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Published on June 14th, 2019 | by Steve Hanley


Alberta Taxpayers Will Get Stuck With $400 Billion+ Oil & Gas Cleanup Bill

June 14th, 2019 by  

Don’t you love it when your government shirks its responsibility to the people so it can shower financial favors on a select few? Conservatives Reactionaries love it when that happens, especially if they are part of the group on the receiving end of such largess. The taxpayers living in Alberta, Canada must be thrilled to know that Rob Wadsworth, vice-president of closure and liability for the Alberta Energy Regulator told oil and gas officials privately last September how much it is going to cost to restore the land around the 343,000 inactive or abandoned wells in the province to their natural state, but forgot to tell the people of Alberta.

Alberta oil wells

CreditL Real News via YouTube

That information only came to light after the National Observer and Star Calgary filed a freedom of information request as part of a joint investigation. Isn’t it wonderful that the media needs to force their government to tell voters what’s going on? The people of Alberta must be very proud because they recently elected Donald Trump clone Jason Kenney premier of the province.

Kenney just gave a big speech to 51st annual Global Petroleum Show in Calgary on Tuesday in which he outlining his strategy to strengthen the province’s oil and gas sector. He was following up on promises he made during the election campaign, which brought his United Conservative Party to majority power in April.

According to World Oil, Kenney acknowledged that Alberta has seen oil and gas investments flee the province. “Due to lack of regulatory certainty, market access, together with certain policies, such as higher taxes, we’ve seen the shift of capital from Alberta’s energy sector to the sector in many other parts of the world, often jurisdictions that do not have the same level of regulatory and labor standards that we have in Canada,” Kenney said. “But all of that is about to change,” he added.

No doubt those changes will be good news for the long suffering taxpayers who will be glad to hear that Wadsworth told industry muckety-mucks last fall that cleaning up after themselves will cost upwards of cost $260 billion. The official number AER uses when it speaks publicly is $58.65 billion. Companies are supposed to pay into a fund administered by AER to cover cleanup costs, but guess what, citizens of Alberta? It only has a little over $1.6 billion on hand at the moment.

“The province’s system of collecting money to cover well cleanup costs is “only designed to work when things are booming,” and overestimates the value of companies’ assets, said Lucija Muehlenbachs, an economist at the University of Calgary who studies oil industry liabilities. In most cases, the province doesn’t collect any upfront security on wells, allowing companies to put off cleanup until they have no money left to pay for it. “It’s so obviously not a sustainable well-liability regime,” Muehlenbachs said.

The AER says the numbers cited by Rob Wadsworth represent “a hypothetical, worst-case scenario” where “industry stopped producing all hydrocarbons.” It says the liabilities include $130 billion for mining — most of which involves waste reservoirs in the oil sands called tailings ponds — $100 billion for conventional oil and gas, and $30 billion for provincially regulated pipelines.

It Gets Worse

The Supreme Court of Canada ruled recently that cleanup costs must be paid first out of the assets of bankrupt oil and gas companies before any being applied to any other debts. Even so, the cleanup, if there is any will likely take hundreds if not thousands of years, based on the rate of remediation to date. Here’s a slide from Wadsworth’s presentation last September.


Alberta oil and gas cleanup times

Source: National Observer

Wadsworth blames the problem on the regulator’s “insufficient” collection of security deposits on wells and an increasing number of companies with “questionable” ability to pay for cleanup, which is a little like saying “The dog ate my homework.” Unlike most Canadian provinces, Alberta also doesn’t impose cleanup deadlines on oil and gas companies. And with Kenney at the helm, it is unlikely to do so anytime soon.

Unlike taxpayers, who have certain amounts deducted from every paycheck to make sure they pay their fair share, oil and gas companies are on the honor system, with predictable results. So while the companies make out like bandits, the people are being set up for a soap suds enema by their government because, you know, too many job killing regulations are squeezing the lifeblood out of corporations. Kenney’s government has now slashed the application time for a new drilling permit to just 15 minutes while assuring people that is ample time to exercise proper oversight of the industry.

So drill, baby, drill. Freedom means never having to say your sorry or pay for the damage you do along the way. You would think the people of Alberta would want a government that protects them and the land they call home from harm but you would be wrong.

They apparently like being shafted by their elected officials. Which is good, because that means they are going to get precisely what they voted for from the Kenney government. So bend over, Albertans. When these chickens come home to roost, the oil and gas industry will be nowhere around and you will be left to clean up their mess.

Here’s more from RealNews.com.

Hat tip: Dan Allard 

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About the Author

Steve writes about the interface between technology and sustainability from his homes in Florida and Connecticut or anywhere else the Singularity may lead him. You can follow him on Twitter but not on any social media platforms run by evil overlords like Facebook.

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