations in B.C. and corporate registration in B.C. Industry response to the first phase of the program in May was robust, with over 1,100 applications in the first 24 hours of the program being open.
Ahead of the second phase of the program, the government has encouraged Indigenous communities, local governments and landowners to identify specific well sites for priority reclamation. These groups had until September 30, 2020, to nominate sites through an online process. Second phase applications which address nominated sites are expected to be preferred for approval.
While the government has not released details of the second phase of the Dormant Sites Program yet, under the first phase of the program the government specified a list of eligible and ineligible activities. Eligible activities include the following work in relation to oil and gas dormant sites:
- closure work;
- environmental site assessments (PSI and DSI);
- reclamation; and
- preparation of applications for remediation and reclamation certificates.
Ineligible activities included:
- suspension (wells and facilities) and discontinuation (pipelines) costs that are not part of dormant site eligible activity work;
- non-closure work on producing oil and natural gas sites (for example, spill remediation);
- closure work for dormant sites outside of British Columbia;
- closure work on orphan and legacy sites (these sites have separate funding streams); and
- work completed before the first phase of the program came into effect on May 25, 2020.
The details regarding eligible activities are expected to be similar under the second phase of the program. We will continue to monitor and update as additional information is released.