Cash is coming as Alberta to open next phases of oil well cleanup

The next three phases of Alberta’s $1-billion program to clean up inactive oil wells will open within 10 days, as the federal government establishes monitoring committees to track the progress of well-cleanup activities funded by its $1.7-billion grant to Alberta, Saskatchewan and British Columbia.

Close to 100 Alberta Ministry of Energy staff were redeployed from their usual duties to assess cleanup applications, with another 30 employees from Service Alberta and Treasury Board and Finance brought in to help deal with the 35,758 applications that flooded the department when Phase 1 opened on May 1. All of those applications have now been processed, along with 400 additional ones for Phase 2. Close to $65-million has been approved for 140 Alberta-based companies.

But some company owners, such as Scott Darling in Calgary, feel trapped in limbo as they await answers and the next rounds of the program.

“It’s hard to have faith,” he said. “It’s really been kind of a schemozzle, truth be known.”

The Globe and Mail first spoke with Mr. Darling in May, not long after he’d spent 18 hours a day submitting forms, trying to secure a share of the $100-million earmarked for Phase 1. He owns two oil-well services companies – Performance Energy Services and Performance Production Services.

Now he’s waiting for word about which applications were successful, but he’s “not having very much luck.”

By Friday, he had received eight approvals for cement work; however, 194 of his applications were denied. “It’s a little hard to take all this rejection, to be honest. It reminds me of high school,” he joked.

After numerous discussions with the bureaucrats who are sorting through approvals, he said it seemed like small details – including leaving out start and ends dates on his applications – resulted in rejections.

That was “frustrating,” he said, pointing out it’s impossible to know a project’s start or end date until he knows how many contracts he’ll have and is able to plan work accordingly.

Alberta Energy Minister Sonya Savage told The Globe on Sunday that many applications came with similar paperwork errors and problematic “subject to” clauses, so the government will launch a kind of do-over called Phase 1B.

She said the department will work with companies for Phase 1B to try and fix issues like Mr. Darling’s, so it can capture those contracts and roll out more cash.

“There is work coming for all of those that might have been disappointed in Phase 1. There’s plenty of work coming – it’s a billion-dollar program,” she said.

Inactive well programs in Alberta, Saskatchewan and British Columbia were all funded by federal government grants as part of Ottawa’s COVID-19 response. The idea was to stimulate economic activity and protect jobs by cleaning up oil and gas wells.

According to the federal Finance Department, funding agreements with the provinces stipulate terms and conditions, including how the funding can be spent and joint monitoring committees will track progress.

Alberta’s initial tranche targeted relatively simple cleanup projects less than $30,000. But with unclear communication and industry rumours that the program was “first in, best dressed,” companies tried to crowbar large, complex projects into the first phase by cutting contracts into $30,000 chunks.

Other companies had multiple contractors apply to clean up their wells, Ms. Savage said, figuring they had a better chance of securing cash if they submitted more applications.

“You can’t blame them. You’ve got a program of government funding and you want to ensure you get the most benefit from it because you know it will be widely subscribed. So everything was kind of dumped into Phase 1,” Ms. Savage said. “They’re desperate for work and are trying to keep their employees working, trying to keep their rigs working, trying just to stay alive.”

Ms. Savage expects less of that over the next few phases, as the department improves communication around what projects fit where.

Criteria for phases 3 and 4 are being developed according, in part, to what the government saw in first-round applications. An industry working group is also meeting each Friday to go over what they’ve heard from members and give their input into program improvements.

Although she knows it’s tough in an environment where many companies have struggled along with decreasing work over the past few years, Ms. Savage asked for patience. “There is money available. There will be funds rolled out,” she said.

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