New coalition files challenge against the Alberta Energy Regulator to ensure polluters pay for orphan well cleanup

Despite Sequoia bankruptcy, Alberta Energy Regulator gives the oil and gas industry a staggering 83% discount on its 2025 orphan cleanup fee

(Calgary/Treaty 7 Territory) — A new coalition of landowners, scientists, academics, and Indigenous and civil society organizations, called the Coalition for Responsible Energy (C4RE), today filed a first-ever challenge to Alberta’s 2025 orphan fund levy, saying the proposed $144.5 million charge to oil and gas companies will cover less than a quarter of the estimated costs of cleaning up orphaned wells and other sites. This amounts to an eye-popping 83% discount on what they owe this year.

C4RE and landowner Dwight Popowich—who has an orphan well on his property drilled by bankrupt company Sequoia Resources—filed the formal Request for Reconsideration to the Alberta Energy Regulator (AER) yesterday. The filing states that the low rate set for the levy will not be able to pay for the existing backlog of orphan infrastructure. They called on the regulator to increase the levy on oil and gas companies to a minimum of $862 million to ensure Albertans are not left waiting years for orphaned wells to be cleaned up.

Egregious pattern of underfunding

Alongside Mr. Popowich’s submission, C4RE also published a new report authored by Drew Yewchuk, a liabilities regulation expert. It demonstrates an alarming pattern of underfunding at the industry-controlled Orphan Well Association (OWA) as a result of successive annual levies that were insufficient to cover existing cleanup costs.

Orphan wells can pose both health and environmental risks, leading to land and groundwater contamination, air pollution, and persistent impacts to ecosystems.

In January, the number of orphaned wells the OWA must clean up more than doubled after it assumed responsibility for 2,500 new sites from the bankrupt Sequoia Resources Corp. 

The OWA is responsible for closing and cleaning up wells and other oil and gas infrastructure if its owner becomes insolvent or bankrupt or cannot meet its obligations to close its sites safely and responsibly, and is designated by the AER as an orphan. The OWA is funded through an annual levy, administered by the AER to companies across the oil and gas industry and is intended as a backstop to protect taxpayers.

Underfunding violates the Polluter Pays principle

On March 31, 2025, the AER set its annual orphan fund levy at $144.5 million for 2025. Yet according to the OWA, the estimated cleanup costs of wells already on their books after the 2023/24 fiscal year was $862 million, leaving a shortfall of $715.55 million. At the same time, there are billions in cleanup costs for inactive wells that are likely to become orphans in the coming years. 

Mr. Popowich, from Two Hills, AB, has been fighting for eight years to have a well that was drilled in the middle of his alfalfa field in 2008 to be properly closed and cleaned up. Owned by the long bankrupt Sequoia Resources, the well was finally declared an orphan in March of this year. But he and other landowners were told that they will have to wait between 10 and 12 years for the wells to be cleaned up due to a shortage of funds at the OWA. 

Mr. Popowich’s filing was submitted on the basis that the AER, in setting its 2025 levy to $144.5 million, neglected to include the funding needed to clear the backlog from previous years. By setting the orphan levy unrealistically low, the AER is choosing to minimize the costs to industry, while maximizing the risk to taxpayers, landowners, and the environment — violating the Polluter Pays principle, a foundational tenet of Canadian environmental law.

Industry decides how much to pay

According to a May 2023 report from Alberta’s Auditor General, prior to 2022, the AER did not scrutinize the orphan levies that were proposed by the industry-controlled OWA, and did not analyze the long-term sustainability of the orphan fund to meet the demands of oil and gas site closure costs. This means the regulator has let industry decide what to pay instead of what they should pay each year — leading to the current crisis of underfunding for the backlog of orphan wells.

The levy is applied to companies across the oil and gas industry, which means that even though some companies may be bankrupt, the industry as a whole can still cover the cost of clean up. For example, just three companies — Cenovus, CNRL, and Imperial Oil — reported a combined $14 billion in profits in 2024 alone. That’s nearly 20 times greater than the $715.55 million unaccounted for in this year’s levy. 

The AER bulletin prescribing the 2025/26 levy provides no justification for the amount of the orphan fund levy and no explanation as to why the OWA or the AER believed that $144.5 million is sufficient to cover incoming and existing costs, or the long-term sustainability of the orphan fund. 

Mr. Popowich is asking the AER to reconsider its decision and make polluters pay what they owe. 

Quotes

Dwight Popowich, applicant, landowner, and C4RE member:
“Landowners have waited over seven years to have their inactive Sequoia wells declared orphans, and we’ve been told it could take another 10 to 12 years before they’re cleaned up. Taxpayers have already paid at least $15 million in annual compensation to those landowners, and that will continue as long as the orphan fund is underfunded. Why should taxpayers bear this burden? Why should I, and thousands of other landowners, have to wait a decade or more to get our land back, when it’s the regulator that’s responsible for setting the levy and holding companies accountable?”

