Province, Feds Squabble Over $1M Oil Leak Cleanup

In 2017, Siobhan Coady asked the federal government to pick up tab on leaking abandoned oil wells on Shoal Point.

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The province has allowed abandoned oil wells on the Island’s west coast to leak petroleum into the Gulf of St. Lawrence four years after being told how to stop the pollution. 

Documents obtained by The Independent show that, despite the provincial and federal governments’ knowledge of continual oil seepage into Port au Port Bay from century-old oil wells at Shoal Point, the two governments have failed to agree who will pay the estimated $1 million to implement a permanent solution.

Three well casings protrude from a tidal area on Shoal Point, a narrow peninsula near the community of Boswarlos on the Port au Port Peninsula. They belong to wells estimated to have been drilled in the late 19th or early 20th century. During low tide they are exposed and during high tide they are submerged underwater. 

A provincial monitoring program has consistently reported oil leaking into the bay. Rather than implementing the recommended solution from its own commissioned report, the province has spent four years unsuccessfully lobbying the federal government to foot the cost.

Oil leaking since 2015

The Independent obtained a copy of an August 2017 letter from provincial Natural Resources Minister Siobhan Coady to her federal counterpart, former Natural Resources Minister Jim Carr, asking for the money to remediate the wells. 

“[T]he best approach to ensure protection of the environment is to complete the decommissioning,” she writes in the letter dated Aug. 7, 2017. “Therefore I write to ask for funds estimated to be upwards to $1 million for two wells.” Coady also cites a $30 million federal grant to Alberta through the 2017 federal budget “to undertake similar activities” in that province.

Carr’s Nov. 29, 2017 response, also obtained through an access to information request, says “the industry is responsible for oil well decommissioning and cleanup, while orphaned wells are primarily regulated under provincial jurisdiction.” He also says Canada is willing to “explore potential federal programs that could support the province’s efforts to address this environmental issue.”

A spokesperson for the Department of Industry, Energy and Technology (IET), which supports energy industries in the province, said discussions with the federal government were interrupted in 2019, “likely because of the provincial and federal elections,” and then by the COVID-19 pandemic. But the department “will continue to engage with them on this file,” they said.

In 2015 residents on the Port au Port Peninsula reported oil leaking into the ocean near abandoned rusty oil well casings protruding through the sand and water in a tidal area of Shoal Point. At the time, Shoal Point was the site of a controversial proposed fracking operation, but a grassroots-led resistance to fracking in the province led the government to implement an indefinite moratorium on the controversial method of petroleum extraction.

That same year, the province commissioned engineering and consulting firm Amec Foster Wheeler to assess the oil seepage. That report, released in August of 2015, proposed temporary solutions to stop the flow of oil and buy time to determine a long term solution. It also estimated that approximately one litre of oil was leaking into the ocean every hour, though it did not determine whether seepage is continuous.

By the end of November 2015 the oil leaks were temporarily stopped. In a December 2015 report, Amec Foster Wheeler recommended “that the permanent decommissioning of these well casings be undertaken as soon as possible to avoid deterioration of the well casings that may again lead to continued release of oil to the receiving environment.” The company also suggested monitoring the wells “at least monthly” for leakage. 

Government documents indicate the province did not conduct a follow-up inspection until six months later, on May 25, 2016—the same day the Canadian Coast Guard received a report “from an individual advising that oil seepage had resumed from the repaired wells,” the report says.

The site inspection that day reported no traces of oil. But follow-up visits the following day, and again on June 1, found oil leaking from the wells.

“The rate of oil seeping may be comparable to that observed prior to the repair,” the report’s author says, adding: “I suspect that the oil is leaking from the well casing and the oil is accumulating under the concrete and is eventually finding an escape route. The repair has not resolved the seepage.”

Site visits were conducted almost monthly until November 2016, which marked the last inspection for half a year, when two were finally undertaken again in May 2017. The second visit that month found oil seepage near one of the wells. Monthly site visits stopped again for several months after November 2017 and resumed the following spring.

Image from a site inspection report showing one of the three Shoal Point well extension pipes broken off from the well casting. Photo taken Oct. 12, 2016.

“Warning Sign” of looming problem

The Independent asked the Department of Environment and Climate Change why it did not follow the Amec Foster Wheeler’s recommendation that the wells be monitored monthly, but did not receive a response by the time of publication.

The most recent site inspection report reviewed by The Independent, dated July 23, 2021, says “oil sheening” was observed near one of the wells, and that an “oil odour was detected downwind” from that well. “Monitoring of the area will continue,” the report concluded.

Angela Carter, an associate professor of political science at the University of Waterloo and author of the book Fossilized: Environmental Policy in Canada’s Petro-Provinces, says the case of Shoal Point signals “a looming problem” for the province and the oil industry at large. 

“If the province and feds can’t figure out a way to plug one well onshore,” she says, “how are we ever going to manage the decommissioning and ‘abandonment’ of numerous major fields that are 400 kilometres offshore, with wells more than a kilometre deep?”

In May 2017 Amec Foster Wheeler submitted its report to the province laying out three long term options, including full abandonment of the wells at a cost of more than $1 million. It’s the only option the firm says has a “high” probability of oil seepage reduction. 

In the written statement from the Department of Industry, Energy and Technology, the spokesperson said that “in light of the fiscal reality facing the Province in recent years, simply ‘footing the bill’ is not a solution to this issue.”

They also noted that “the options contained within the AMEC Report are not definite—in fact, the report states the natural seepage could still occur regardless of either choice.”

In June the province announced more than $500 million in financial assistance to Terra Nova project co-owners Suncor, ExxonMobil and Chevron in an effort to entice them to extend the project’s life.

Stephenville-Port au Port MHA Tony Wakeham says he’s “disappointed” the issue hasn’t been addressed, and that the oil leak “is another example of the Liberals dragging their feet on environmental protection.” He says his constituents “deserve an update from [Minister Andrew Parsons] and deserve for action to be taken.”

Russell Williams, an associate professor of political science at MUNL in St. John’s, says the provincial government’s inaction on the oil leaks is a “warning sign” of an imminent problem.

“The province is essentially saying it doesn’t have the money to clean up something that is usually a provincial responsibility at the same time as we take on an ever-increasing number of what I would call long term environmental liabilities in the province’s oil and gas sector,” he says.

“There are a lot of hidden costs from oil and gas development in the province that we have not had an honest conversation about—where we’re going to get the money to clean things up.”

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