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The federal $1-billion fund was created to chip away at Alberta’s backlog of abandoned oil and gas wells
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Alberta is pleading with the federal government to allow it to keep $137 million in unused funds for oil and gas well cleanup for the same activities on Indigenous land.
The request to allocate the funding to site cleanup on Indigenous lands has received backing from chiefs from Treaty 6, 7 and 8 territories and the Indian Resource Council.
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At the heart of Alberta’s request is funding created by the federal government early in the COVID-19 pandemic that was structured to save jobs and jumpstart efforts to reduce the number of abandoned wells on Alberta’s books.
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In late April 2020, the federal government announced a wide-scale economic response plan that included its Site Rehabilitation Program (SRP) — a $1-billion fund to chip away at Alberta’s backlog of abandoned oil and gas wells. The funding came as thousands of oilfield workers were unemployed during the height of COVID-19, resulting in more than 4,000 jobs being created.
With that program coming to a close, $137 million of that $1 billion in grant funding remains unused. The federal government is requesting that funding be returned to Ottawa, according to the Alberta government, which currently holds the money.
Cleaning up an abandoned well can cost between $100,000 to several million dollars, according to the federal government.
‘They’ve already allocated this on the books’: Jean
“Even though the money has lapsed, it’s just simply a time in the calendar,” said Alberta Energy Minister Brian Jean. The longtime Alberta politician did not say why the $1-billion funding hasn’t been fully spent.
“They’ve already allocated this on the books. Just let us keep it, manage it and clean this up.”
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The federal government did not immediately respond to Postmedia’s request for comment. Deputy Prime Minister and Finance Minister Chrystia Freeland was expected to address the request at a Monday evening press conference.
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“This is a liability of the lessees, and the Alberta Government is holding them accountable through the Well Closure Program. However, time is not on our side,” said Chief Cody Thomas of the Enoch Cree Nation.
The SRP has resulted in 1,824 inactive well sites being closed during the Indigenous community grant program, which set aside $133.3 million to clean up inactive wells in Indigenous communities.
‘This is essentially now an industry subsidy’: lawyer
Martin Olszynski, a University of Calgary resource lawyer and frequent critic of the province’s remediation policies, said the intent of the federal program “wasn’t intended to subsidize well clean-up” despite it indirectly having that effect.
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“The primary rationale was about sustaining jobs in the context of broader COVID relief,” Olszynski said. As oil and gas companies have rebounded sharply from low commodity prices, both preceding and during the pandemic, some have in recent years posted all-time record profits.
In that context, the SRP’s intended use has come and gone, Olszynski said.
“This is essentially now an industry subsidy. What we’re talking about here is subsidizing well cleanup that should have been done and should be the responsibility of the operators of those wells,” he said. The funding does present economic opportunities for Indigenous communities, he said, but asked why oil and gas companies aren’t being required to clean up those wells.
Internal documents obtained in January by University of Calgary researcher Drew Yewchuk suggested Alberta’s energy regulator believes the total cost of well cleanup in Alberta to be about $88 billion — significantly more than the $33 billion it publicly estimated earlier this year.
mscace@postmedia.comX: @mattscace67
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