Mark Dorin, landowner, and C4RE member: 
“The orphan fund exists to protect Albertans from bearing the costs of a reckless industry, but it only works if the AER sets an appropriate levy and forces these companies to pay what they owe. It’s time for Albertans to hold our government and our regulator accountable to protecting taxpayers, landowners, and the environment and ensure they make polluters pay.”

Dr. Norm Campbell, Canadian Association of Physicians for the Environment: 
“Oil and gas wells are associated with substantive health risks through the leak of gases and other poisons. All Albertans, but especially those living close to active or abandoned wells, need to be concerned about toxins in the air, water, and soil adversely affecting their personal health, as well as the health of wildlife and the environment nearby.”

Drew Yewchuk, liabilities regulation expert, former staff lawyer with the University of Calgary’s Public Interest Law Clinic: 
“The AER’s traditional approach has been a catastrophic failure. It has let the oil and gas industry decide how much they want to pay each year for orphan well cleanup, instead of making them pay what they owe to protect Albertans.”

Bill Heidecker, President of the Alberta Surface Rights Federation, cattle producer and owner of Drylander Ranch in Coronation, Alberta:
“If there is to be a redoubling of energy development and activity in Alberta, then clearly issues with past energy activity must be dealt with first including ensuring the orphan fund is properly funded by industry.”

Paul McLauchlin, Reeve of Ponoka County:
“I am grateful this coalition is recognizing that the regulator’s under-funding of orphan well cleanup has been an ongoing issue in rural Alberta. Before Alberta increases production, the regulator must first get its house in order, and make industry pay the full orphan fee. If Alberta’s oil and gas industry wants to attract outside capital and increase production, they need to first clean up their mess. They signed a contract to do so, and a promise is a promise.”

Lucija Muehlenbachs, Professor of Economics at the University of Calgary, with a focus on environmental, resource, and energy economics:
“I don’t see the reason to kick the cleanup costs down the road. The current number of orphan wells, 4,482, is still a small number. We have over 200,000 wells that will need cleanup at some point, many of which could become orphans. Landowners don’t have a say as to whether a well gets drilled on their land, so their frustrations should be heard when they are told it will be a decade before cleanup.”

For more information or to request an interview, please contact:
Phillip Meintzer, co-founder, Coalition for Responsible Energy (C4RE)
email: meintzer.phillip@gmail.com, phone: (403) 771-1647

About Coalition for Responsible Energy (C4RE):

C4RE  is a coalition of landowners, scientists, surface rights advocates, and Indigenous, environmental, human health and civil society organizations fighting to change the way that energy development is regulated in Alberta. The coalition formed around a shared concern about the AER’s failure to function as a credible regulator of energy development in Alberta, and its inability to meet its own stated mandate to “provide safe, orderly, and environmentally responsible energy development.” 

Responsible energy means prioritizing the health and wellbeing of ecosystems, Indigenous Peoples, and local communities over corporate interests. For more information and a list of endorsing organizations, visit https://c4re.ca/ 

Background

The AER’s decision to give oil and gas companies a discount on the orphan levy is yet another example of the regulator letting industry off the hook. In August 2024, the AER gave Imperial Oil a 95 percent discount on its fine for a tailings spill that lasted 263 days, and in January 2025, new research showed that the AER failed to inspect 97 percent of more than 500 tailings spills reported over a 10 year period. Mounting evidence shows that the AER continues to prioritize the interests of the industry it is responsible for regulating.

COALITION SUPPORTERS

C4RE members include: 

• Alberta Environmental Network
• Alberta Liabilities Disclosure Project
• Alberta Wilderness Association
• Alberta Resistance
• Calgary Citizens on Climate Change
• Calgary Climate Hub
• Canadian Association of Physicians for the Environment
• Chinook Watershed Society
• Council of Canadians – Edmonton, Calgary and Red Deer chapters
• For Our Kids Alberta
• Keepers of the Water
• Land Lovers Network
• Polluter Pay Federation
• The Gravity Well
• Treeline Ecological Research

THE NUMBERS

Right now in Alberta, there are more than 325,000 conventional oil and gas wells and nearly 450,000 kilometres of pipelines. As this infrastructure ages and breaks down, it can leak toxins into the surrounding air, land, and water.

• Number of orphan sites that require decommissioning: 4,482
• Number of orphan wells (within those sites) that still require decommissioning: 3,712
• Number of decommissioned orphan sites that require land reclamation: 8,081
• OWA’s total estimated closure costs for existing orphan sites: $862 million
• Amount industry is being charged for cleanup: $144.45 million
• Just three companies — Cenovus, CNRL, and Imperial — reported a combined $14 billion in profits in 2024 alone. That’s nearly 20 times more than the $715 million unaccounted for in this year’s levy.
• Last year alone, CNRL – a single company – paid more than $4.5 billion in dividends and share buy backs. 
• According to a 2023 Pembina Institute poll: 94 per cent of Albertans say oil and gas companies should pay for cleaning up inactive and abandoned oil and gas wells