The Alberta government titled its 2016 budget “The Alberta Jobs Plan” but there’s one group in the province that’s disappointed it will not see its jobs proposal funded.   The reclamation and clean-up of abandoned oil sites was proposed as a potential job creator by the Petroleum Services Association of Canada (PSAC). With over 37,000 orphaned and inactive wells across the province and thousands of unemployed, highly-skilled workers, PSAC said the provincial government should dedicated funds to well clean-up and reclamation.   It’s a proposal similar to Saskatchewan Premier Brad Wall’s ask for federal funding to clean up his province’s orphaned oil wells. His request for $156 million went unanswered in the federal budget. Wall argued the funding would have put 1,200 people back to work.   Alberta’s economic downturn has seen 40,000 jobs lost in the energy sector. PSAC argued putting money into decommissioning oil sites could reclaim some oil and gas sector jobs and get companies back to work.    “We are losing tens of thousands of workers from the oil and gas services sector and, along with them, the intellectual capital and expertise we need when the economy turns around,” Mark Salkeld, president and CEO of PSAC, said.   PSAC has advocated for several months that $500 million in funds, whether from the province or federal government, be put into a decommissioning program for orphaned and inactive wells.   But on budget day in Alberta the only funding dedicated to this issue was a $30.5 million injection into the Orphan Well Association, a group funded predominantly by industry (they received a one-time boost of $30 million from Alberta a few years ago) that cleans up sites abandoned by bankrupted companies.   The cost of reclaiming a single well starts around $10,000 but can become millions in some cases. Since its inception just over two decades ago the Orphan Well Association has reclaimed over 650 wells. Over 540 wells have been abandoned in Alberta in the last 12 months, up four times from previous years as especially junior and intermediate companies have struggled with record-low oil prices. An estimated 700 orphaned wells are the result of bankruptcy.   Brad Herald, vice president of Western Canadian Operations with the Canadian Association of Petroleum Producers and director of the Orphan Well Association, said the group is on its way to reclaiming 160 abandonments a year, which is up from 40 to 50 per year previously.   “We’ve effectively quadrupled the wells we’re going to put to bed in just a couple years,” Herald said.   A lack of fresh funds to handle the growing number of abandoned sites means the Alberta government hopes sticking with a polluter-pays model will pan out in the long run.   “Many Albertans and Canadians alike don’t want their tax dollars going to cleaning up after someone else,” Alberta Energy Minister Marg McQuiag Boyd said in a statement to DeSmog Canada.   Don Bester, president of the Alberta Surface Rights Group, agrees. Tax-dollar subsidized reclamation creates the expectation government will simply pay for industry’s abandoned projects, which, according to Bester, removes any incentive for companies to carry out costly clean-up.   “Oil and gas companies that are not in trouble are going to just say ‘well, why not just leave them? Somewhere down the road the government will clean them up.’”   In the meantime, however, thousands of inactive wells dot the provincial landscape on at times valuable farmland, like environmental potholes left for future generations.

Barry Robinson, lawyer and National Program Director with Ecojustice, said if there was ever a time for government to step in with funds for orphaned wells, it would be now during the economic downturn when costs are low and people need jobs.   “The sooner you clean up the really old wells the less environmental risk you have,” he said.   Robinson said government investment could get clean up going in the short term while a longer-term repayment program could be put in place through royalties.   “Ultimately polluter-pays is the way to do it,” Robinson said. “We’d like to see companies post security for the abandonment and reclamation right at the time the well was drilled.”   It would avoid the current situation of companies going bankrupt and disappearing, leaving their wells to be handled by the province. For Robinson, it’s a long-term solution, which, when it comes to Alberta’s orphaned wells, have been in short supply.   Robinson says a big issue is the absence of timeline rules in oil and gas regulations. Without meaningful time limits regulators have nothing to enforce.   “Companies are not doing anything wrong or illegal by simply leaving wells inactive,” Robinson said, adding there are at times “good reasons for wells to be inactive.”     But he said there are orphaned wells dating back to the 50s and 60s that still have not been dealt with.   The longer a well sits abandoned, the higher the risk of accidental release or groundwater contamination.   For the landowners Bester works with, these legacy wells mean they’re stuck with inoperable and potentially hazardous land. 

