The Alberta government may have to return $130 million in unspent federal funding allocated to clean up inactive oil and gas wells, after failing to make adequate progress on the issue.
Recent reports have indicated that the province has only been able to spend $7 million of the $137 million provided by Ottawa in order to decommission wells.
The Canadian Association of Petroleum Producers (CAPP) estimates that there are over 200,000 inactive oil and gas wells in Alberta, and that the majority of them need to be decommissioned to ensure that the environment is protected.
The federal government has been urging Alberta to take action on the wells for some time, but the province has been slow to address the issue. Now, Ottawa has indicated that it will not extend the funding deadline and that Alberta will have to return any unspent money.
“We have been clear that the funds have to be spent by the end of March 2021,” said Natural Resources Minister Seamus O’Regan. “We have not received a proposal from Alberta that would allow us to extend the deadline, so any funds not spent by then will be returned to the federal government.”
Alberta Energy Minister Sonya Savage expressed frustration with the decision, but acknowledged that the province had failed to adequately address the issue.
“We understand the federal government’s position,” she said. “We accept that we must meet our commitments, and we will work to do so. We are determined to make progress to clean up oil and gas sites in Alberta and we will continue to work hard with our partners to make that happen.”
However, Savage indicated that the province was not ready to return the unspent funds.
“We have not yet made a decision on what to do with any funds that are not spent by the end of March,” she said. “We will be engaging with our federal partners to discuss potential solutions.”
The issue of inactive oil and gas wells has become increasingly pressing in Alberta, and the return of the unspent funds could have serious implications for the province. It remains to be seen whether the government can make sufficient progress on the issue, or if the funds will have to be returned to Ottawa.