“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.