A proposal by Danielle Smith’s UCP government to offer royalty credits to accelerate the clean-up of inactive oil and gas wells has fired up a long-standing debate over who should pay. The province recently announced the Liability Management Incentive Program, which would provide $100 million in royalty credits to companies that speed up the reclamation of inactive wells. The government is consulting with stakeholders to get more input before moving ahead.
Inactive oil and gas wells are strewn all over the province, the relics of a century of industry activity. According to the Alberta Energy Regulator, there are about 464,000 total wells in the province. Of these, more than 83,000 are inactive.
Industry pays into a fund managed by the Orphan Well Association to reclaim wells that lack a current owner, but a University of Calgary study argues it’s not enough to take care of a large backlog of inactive wells.
“The Government of Alberta has strict rules on caring for a well site when a company ceases operations,” the Pembina Institute said. “While many companies abide by these rules, increasingly some do not. This is due partly to sustained low prices for oil and gas and regulations that don’t include timelines for reclaiming the well.”
Premier Smith said the proposed program would help clean up some of the worst inactive wells, drilled by companies that are long gone. “What has happened is the polluter who created the problem is no longer around anymore, and yet these liabilities kept on getting carried forward along with producing assets. And now we’re left with somebody holding the bag who may not have been responsible for the initial liability,” she said.
Critics of her proposal say the government shouldn’t be offering incentives to companies that are legally obligated to clean up inactive wells, especially as they are earning record profits. “Royalties belong to the people of Alberta and future generations. Giving this money away will squander the energy price boom we are currently experiencing and is fiscally irresponsible,” said NDP Energy Critic Kathleen Ganley. “It amounts to a massive transfer of wealth from Alberta families to companies who don’t need it.”
According to a report from Scotiabank, the proposal could “perpetuate negative views against the energy industry” and it flies in the face of “the core capitalist principle that private companies should take full responsibility for the liabilities they willingly accept.”
This May, my vote will go to the party that is looking to our future instead of our past, is willing to adapt to the social and economic ideals that are moving us forward and ensures our province will be ready for the world yet to come.
Polity V1 is our first commercial product, deployed for the first time in the Alberta 2023 Provincial Election. We have refined our previous design, enhanced our functionality, and invested in new technologies.
The Millennial voting block (ages 26 – 41) is the largest and most powerful in the coming Alberta 2023 election. We have grown up enough, and have enough irons in the fire, that we will show up at the polls on election day.
Policy Cards are policy action items that voters want the candidates to support if they’re elected. Tell the candidates which policies you support by voting on the Policy Cards!
No candidates have added their support for this policy yet.
No candidates have added their support for this policy yet.
The verification link has expired. Please, try to register a new account.
Enter the email address associated with your account and we'll send you a new password
Comments
Log in to leave comments:
Log In