Public money needed to aid energy cleanup, minister says
Less than a quarter of province’s half-million energy wells are reclaimed
Alberta’s energy minister is promising strong action by next fall to clean up the province’s growing backlog of unreclaimed oil and gas sites.
“There are many oil wells to reclaim and the current system is unlikely to see them reclaimed,” Brian Jean said.
But Jean said industry might need help from public finances to live up to its legal obligations, as well as lower municipal tax burdens and a lighter regulatory approach.
“I don’t like sticks, I like carrots,” Jean said. “Without changes to how we approach fixed costs and we approach financing well closure, we won’t make the required progress. We need to find new ways to do liability financing, and we need to change the approach on municipal taxes.”
Alberta government figures show the province has nearly a half-million energy wells. Less than a quarter are reclaimed.
Meanwhile, the province’s conventional oilpatch is in decline, with production falling slightly over the last decade. Less than 30 per cent of Alberta’s wells are new or active.
The squeeze between growing environmental liabilities and falling revenue has many worried about who will pay the cleanup bill. The tab has been estimated at anywhere from $59 billion to $260 billion.
Energy companies are required to clean up after themselves as a condition of their licences, and Jean said he supports the principle of polluter pay.
“It’s important to me to make certain industry is responsible for its own messes,” he said.
But they may need a little help. “To stimulate activities that are necessary to protect Albertans, we might have to do some investment,” Jean said. “I’m not going to rule anything out.”
The United Conservative Party government has already proposed two programs that would use taxpayer dollars to help energy companies pay for their legally required cleanup. Both have been heavily criticized.
Jean said municipal taxes on energy facilities will also be scrutinized. He suggested municipal leaders are open to the idea that some taxes are better than no taxes at all.
“They understand that the industry needs to be healthy in order to pay municipal taxes. You have to have a tax that actually makes sense. They also understand we’re in it together.”
Rural Municipalities Alberta calculates provincial moves have cost its members $9 billion in reduced assessments and $332 million in mandated tax holidays on top of $252 million in unpaid taxes.
Jean refused to commit whether industry levies, such as those that go into the fund that cleans up abandoned wells, would increase.
“At this stage, I would say the Orphan Well Association is well funded. But the truth is, it’s going to change.” Rules governing oilpatch operations may also change.