Auditor's OGC report stirs debate

By Christine Rumleskie and Jon Zacks


The B.C. NDP is echoing the findings of a report that’s calling on the Oil and Gas Commission to beef up some of its safety and environmental practices.

NDP Energy Critic John Horgan discussed the findings of an audit conducted by BC Auditor General John Doyle.

The report concludes that the OGC isn’t doing a good enough job in its oversight of restoring contaminated well sites in the northeast.

Doyle indicated that the OGC requires a $7,500 deposit to decommission and restore each site, should the company fail to complete the work itself. However, an investigation found that the actual price for site restoration falls somewhere around $100,000.

In 2007, a consultant was contracted by the Canadian Council for Ministers of the Environment. The consultant found that if all of the wells operational at the time were to be abandoned, that could leave the province with a $1 billion mop-up job.

Horgan says there’s no safety net to cover that cost, so the taxpayer would be the one to pick up the bill.

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However, the Commissioner of the B.C. Oil and Gas Commission says while his agency was involved in the audit process, he was a little taken aback by the figures thrown out by the Auditor General.

Alex Ferguson says the potential $1 billion cost to the province to mop up abandoned well-sites is a worst-case scenario. He says there are several different layers of insurance in place to ensure the crown would never be on the hook for orphaned wells, including financial audits of companies before they can take on new wells, drilling deposits, and a rougly one million-dollar orphan fund.

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He also says $7,500 is the minimum deposit for drilling a new well, and most companies pay much more than that. He says the orphan fund currently sits at roughly $1 million, and the Ministry has the power to top-up the fund through increased taxation on industry.

Ferguson concedes there is work to be done, and he admits his agency needs to be more transparent, but says some figures from the report have been taken out of context.

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John Horgan also attacked the Minister of Energy, Mines and Petroleum Resources in the BC Legislature’s Question Period on Thursday.

He called on Blair Lekstrom to protect the environment and public health, and to ensure that there’s appropriate oversight and compliance within the OGC.

Horgan touched on the sour gas leak that happened in Pouce Coupe in November. He says the OGC needs to keep a watchful eye on operations, to ensure this doesn’t happen again.

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Doyle and energy critics like John Horgan are calling on the Ministry and the OGC to be more transparent in their oversight of the industry.

Blair Lekstrom, meanwhile, says the Ministry and the OGC are always looking for ways to improve.

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He also says the implementation of the ‘Oil and Gas Activities Act’ this spring, will give government even more power to address many of the key issues in the report.

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