Ottawa, Ont – It is good news that the government has not given in to the enormous pressure being exerted by the oil and gas industry and the Province of Alberta – who have been asking for a $30 billion bailout. The government’s measures, announced today, seem to acknowledge that the vast majority of Canadians want our government to focus on transitioning workers and provinces towards a clean energy economy as the world moves away from oil to address climate change.
Providing support to cleaning up orphaned wells is far preferable to giving handouts to the oil industry, and consistent with what science and sound economic planning would suggest. This package will put people to work at a time when Canadians are really struggling. However, we are missing many of the details needed to fully understand how the support will be administered.
It is crucial that these funds be tied to conditions that ensure the problem of wells becoming orphaned are fixed permanently, and that Alberta puts in place a polluter-pays program so the public is not left with these liabilities in the future.
We are pleased that the government for remaining firm in regulating methane emissions from the oil and gas industry. We know the Canadian Association of Petroleum Producers has been lobbying to have these regulations axed in favour of weaker provincial regulations. However, reducing methane is very cheap, and the government should not be giving loans worth almost $700 million for companies to comply with existing regulations. Any federal support must be tied to achieving methane reductions that go beyond what the regulations will deliver.
We are also concerned about the plans to make it easier for oil and gas companies to access additional credit through Export Development Canada (EDC) and the Businesses Development Bank of Canada. Changes made to the law governing EDC last month have made it easier for the government to use EDC to funnel more support towards domestic oil and gas operations – without public scrutiny.
About ENVIRONMENTAL DEFENCE (www.environmentaldefence.ca): Environmental Defence is a leading Canadian advocacy organization that works with government, industry and individuals to defend clean water, a safe climate and healthy communities.
For more information or to arrange an interview, please contact
Barbara Hayes, Environmental Defence, email@example.com
- Clean up of orphan and inactive wells: $1.7 billion to clean-up orphan and inactive wells in Alberta, Saskatchewan and Newfoundland and Labrador. The bulk of this support ($1 billion) will go to Alberta – and of that, only only $200 million will be loaned to the Orphan Wells Association (OWA).
- Many inactive wells are owned by profitable oil and gas companies who have neglected to pay the clean-up costs of their operations for decades. There are 93,805 inactive wells at risk of becoming orphaned in Alberta. The cost of reclamation of these inactive wells is estimated at $100 billion.
- Today’s announcement included commitments that local landowners will have the ability to nominate and prioritize wells, and that companies in good standing with municipal taxes will receive priority. This falls short from our recommendation that money for orphan well cleanup should be administered by an independent fund with representation from Indigenous communities, local governments and landowners.
- Details Missing: It is unclear how the remaining amount will be administered by the province or how the funds will be prioritized, and whether it will target orphan or inactive wells.
- Reducing methane emissions: $750 million subsidy to companies to decrease their methane emissions through repayable contributions which includes $75 million for Newfoundland’s offshore oil industry.
- Additional financing through Export Development Canada: EDC already provides on average ten billion dollars in government-backed financial support to oil and gas companies every year.
- Between 2012 and 2017, EDC provided twelve times more support for oil and gas than for clean technologies.
- EDC has been criticized for a lack of transparency, raising concerns that financial support can be funneled to the oil and gas sector without public scrutiny.
- Details missing: Today’s announcement lacked specifics about this program, including how much additional credit will be made available.