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Polluter pay advocate takes premier to task

Use regulations not royalty incentives to clean up old wells, says Polluter Pay Federation

A polluter pay advocate says the premier’s statement to clear up “inaccurate claims” about the government’s well cleanup efforts offers plenty of its own hogwash.

Premier Danielle Smith put out a statement on Wednesday “in response to inaccurate claims about the government’s ongoing efforts to rehabilitate Alberta’s oldest and most problematic oil and gas development sites …”

The government has proposed a $100 million pilot project to give companies a break on royalties that would be owed on future production to clean up the worst oil and gas sites. Money spent on cleanup would have to be over and above the amount companies are already legally required to pay for site rehabilitation.

Energy Minister Peter Guthrie is consulting with landowners, Indigenous groups and industry to design a pilot program to “expeditiously” clean up the inactive pre-1980 well sites, she says. That will take several months and then go back to government for a decision on going forward.

“It is hoped the pilot program will greatly accelerate the cleanup of the most unpredictable and challenging oil and gas sites in Alberta.”

The statement says that of Alberta’s 83,000 inactive wells, about 20,000 were drilled before 1980, have been inactive for more than 20 years and the environmental problems they cause are getting worse. As well, the number of orphan wells has surged from 705 in 2015 to 5,279 as of March 2019.

Polluter Pay Federation’s Mark Dorin does not buy the premier’s premise that a new royalty tax break program is needed to fix the energy industry’s environmental legacy.

Alberta must flex its regulatory muscle to deal with well-site environmental hazards, not bribe oil and gas companies to do their job, said Dorin, who lives in Red Deer and has more than 40 years of oil and gas industry experience.

Environmental protection legislation clearly anticipated problems and created regulations requiring companies to undertake “remediation” — as in cleaning up any environmental hazards — when they are spotted. If the cleanup doesn’t happen, an environmental protection order can be issued by the Alberta Energy Regulator (AER).

That those orders under the Environmental Protection and Enhancement Act are not being issued is the problem, said Dorin, who said the focus should be on overhauling the AER not offering more industry perks.

Dorin dismisses as a “ridiculous claim” the premier’s contention that the AER’s Inventory Reduction Program will “fix the orphan well backlog that previous governments failed to address and continue to ignore today.”

The program sets an industry minimum standard for annual closure work, which amounts to $740 million in cleanup work this year and is forecast to grow by nine per cent in 2024.

However, many companies that own tens of thousands of wells no longer have any profitable assets or income, said Dorin. Those companies will not be able to comply with any minimum standard rules and their wells will inevitably end up in the Orphan Well Program.

The Inventory Reduction Program will not address the backlog of nearly 10,000 orphan wells already in the underfunded system.

Dorin also takes issue with the premier’s suggestion that this is the first government to try to find a solution to this problem.

Previous governments have grappled with the issue. Dorin was involved in liability management sessions with the previous NDP government in 2017 as part of an effort to come to grips with the looming environmental disaster.

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