If you live in Alberta, you’ve likely heard about land reclamation in the oil and gas sector. Simply put, land reclamation is about returning industrial sites back to a natural state after commercial use.
While oil and gas companies are legally required to close and clean up their sites when production ends, it doesn’t always happen — in fact, thousands of inactive wells litter the Alberta landscape.
How did we get here?
Weak government rules have enabled operators to delay the work, avoid the costs or walk away entirely from their land reclamation responsibilities. When these companies shirk their duties to close oil wells or fail to pay the rent on the land they used for business purposes, that burden shifts from the fossil fuel sector to the pocketbooks of Alberta taxpayers. This is not chump change by any means. We’re talking about hundreds of millions of dollars.
It's not just the cleanup costs that fall on Albertans — old oil and gas wells that are left on someone’s land for decades affect their use of the land, property values, and even physical health. In some cases, provincial tax dollars get allocated to cover the bills when companies dodge their rent.
This problem has gone on for long enough that sometimes Albertans might think that it’s intractable. It’s not, but we can’t ignore the issues and hope they go away. With that in mind, we’ve compiled a list of common questions on the key concepts related to the complex topic of land reclamation so we can start to find ways to solve it. There are a lot of specific terms and regulations to unpack and understand, so let’s get into it.
What is the “polluter pays principle”?
The polluter pays principle is simple — it’s the idea that industrial operators should be responsible for cleaning up their own pollution. And it’s a key tenet of Alberta’s environmental protection laws. The Alberta Environmental Protection and Enhancement Act references this principle.
Currently, the polluter pays principle is not being fully upheld in Alberta. You might think that oil and gas firms are required to post a large upfront financial bond to ensure they can pay for cleanup; but in fact, companies rarely have to do this, and it is at the discretion of the regulator. While the Alberta Energy Regulator (AER) is supposed to effectively steward and manage levies taken from oil and gas companies to pay for cleanup costs at closure, they’ve collected less than 3% of what is needed to effectively reclaim land.
What is an orphan well?
It is an oil or gas well that no longer has a responsible owner. This is usually because a company has gone bankrupt and has failed to properly reclaim its infrastructure. These orphan wells end up as the responsibility of the Orphan Well Association. There are more than 7,000 of them across the province, and almost half of them were orphaned this year alone. At present, there’s roughly $1.6 billion in liabilities for orphan wells.
Who oversees liabilities for the oil and gas sector in Alberta?
The AER manages oil and gas debts through the Liability Management Framework. The AER coordinates land reclamation and is supposed to ensure that companies meet their obligations throughout the business life cycle.
Generally, oil and gas producers are not required to pay an upfront deposit for land use or reclamation. Only when a company is determined to be in a precarious financial situation must they post security against their infrastructure, but this rarely happens. As a result, if an operator goes bankrupt, there is often not enough money left to cover their well abandonment and reclamation costs.
What is the Orphan Well Association and what are they meant to do?
The Orphan Well Association (OWA) is an industry-funded organization. It is supposed to manage environmental and safety risks associated with old wells that have been abandoned by negligent industry owners.
The OWA is chronically underfunded. While the oil and gas industry pays an annual levy to support the OWA’s decommissioning work, the levy is small compared to the volume of work ahead — just $144.5 million this year. Some of the OWA’s funding comes from government loans: $330 million from the provincial government, and another $200 million from the federal government.
How are Albertans impacted by reclamation issues?
When an old industrial site has not been effectively restored, farmers and rural landowners bear the brunt of the physical impacts that include obstacles to agricultural work and toxic contamination of the nearby soil, water, and air.
Oil and gas operators are also required to pay rent for the land their machinery and roads occupy, but they don’t always comply. If a company doesn’t pay, landowners can make a claim to the Land and Property Rights Tribunal, which has handled over 35,000 claims since 2016. Ultimately, the provincial government covers the costs of companies that fail to pay this compensation. Since 2014, Alberta taxpayers have paid out $145 million to landowners in compensation for unpaid rents. This problem has been getting worse and more expensive over the last several years.
There are even more subsidies given to this highly profitable sector. The former Trudeau government made a $1 billion contribution to Alberta’s Site Rehabilitation Program, to provide industry with public funds to address environmental obligations that were meant to be financed by operators themselves. While this Covid-era initiative was designed to stimulate economic activity during the oil and gas sector slowdown period, it was not designed to be ongoing taxpayer support of industry cleanup obligations.
Are oil and gas companies supposed to pay municipal property taxes for land they use?
Yes, but some companies don’t pay what they owe, even when they’re still in operation. This shifts the cost burden for municipal services onto law-abiding families and businesses. Some of the taxes deducted from Albertans’ incomes every month go towards compensating farmers for this unpaid rent and to support struggling rural municipalities. The energy sector’s total unpaid municipal tax bill is approximately $250 million.
The issue of unpaid taxes is province-wide — results from a recent survey from the Rural Municipalities of Alberta found that only four municipalities had no unpaid tax burden from oil and gas companies.
This seems like there are some generous rules for oil and gas operators. Is it the same for Alberta’s renewable energy sector?
No. Renewable energy producers in Alberta are subject to much more stringent rules than their fossil fuel counterparts. In June 2025, a new code of practice was established for wind and solar projects that set security requirements at 30% of the total land reclamation cost, but after 15 years of operation the security fee jumps up to 60%. Compare this to the fact that most oil and gas producers are not subject to any up-front security requirements.
Security for reclamation is essential for protecting our land, landowners and our environment. Yet renewables face a disproportionate requirement compared to their oil and gas counterparts despite the fact that wind and solar projects are unlikely to result in land or water contamination, and often have significant salvage value in components like the steel towers and copper wiring.
The government has yet to announce any similar overhauls of the oil and gas sector’s liability governance. As it stands now, Albertans are being set up to get stuck with a system that alleviates accountability from the oil and gas sector and unfairly burdens renewable developers.
Ultimately, we need a system where Albertans can be confident that energy infrastructure will be cleaned up in time and paid for by the operator, but can also enable Albertans to access the jobs and economic opportunities that come from responsible energy development.
What can be done to solve land reclamation issues in the oil and gas sector?
The Alberta Energy Regulator came up with the Mature Asset Strategy in 2025, which is currently being assessed and may move into legislation. However, this strategy doesn’t address the fundamental problems that too many pieces of infrastructure are being orphaned; that there are no enforceable timelines for cleanup; and that some companies have been able to skirt the rules. The strategy also includes provisions for the creation of semi-Crown corporations that would take ownership of aging wells, operate them until end of life, and close them. The potential for those Crown corporations to be funded with taxpayer money if not enough revenue is generated is significant and would be a huge step back in terms of keeping oil and gas firms accountable for cleaning up after themselves.
But there are actions that the Government of Alberta and Alberta Energy Regulator can take to address this problem — actions that other places, including several U.S. states, have implemented with some success.
Some of these solutions include:
1. Firm deadlines for closing old wells, backed with inactive well fees.
2. Transparent public estimates of cleanup costs.
3. Tougher rules to stop high-risk companies from taking on more wells they may never clean up or pay for.
For more on this topic
Report: No Well Left Behind
Report: Unpaid Bills
Guide: Liabilities Resources for Landowners
