Observers are criticizing Alberta Energy Minister Brian Jean’s suggestions on how the province could clean up the thousands of abandoned oil wells. They say these favor the industry and lack public input.
“Albertans owe a better explanation than they have yet received about why this is necessary,” said Martin Olszynski, a professor of commodity law at the University of Calgary.
Jean’s department opens consultations on how to deal with Alberta’s nearly half a million oil and gas wells, two-thirds of which are not producing. Estimates of the potential costs vary widely, in the hundreds of billions of dollars.
In an interview, Jean suggested that while this is not his preferred solution, some form of government support may be needed to clean up the mess, despite the industry’s legal obligations. He also suggested that municipalities may need to reduce their tax levies and that the regulatory burden on the industry may need to be eased.
But Olszynski said many energy companies are thriving. Any form of a government-funded bailout would raise serious questions, Olszynski said.
“There is no rational explanation for this support when you realize that this industry is not a monolith. For lack of a better explanation, Albertans are right to wonder what is going on.”
Katie Morrison of the Canadian Parks and Wilderness Society said the use of public funds for the problem says nothing about how it came about in the first place.
Receive the latest national news
For news affecting Canada and around the world, sign up for breaking news alerts sent directly to you as they happen.
“We can look at what needs to be done immediately, (but) we also need to look at how we can prevent this. I don’t see anything that (Jean) has talked about so far that will prevent the situation from happening again and again.
Paul McLauchlin, chairman of Alberta’s Rural Municipalities, said municipal taxes are well down the list of well owners’ costs and 94 per cent of businesses pay their taxes just fine.
“This narrative that (cutting) council taxes is going to save the industry is a completely ridiculous idea,” he said.
He said business groups like the Alberta Enterprise Group — once led by current Premier Danielle Smith — have been lobbying for municipal tax cuts for years.
“The government is going to do this on the backs of rural Albertans,” McLauchlin said. “Rural MLAs must make their voices heard.”
Energy critic Nagwan Al-Guneid of the opposition New Democrat party said reducing environmental obligations for energy companies with public funds amounts to breaking the law.
“It is unacceptable to use public money to meet companies’ legal obligations to clean up the environmental damage they cause,” she said.
Olszynski also questioned Jean’s statement that the Alberta Energy Regulator’s footprint is too large. He pointed out that the province’s auditor general found in a January report that the regulator had underestimated cleanup obligations and did not have a good understanding of pipeline reclamation or the condition of Alberta’s 59,000 energy infrastructure components.
“It is difficult to reconcile the Auditor General’s concerns with the idea of a lighter regulatory burden.”
If anything, the regulator’s reach should be wider, Al-Guneid said.
“I think we have great regulations,” she said. “They are not enforced.”
Both Olszynski and Morrison criticized the lack of public input into Jean’s deliberations.
“It’s often the case that (this government) looks at the industry perspective and the economic perspective, but not the whole picture,” Morrison said.
Olszynski said leaving the public out of such discussions is why Alberta ended up with such a large liability in the first place.
“You’d think by now that maybe we should get the public involved.”
Richard Wong of the Canadian Association of Petroleum Producers said government action has helped operators reduce the inventory of inactive wells by 18,000 between 2018 and 2023. The total percentage of inactive wells has fallen from 21 to 17 over the past four years.
“While more needs to be done to further accelerate the well closure process, (the association) looks forward to working with other stakeholders on any potential regulatory, policy and fiscal measures that may be necessary to address the challenges in the regions of Alberta. mature oil and gas producing assets through the province’s mature asset strategy consultation,” Wong wrote in an email.
© 2024 The Canadian Press
