AER pegs Alberta oil and gas cleanup bill at $38 billion

The Alberta Energy Regulator estimates it will cost $38 billion to close and reclaim the province’s conventional oil and gas sites, up from $37 billion a year earlier, according to its annual liability report published Nov. 9.

The figure is the regulator’s estimate for the end of 2025 and covers both active and inactive sites outside the oilsands, which the regulator pegs at a further $58 billion. The increase is about 2.7 per cent, even though the regulator said spending on cleanup by companies and the industry-funded Orphan Well Association topped $1 billion in 2025.

The report counts 77,932 wells that are no longer producing but have not been properly sealed, or about 16 per cent of the total, a lower share than the year before. Almost half of those idle wells are more than 10 years old, and some have sat for more than 20 years, according to The Narwhal’s reading of the report. Older wells can cost more to clean up and can carry pollution from years of neglect.

Under Alberta’s liability rules, companies must meet annual spending targets for closure work or post deposits in lieu. The regulator said 389 active companies, or about 80 per cent, met their targets. That leaves 96 active companies delinquent, and 17 of them have missed their obligations three years running. The Narwhal calculated from a separate regulator report that 35 active companies failed to meet both their cleanup targets and their payments to the Orphan Well Association.

Most of the liability sits with companies that can pay. The regulator said 82 per cent of the $38 billion, or roughly $31 billion, is held by licensees in low financial distress. Another $5 billion, or about 13 per cent, is with companies in medium distress, and more than $1.7 billion, about 4.5 per cent, is with companies in high distress. Those shares do not count licences still held by insolvent companies, and they can shift when licences change hands.

The regulator itself says liability is hard to pin down. Since 2024 it has based its estimate on closure costs that licensees submit, rather than on its own formulas. Critics have long questioned whether the estimates are low. The Narwhal reported that internal regulator documents from 2018 suggested oilsands estimates could be understated.

For Albertans, the stakes are who pays if a company fails. The rules say industry is responsible for all closure costs, with the Orphan Well Association funded by an industry levy and security collected from insolvent licensees. Taxpayers are exposed when those sources fall short, which is why the regulator tracks the financial health of each licensee.

The report arrives amid record profits and debt reduction across the sector. Canadian Natural Resources recently reached its $13-billion debt target and shifted to buybacks. The regulator has also acted against weaker operators, most recently when it suspended Sumerian Oil & Gas sites and ordered wells shut in.

Sources: Alberta Energy Regulator, Oil and Gas Liability Management; The Narwhal. Percentage shares are Canada News Media calculations from the regulator’s figures.

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