By Cole Parkinson
With the Municipal District of Taber under the clutches of abandoned oil and gas infrastructure, a new company is hoping to re-purpose the land for small-scale solar generation.
Over the last four to five years, the M.D. of Taber has reserved approximately $2.2 million for uncollectible tax revenue due to bankrupt oil and gas companies and RenuWell Energy Situations is hoping to turn the liabilities into assets for municipalities.
“I’ve been working on this project for about the last three years to utilize abandoned and inactive oil and gas infrastructure as a foundation for building renewable energy projects. Really turning liabilities in this area into assets but there are a lot of questions. It is one thing to have a concept and another to work out all the details of how this can be done and avoiding repotting some of the mistakes that have been made,” said Keith Hirsche from RenuWell at council’s regular meeting on Mar. 12. “We have been successful with this funding from the provincial government on the Community Generation Capacity Building Program ($261,900). This will empower us to work together to set up a series of guidelines and best practices for transitioning abandoned oil and gas assets to renewable energy for the province as a whole.”
From RenuWell’s model, they expect commercial project costs to be comparable with conventional utility-scale solar projects.
Another big positive is highlighted in the fact the projects will allow for preservation of agricultural lands and be located near needed infrastructure for these types of projects.
“Obviously with the 1,400 unreclaimed oil and gas sites, it provides an option for those properties. Many of which are serviced by utilities, access roads and certainly it fits within our municipal development plan with preservation of farmland. If there is a need for utility-scale developments, perhaps it could go over these 1,400 sites rather than farmland,” said CAO Derrick Krizsan when speaking of the benefits for the M.D. of Taber.
Current conditions of abandoned well sites are also a concern for all involved.
“In the entire history of the oil and gas industry, only 14 per cent of the wells that were drilled have been reclaimed,” said Hirsche. “These sites are not being restored in the way that we were promised. We have a very major potential liability with the existing infrastructure.”
Even with the high number of companies in bankruptcy, the number continues to climb.
“Orphan Well inventory has been climbing at a drastic rate. We currently have 30 more oil and gas companies in receivership and that fallout is being felt here in the M.D,” continued Hirsche. “There are over 200,000 inactive wells in Alberta, most of them in southern Alberta. Associated with that, there is about 410,000 acres that require reclamation.”
With the high amount of abandoned properties in southern Alberta, RenuWell is hoping to access as many as they can to convert to small scale solar.
While they realize not all of the properties will work for their operation, even a small amount will bring a big benefit for Albertans.
“If we convert these existing leases to renewable energy or even 10 per cent of them, we can produce power at a competitive rate. We can decrease the abandonment costs on existing infrastructure by leaving the valuable parts in place. The power lines, the roads and the leases are already there in places suitable for other objectives. We can save costs on the renewable side and we can also save cost on the oil and gas side,” stated Hirsche, who highlighted the 10 per cent conversion would see an annual production capacity of over 10,000-gigawatt hours and almost 600 megatons of CO2 savings per year. “Many of the abandonment leases are not going to be suitable, we don’t want to work on leases that are contaminated. They need to be cleaned up and there are many leases where you would not want to put other infrastructure.”
Over the past three years, RenuWell has been working to develop a plan for a pilot project and they have selected a location six kilometres southwest of Taber to build a small-scale solar array.
The current Orphan Well lease is on a 2.7-acre piece of land on James Molnar’s farm and the organization is hoping to prove the viability of the project.
“We have done pre-feasibility work with James’ consent and I got the go-ahead from the AER (Alberta Energy Regulator). Previously, the Orphan Well Association was not allowed to talk to anyone outside of just strictly getting leases closed off. Since November there has been some opening as people are becoming more aware of the magnitude of the liability of oil and gas cleanup. This has been strengthened since the Redwater decision that happened last month. The Orphan Well Association is now empowered to work on a conditional basis with us to see if we can make this transition process work. Because of the history at the Molnar farm, it has been a long and very painful story. A very good example of a bad set of things that can happen in an interrelationship between oil and gas and agriculture. They have been very willing to use this site to empower and help us make a better conclusion to this,” said Hirsche.
The lease has residual surface contamination with the reclamation ticket being withdrawn last June and the group hopes to have the solar array installed later this year or early next year.
“We are in the final stages of getting paperwork from that side. The Orphan Well Association is going to retain responsibility for the well license and any contamination that is present now. In the new legislation, we are able to get an overlapping surface lease with the Molnar family to put in a solar array,” said Hirsche. “On average, this would generate enough electricity for 3,500 acres of pivot irrigation. It would give us a Greenhouse Gas savings, on average, of about 400 metric tones a year. It is a fairly small site but it would give us a fairly reasonable impact in terms of renewable energy generation.”
Molnar stated he had a few concerns with the project though mostly around weed control but discussions around that matter have cleared some of that confusion.
One question that M.D. council has routinely brought up when in discussion about solar was reclamation of projects and it was posed to RenuWell.
“There have been a lot of questions, particularly with the larger projects, there really is no strong guidance on how to handle it. It’s different for municipalities so what the province is giving us is basically putting it on us. We are basically being asked to help them figure this out,” answered Hirsche.
As far as placing solar on M.D. owned lands with abandoned wells, Hirsche highlighted the fact there may be some money available.
“There is also grants available for the municipality. If you find that the M.D. may be able to put in their own sites with grants if you identify areas where it would be good for the M.D. to provide power generation.”
With much of the needed infrastructure on the oil and gas leases, the conversion on abandoned quarters was something council saw as a good solution.
“One of the real benefits are you don’t have to put in new transmission lines, substations or all of that stuff. This is infrastructure that is already there,” said Coun. John Turcato.
As larger-scale operations have been the focus of many, it was pointed out the smaller scale projects may be the real key moving forward, especially if a change in government comes in the next few months.
“We all know we may have a transition in government happening this year and they have indicated that they may cancel subsidy programs for large scale solar and wind. There may be an opportunity for these smaller projects. As Surface Rights Associations, we see a lot of benefits,” said Daryl Bennett, a director with the Action Surface Rights Association. “We still have these orphan sites, we still need to generate electricity, we still have irrigation and I think we would be prepared, if there is a new UCP government, and we say ‘we think this is a benefit to landowners, we expect you to continue some of these new programs.’ There might be a large window of opportunity that if we aren’t going to have large scale renewables, it may open up room for smaller renewable projects.”