During a major review of Alberta’s royalty structure last year, the Alberta Surface Rights Group recommended the government integrate clean up payments directly into the oil and gas regulatory structure.   Bester said he also recommended the government require companies to clean up old well before building new sites. Ultimately his group’s recommendations went nowhere.   Bester’s group has met with Environment Minister Shannon Phillips and Minister McQuiag-Boyd on the issue and is hopeful a regulatory change will come this spring during the legislative session.

Image: Chris & Lara Pawluk/Flickr.

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A renewable energy economy may emerge from the heart of Canada’s oil industry thanks to announcements made in Alberta’s provincial budget last week. The budget promises spending $51.5 billion in 2016 despite resource royalties projected to be as low as $1.4 billion, representing a 90 per cent drop.   The province pledged $2.2 billion for clean infrastructure, $645 million for energy efficiency and unveiled an expanded carbon levy that the government estimates will generate $3.4 billion for renewable energy development. An additional $195 million has been set aside to help First Nations communities transition off coal and onto cleaner sources of energy.   “We’re very proud of our climate leadership plan as a progressive way to bend the curve on carbon,” Finance Minister Joe Ceci said in a press conference Thursday.   Sara Hastings-Simon, director of the clean economy program at the Pembina Institute, commended the province’s decision to expand the carbon levy to beyond industrial emitters.   “We know it is the most efficient way to reduce emissions in the province,” she said.

Although Alberta was the first jurisdiction in North America to implement a carbon tax, the levy applied only to emitters producing more than 100,000 tonnes of greenhouse gas emissions. New changes to the “polluter pays” legislation means the levy will now be economy-wide and set to scale up from $15 to $30 per tonne by 2018. 

The government forecasts the scaled-up tax will generate $9.6 billion in gross revenue over five years.   Hastings-Simon said the new legislation — which taxes all consumers at the same rate as industry — includes a rebate option for small consumers and lower income Albertans.   “At the end of the day 60 per cent of Albertans are not going to owe anything under the system,” Hastings-Simon said, adding the program is likely help the province work towards its climate targets.   “With a flat rebate you’re incentivizing folks to reduce emissions further as they end up with more money in their pockets as they reduce emissions.”   The province will also start up a new agency, Energy Efficiency Alberta, that will help homeowners reduce emissions in their households.   On Thursday Minister Ceci announced the $3.4 billion generated from the carbon levy would be dedicated to clean energy projects through a bidding system adjudicated by the Alberta Electric System Operator. Bidding will start at the end of the year.    “By combining private sector incentives, the market guides you to where you should be investing government money,” Hastings-Simon said.   Greenpeace Canada climate and energy campaigner Mike Hudema said the new tranche of funds could definitely help jumpstart the province’s renewable energy sector.   “Alberta is finally going to take advantage of the tremendous renewable energy potential that it has,” he said.   He added the government should ensure money is also available to community-based projects. Structural change, to address the way energy is owned in the province, should also part of this new system, he said.   “We need to see a prioritization on municipal, farmer association and First Nation ownership so that the benefits are flowing into our communities rather than out of them,” Hudema said.   The government did set aside $195 million specifically for First Nations’ energy transition, but there has been no indication of how that money will role out.   Jesse Cardinal of Keepers of the Athabasca said she hopes that however those funds are delivered, the process be done in consultation with First Nations.   “Consultation is making a plan together, so I would hope that’s how Alberta is going to go with that $195 million,” Cardinal said. “Different First Nations have different ideas of how they want to move away from coal.”   Cardinal was instrumental in establishing a solar program the Fort Chipewyan First Nation now operates. In 2014, securing funding for the $14,000 project was not easy, she said.   Now two more First Nations, the Beaver Lake Cree First Nation and Fort McMurray First Nation, are looking to implement their own solar projects.   The government’s current funding outline includes specific solar project targets and Cardinal hopes the road will be easier for First Nations going forward.   “That’s the next step we need to take is to ensure dollars are available for everybody,” she said. “This is one step of many steps, the beginning of a long road ahead of how we need to change.”

