Alberta Premier Danielle Smith speaks to members of the media during a press conference in Ottawa, on Feb. 7.Spencer Colby/The Canadian Press
A new program being considered by the Alberta government to provide incentives to clean up old oil and gas wells will be delayed until at least the fall – months after the provincial election slated for May.
Eligibility could also be extended to orphan wells, which have no owners, but under current rules, their clean-up is supposed to be funded entirely by industry levies through the Orphan Well Association.
Critics say the pilot being considered by the government is contrary to the polluter pay principal, and question why the government is considering any kind of economic assistance for companies that have shirked their legal responsibility to clean up their messes.
The proposed program would provide producers with royalty credits to offset legally required abandonment and reclamation expenditures, essentially allowing them to pay a lower royalty rate on new fossil-fuel production until they have paid off the cost of reclaiming older, inactive sites on their books. It stems from a pitch Premier Danielle Smith made to then-energy minister Sonya Savage at the behest of oil and gas companies in 2021, back when Ms. Smith was a lobbyist and before she re-entered the political arena and won leadership of the governing United Conservative Party.
The United Conservative government insists no decisions have been made on the parameters or implementation of the pilot program.
Energy Minister Peter Guthrie told The Globe and Mail in November that he would like to see the program finalized by March 1 if the idea received positive feedback during consultations, but scuttled that timeline in an interview this week.
While his government initially expected it could roll out the program before the election, he said, “there are some suggestions that are coming in to us that will take some time to decipher and to figure out how can we apply it to the program so that it’s effective and and efficient.”
With consultations currently under way, Mr. Guthrie said it’s important to “keep an open mind” about suggestions for the program to improve it and “maximize its full potential.”
The Premier’s office said in an e-mail that it won’t prejudge the consultation process, but isn’t anticipating results until the fall.
According to the proposed guidelines for the pilot program, eligible sites would include oil and gas wells that have been inactive, suspended or partly abandoned for at least 20 years, and were drilled prior to 1980.
Eligibility criteria would apply to sites owned by viable companies and those on Alberta’s orphan well inventory. Sites are added to the orphan list when they have no owner that can pay for their clean-up. As of Feb. 1, the association’s inventory included 3,114 sites that needed to be decommissioned and 6,752 that had been decommissioned but needed to be returned to their natural state.
The Orphan Well Association has already borrowed hundreds of millions of taxpayer dollars from the provincial and federal governments, because it doesn’t have enough in its coffers from industry levies to cover the cost of cleaning up the burgeoning number of sites on its books.
Large facilities and test wells would not be eligible, though all sizes of oil and gas companies would be able to access the program.
Companies would also have to have a clear record with the province’s regulator, and have squared up their tax bills and surface lease payments to landowners. They must also agree to show the geographic location of pilot work proposed, under way and completed on a public-facing government website.
Mr. Guthrie said he doesn’t see the program becoming a major election issue that could hurt his party, though the opposition NDP, rural municipalities, economists and environmental groups have all raised concerns with the plan.
The Bank of Nova Scotia also weighed in recently, warning that any such pilot program would fly in the face of “the core capitalist principle that private companies should take full responsibility for the liabilities they willingly accept.”