[Refer first to:
2016 03 16: Canada’s biggest oil producers, including Cenovus, hoarding near-record pile of cash ]
Tide shifts in abandoned well plan as province backs idea by Chris Varcoe, September 2, 2016, Calgary Herald
You have to give Mark Salkeld at the Petroleum Services Association of Canada points for being persistent.
It’s been two years since Canada’s energy sector began its long toboggan ride downhill due to plunging oil prices, and the industry group is making another pitch to governments for assistance to get its members back to work.
Salkeld met briefly with federal Natural Resources Minister Jim Carr this week to talk about the group’s latest proposal to accelerate the cleanup of old legacy and orphan wells in Alberta by accessing funds from Ottawa.
“The conversation is not dead in the water,” said the chief executive of PSAC, which represents the oilpatch’s service, supply and manufacturing sectors.
“The government is listening to us. They like the idea. It’s just a matter of doing it the right way.”
The idea was first pitched before the federal budget in March when PSAC asked the Trudeau government to set aside $500 million to clean up some of the 77,000 inactive oil and gas wells in the province.
However, PSAC’s proposal drew tepid support from Ottawa and the Notley government, which said the principle of polluter-pay must carry the day.
In other words, companies that own defunct wells must pay for their cleanup.
From a national perspective, Carr said it was up to the provinces it they wanted to use their federal infrastructure cash to bankroll the ambitious plan.
The idea soon faded. Six months later, the tide appears to have shifted.
The economic reality has become bleaker for the oilfield service sector. The recession has deepened across Alberta. Exploration work has dropped off.
The Canadian economy shrunk by 1.6 per cent in the second quarter, with the Fort McMurray wildfires sharply cutting oil exports.
Alberta’s employment situation is also troubling.
Provincial statistics indicate 49,000 jobs disappeared in the 12-month period ending in July, while Alberta’s unemployment rate sits at 8.6 per cent, above the national average.
Facing this rough reality, Salkeld has refined the well-decommissioning idea, potentially gaining new allies along the way.
Today, PSAC wants the two levels of government to look at providing a loan to the Alberta Orphan Well Association, the agency responsible for managing the abandonment of wells that no longer have an owner, usually due to the [usually intentionally induced by greed] failure of a company.
Government assistance could be in the form of no-interest or low-interest loans to the association to help accelerate the decommissioning of orphan and legacy wells.
Meanwhile, the number of orphan wells is rising.
The association, which is funded by an industry levy, dealt with 185 abandoned wells for the fiscal year ending in March. But it added 258 new ones.
As of the end of June, it had an inventory of 1,100 wells on its books to plug and seal.
“We’re entering Year 3 of the downturn and it’s getting pretty bruising for everybody,” said association chairman Brad Herald. “We’ve seen a significant uptick in orphans coming in.”
[What do Albertans get who continue to suffer with contaminated frac water flaming out of their toilets and taps? Nothing. They (we) don’t even get “monitoring.”]
Herald, who is also a vice-president at the Canadian Association of Petroleum Producers, said he needs to understand how the non-profit association would be able to receive a loan from government if the PSAC plan proceeds.
But he believes the association can scale-up its current decommissioning efforts with extra funds.
Alberta Energy Minister Marg McCuaig-Boyd likes the PSAC proposal being restructured as a loan to the Orphan Well Association, not a direct grant to industry.
In her mind, that would maintain the government’s polluter-pay philosophy.
“We back the idea. It’s interesting; we’re just in talks right now and we’re certainly considering it,” she said in an interview.
“This is a way to upfront some money now to get people working … but it’s not going to be (direct) government money.” [Take a look at the AER and oil and gas industry around the world. The industry and AER intend on never paying the billions back. Of course it’ll be “direct” money stolen from Canadians by politicians and industry.]
It’s unclear if the proposal would require funds from both levels of government. But the minister views the initiative as a way to tackle a growing environmental headache while creating work.
“I live in northwest Alberta and I’ve seen the hit to the service sector up my way. So I think it’s a pretty important economic stimulus, but it will also take care of a huge environmental problem that’s been created,” [Why was that allowed to happen? Why did not one politician, Tory or NDP, step in and take responsible action by cleaning up the excessively over paid corruption, fraud and filth at the AER?] said the MLA who lives in Fairview.
The concept has also been raised with the Indian Resource Council of Canada, which represents 169 energy producing First Nations.
Steve Saddleback, director of the council’s national energy business centre of excellence, believes the concept is worth examining.
The organization wants to see Indigenous companies involved in cleaning up what’s been left behind by the energy industry, as some abandoned wells are situated near or on First Nations’ land.
“First Nations communities are not immune to the downturn,” he said. “It’s something to look at and something to consider, if there are dollars set aside for it.”
[What about Rosebud’s contaminated drinking water aquifers? They were frac’d illegally by Encana two recessions ago and remain unfixed!]
With additional support for the revamped program, Salkeld’s idea may be starting to lift off.
This time, he’s confident governments will seriously examine the plan as the sector endures a prolonged rough patch.
“PSAC is new with this kind of an ask, so we’re learning on the fly. But we’re encouraged because they are talking to us,” he added. [Where was PSAC when members contaminated Alberta family and community drinking water supplies? Nowhere.]
“I think we’re going to get some wins here.” [But only for billion dollar polluting profit takers, their pimping politicians and fraudulent, deregulating “regulators?” Emphasis added]
A few of the comments:
Diana Daunheimer [BRILLIANT COMMENT!]
Here’s the solution to lack of funding for industries liabilities, trim the fiscal fat at the AER, PSAC, CAPP et al. and mandate companies and government fully divest and defund all synergy groups in Alberta. PSAC certainly could forego their Golf Classic and get by with less than 17 board members. The sunshine list for the AER is astounding, as are the expense accounts of the Board, VP’s and Hearing Commissioners. (HC’s got paid millions to preside over rulings on quack grass) Does Monique Dube of the AER need to spend thousands to attend the Pembina Gala in Toronto?
All the money that should be there for abandoned well sites, which constitutes a complete failure of the AER’s liability management, is still right there, being wasted on entitlement, unethical expenses, lobbying and Oil Respect bumper stickers handed out by PSAC’s president smoozing all over Canada with his thumbs-up. Put your Pete Club lunch money where your mouth is industry, we know you won’t pay back that loan.
Sep 2, 2016 9:21pm
Steve Adams
Yep – shrink government spending in these tough times, except when it comes to government handouts to help oil producers clean up the mess and pollution that they caused and should be entirely responsible for. Wonder what farmers and ranchers think? Firstly, having so many companies welshing on their rents (September 1, 2016 Herald headline – “Alberta landowners file hundreds of new complaints against resource companies for unpaid rents”) and secondly, potentially having their tax money used to clean up the orphan well mess that rightfully belongs to the oil companies and to have that same tax money also used to pay the land rentals that are owed them.
[Refer also to:
2014 01 25: Federation of Canadian Municipalities (FMC) wants ‘polluter pay’ system [What do they get? Rip-offs extraordinaire and whining begging from billion dollar profit-taking foreign multinationals]