By: Drew Yewchuk
PDF Version: The 2020/2021 Orphan Fund Levy and the Missing Consultation on Environmental Liability Management Reform
Document Commented On: 2020/2021 Orphan Fund Levy Bulletin, Alberta Energy Regulator, September 10 2020
The Orphan Fund Levy is a levy imposed by the Alberta Energy Regulator (AER) on all holders of licensees or approvals issued by the AER. The levy is authorized by sections 72 to 75 of the Oil and Gas Conservation Act, RSA 2000, c O-6. The levy funds the work of the Orphan Well Association cleaning up oil and gas assets that have no solvent owners and no financial security set aside for their clean-up . The AER released a bulletin setting the 2020/2021 Orphan Fund Levy on September 10, 2020. The prescribed levy is $65 million for 2020/2021, up from $60 million in 2019/2020, $45 million in 2018/2019, and $30 million in 2017/2018 (when it was still collected in two parts).
The good news is that the Orphan Fund Levy is going up, which should help cover the substantial costs of cleaning up Alberta’s growing orphaned well inventory. The bad news is that in $3.4 million of the levy was not received in 2019 due to the insolvency of some operators (Orphan Well Association Annual Report, 2019). The ugly news is that, despite Alberta’s commitment to implement new regulations to significantly reduce the prospect of a growing inventory of orphan wells (see the announcement of April 17, 2020), and the provincial government’s press release of July 30, 2020 about of the new framework to manage oil and gas liabilities, there have yet to be any public details or public consultation on the design of the new liability management system. Alberta is drifting along with the old system despite acknowledging its massive problems.
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