“It’s highly questionable” whether oil and gas companies should be leaving taxpayers on the hook for expensive cleanup costs around Alberta’s abandoned wells, says the manager of policy at Oxfam Canada, co-partner of a new report raising questions around nearly $1 billion in federal funding already spent on well remediation.
The report, entitled Not Well Spent, was prepared for Oxfam Canada and the Parkland Institute, which now recommend stronger regulations to ensure that oil cleanup liabilities are accounted for on the balance sheets of companies, upholding the “polluter pays principle”.
“This funding fails to deliver its intended social and environmental benefits,” says Ian Thomson, manager of policy at Oxfam Canada. “It’s highly questionable whether oil and gas cleanup should receive any public dollars, especially with so little transparency or co-management with Indigenous peoples.”
The funding in question came through Canada’s COVID-19 Economic Response Plan announced in March 2020, which designated $1 billion to clean up Alberta’s estimated 168,000 orphaned and abandoned wells. The Government of Alberta was to lead the project under its Site Rehabilitation Program (SRP).
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Questions have swirled around the transparency of the SRP over the funding, states the report authored by Megan Egler, a natural resources PhD student and researcher with the Parkland Institute.
“Federal commitments were not meaningfully upheld, environmental factors were not considered, and mechanisms intended to increase Indigenous participation have shown little success,” the report argues.
The SRP was set up to administer the $1 billion federal fund over several application periods with different criteria, providing grants to oil field service contractors that cover between 100% and 50% of costs for work on well, pipeline, and facility closures and reclamations, the report says.
“The funding targets chosen within the periods have a clear weighting toward the cleanup of sites that relieve financial obligations of oil and gas producers and the provincial government, over other potential priorities such as environmental risk or sites nominated by local community members,” the report states.
As Canada’s most methane-intensive industry, the Parkland Institute’s report says that cleanup of oil and gas infrastructure has a high potential for emissions reductions; however, effective ways to track success have not been measured nor prioritized within the SRP. The report highlights a 2021 study conducted by researchers at McGill University, which found that annual methane emissions from the country’s inactive and abandoned wells have been underestimated by as much as 150%.
“Performance measures used to assess the program internally, such as the number of sites completed at various stages of work and the number of Indigenous employees and subcontractors engaged in the work are at this time not publicly available,” the report states.
The report also notes that Alberta has proposed a new Liability Management Framework that claims to enable industry to better take responsibility for the cleanup of oil and gas infrastructure. “Close attention” should be paid within the implementation of this new framework to “ensure that the problem is being addressed and that industry is being held responsible,” the report suggests.
Makes perfect sense as “Producer Pays”. This does not surprise me as the cleanup of highly contaminated mine sites of all descriptions should not fall on the taxpayer. Although if you happen to be a previous owner of a gas station the Ministry of Environment will go to the ends of the earth to make you pay for cleanup because it is usually individuals not Corporations . It is a horrible double standard that shows how weak our laws are in this regard. Old oil or gas wells and mine sites are treated by business as “the cost to society for providing jobs.” Our politicians and legislators are deaf to this issue. Take a look at the Pacific Rim Partnership language and onus on environmental and social impacts and who is ultimately responsible. That language is recent and anti-citizen.
Ernst V Encana tried to have the Alberta Energy Board ( as funded and set up by industry) to be held liable for damage to well water as caused by fracking. See the case on line, but it is the Alberta Energy Board that has immunity from legal action . Justice Abella ( held in high regard) labelled Judith Ernst a” Vexatious Litigant”, with no supporting facts. Remember the Supreme Court of Canada is part of the Federal Govt and it’s supporting companies- oil and gas, uranium etc. No Environmental Book published in Canada for schools- elementary,secondary,Colleges,Universities and public libraries WILL NOT include any successful or near successful environmental legal actions in Canada. They will trot out the Love Canal , Tom’s River and Brokovitch. in support see Heighington et al V Ontario
There needs to be a change made to the Business Corporations Act to include environmental impact liabilities be the responsibility of the directors of the corporation. Currently, there is no accountability, a corporation can simply wind down the business through insolvency or bankruptcy and the directors wash their hands of the problem and any responsibility. If a corporation, or its directors, can’t afford to clean up a mess they create in the pursuit of revenue, they have no reason to even begin. The mess that is left in Alberta will impact generations and remediation paid for by citizens – only a change to the BCA can avoid this in the future. Hold directors responsible.