Pumping hundreds of millions of taxpayer dollars into cleaning up Alberta’s orphan oil and gas wells is the wrong approach to fixing a problem that should be fixed by industry, says the Polluter Pay Federation.
“We’re against any public money going towards well cleanup whatsoever,” said Mark Dorin, who lives in Red Deer and is vice-chairman of the newly formed non-profit industry watchdog.
Alberta law is clear that energy industry companies are obligated to clean up their abandoned wells either directly or through the industry-funded Orphan Well Association.
On Friday, the Alberta and federal government announced a $400 million funding commitment, which is part of a $1.7 billion reclamation and remediation plan that was announced last year for old oil and gas sites in Alberta, B.C. and Saskatchewan. Alberta’s share is $1 billion.
Dorin said the money should not be handouts but restructured in the form of loans the industry would be expected to pay back.
In touting the latest influx of cash, the Alberta government said $310 million already spent had gone to more than 600 companies and created 1,500 jobs.
Polluter Pay Federation says the program’s job creation promises are not happening. Rather than spend the cash on more reclamation work, the major oil companies that undertake the bulk of the work are simply replacing their own spending with grants.
“That (reclamation) work came to a grinding halt until they got the federal money and now they’re spending the federal money,” he said.
“The intention of the grants was to create jobs and keep the service industry going and we just don’t think that’s happened.”
The amount of money that industry has gone into the orphan well association fund — about $65 million a year — is well short of what will be required, said Dorin, who said the total oil and gas liability for Alberta has been estimated at $260 billion. Tens of thousands of orphan wells have yet to be put on the books.
Dorin said the Alberta Energy Regulator needs to do the job that it is legally required to do, which is to ensure that cleanup work is adequately funded, and not with public money.
“Either something is legal or it isn’t. If we start saying this law doesn’t apply and that one doesn’t apply, where do we draw the line?”
Alberta governments have known for years that the system is not working and Dorin was among many experts that sat down with the previous NDP government for days of talks about future environmental liabilities.
Those liabilities include the ongoing environmental damage from old and leaking wells that are contributing to terrible air quality and causing increased levels of diseases, such as Parkinson’s.
Undertaking the necessary cleanup would create huge numbers of jobs in the service industry and put rigs and cementing trucks back to work that are sitting dormant.
There are nearly 1,000 service rigs not working and they could also be used for reclamation along with other related equipment.
“There’s $70 billion worth of well abandonment and cleanup to be done. Every cement truck in Red Deer should be out in the field for the next 10 or 15 years every single day and paid for by industry. That’s how you put Red Deer back to work.
“That’s our message at the Polluter Pay Federation, that there is economic benefit to cleanup.”
The group plans to continue to lobby government to make the industry pay its share, he said. The federation also plans to work with landowners to educate them on their rights, which includes the right to have companies clean up their old wells on their land.
Another part of its mission is to provide legal help and funding for landowners asserting their legal rights.