Image: Premier Rachel Notley and Finance Minister Joe Ceci host a pre-budget town hall in Fort McMurray, the home of the Alberta oilsands. Province of Alberta/Flickr.

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The Alberta government has shuttered its arm’s length environmental monitoring agency after a report concluded the program was a “failed experiment.”   Minister of Environment Shannon Phillips announced Tuesday the Alberta Environmental Monitoring, Evaluation and Reporting Agency (AEMERA) would be disbanded and environmental monitoring will return back to the government.

“It ensures government is directly accountable for environmental monitoring and that issues or gaps in monitoring are responded to immediately,” Phillips said at a press conference.

Phillip’s ministry commissioned a report that described the Alberta Environmental Monitoring, Evaluation and Reporting Agency as overly expensive, poorly co-ordinated and plagued by bureaucratic bickering.

“It is hard to escape the conclusion that AEMERA is a failed experiment in outsourcing a core responsibility of government to an arm’s-length body,” wrote report author Paul Boothe, director of the Lawrence National Centre for Policy and Management at Western University’s Ivey School of Business.

The agency was created in 2012 as a reaction to criticism about Alberta’s lack of environmental monitoring in the oilsands — but ultimately, the program failed to attain the “world-class” monitoring standard the government touted.   “Critical dollars were being diverted away from monitoring and science to overhead and administrative duplication,” Phillips said.   Under AEMERA, provincial scientists were meant to collaborate with Environment Canada to monitor the oil industry’s impacts on air, land and water. It was funded by $50 million from industry and another $28 million from the province.   The new structure will have two panels: a science advisory panel and a traditional ecological knowledge panel. For the first time, environmental monitoring results will be made available to the public.   “This openness and transparency is essential to allow Albertans to rationalize the minister’s decisions and ensure they are making decisions in the best interest of Albertans,” says Andy Read, an analyst with the Pembina Institute, a sustainable energy think tank. 

Risk of Political Interference Remains

Experts warn legislative changes are needed to avoid political interference.   “It’s not enough just to fold this and roll it into environment and parks,” says Martin Olszynski, an environmental law expert at the University of Calgary. “If they’re committed, the next piece has to be legislative change with provisions around making monitoring mandatory.”

Olszynski says he would like to see enforceable deadlines for the delivery of data through legislation.   “This kind of monitoring is costly, and it will always be costly,” says Olszynski. “It would be very easy to fold that division without a public bru haha.”   Even AEMERA, which amalgamated individual monitoring programs across the province and was meant to operate as an independent organization, was never full free of political influence, Read said.    “They were still reporting to and needed approval from the minister to release environmental information,” Read said.     Boothe’s report confirmed that: “A lack of clarity around the government’s expectations regarding AEMERA’s ‘arm’s-length’ nature contributed to the poor relations between partners.”   Three years after its creation, AEMERA had not expanded to become a province-wide environmental monitoring program and had failed to find a stabile funding structure.   There remain unanswered questions about the new monitoring system when it comes to the role of stakeholders within the province and the relationship with the federal government.   “It’s still somewhat of a gap,” Read said, pointing out the decision has implications for groups such as the Wood Buffalo Environmental Agency.   “You need to build trust with regional representatives across Alberta,” Read said. “That’s crucial in even identifying what monitoring needs are.”

Role of Federal Government Unclear

One of the report’s major criticisms of AEMERA revolved around the role of the federal government and the agency’s inability to accept Environment Canada as a partner. As of now there is no clear path on how the federal government will be involved in the new structure.   “This is a classic issue and tension in environmental law in Canada,” Olszynski said. “It’d be nice if everyone could accept that it is shared jurisdiction.”   The announced changes maintain AEMERA’s funding model, which weren’t adequate for the province-wide mandate of the agency.   Read says the polluter-pay model has to be implemented province-wide to ensure adequate funding to deliver on monitoring the entire province.   “We definitely will be paying attention to how they establish themselves to collect funding,” Read said.    The Alberta budget will be announced on April 14 and the government expects the new monitoring system to be operational by this summer.

Photo: David Dodge via Flickr

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