Alberta Premier Danielle Smith’s address to her new energy minister suggests that the united Conservative government has not given up on a controversial program that would see taxpayers back cleaning up old oil and gas wells that companies already are legally required to do.
In his mandate letter to Brian Jean, Smith accuses him of “developing a strategy to effectively incentivize reclamation of inactive legacy oil and natural gas sites and enable future drilling while respecting the polluter pays principle.”
That language echoes old proposals by RStar and the Liability Management and Incentive Program, under which companies would have received royalty benefits on production from new wells corresponding to the amount of money they spent cleaning old ones. That tax benefit would come despite site remediation being a condition of licensing all operators in the province.
It was condemned by landowners, rural municipalities, energy analysts and even experts within Alberta Energy.
Critics said it would reward companies for not obeying the terms of their licences, offer an unnecessary tax break during high oil prices and violate a key principle of environmental law: the principle that polluters pay for their own cleanup.
Before the last election, the government had planned a $100 million pilot project on the idea. After the protest, the pilot was shelved.
Now, after the vote, he’s back.
“The UCP didn’t want to talk about the program during the election, but it looks to me like they’re still going to,” said Kathleen Ganley, energy critic for the New Democratic Opposition.
Ganley downplays the clause about respecting the polluter’s pay. The whole idea violates polluter pay, he said.
“It seems contradictory,” he said. “The whole program is designed to make the government pay to clean up [old] sites
“It doesn’t make sense. It seems [like] a communication exercise.
‘They have to sell this’
Martin Olszynski, a professor of resource law at the University of Calgary and a reviewer for RStar, called the wording of Jean’s letter “clever marketing.”
“They realize this is a marketing problem,” he said. “They have to sell this to Albertans.”
There’s no way an RStar-like program could honor polluter pay, Olszynski said.
“You can’t square that circle.”
In an emailed statement, Jean insisted that she can.
“We will absolutely support the polluter pays principle,” he said. “Many of these sites have been left by actors that no longer exist, but for those that are owned by companies that are still in business, I will explore all the tools at my disposal to ensure that these operators clean up the sites.”
The incentives can take different forms, he said.
“It could be seen as anything from easing regulatory burdens, speeding up permitting processes, or creating rules that favor new permits for companies that excel at cleaning up old sites. Those decisions have yet to be made.”
Offering incentives for energy companies to comply with his legal requirements has been a goal of Smith’s since before he re-entered politics.
He promoted him as a business lobbyist. After becoming prime minister, she put it on her energy premier’s to-do list and put a prominent proponent of the program on the public payroll as “special projects manager.”
Kris Kinnear remains on the staff list for Smith’s Calgary office.
Well cleaning is a major problem in Alberta.
As of December, the province’s energy regulator reported that there were 172,236 abandoned or inactive wells. That doesn’t include unremedied pipelines, buildings or other industrial infrastructure.
The stock of such wells is growing. A 2021 University of Calgary study found that the number of idle wells increased by more than 50 percent between 2015 and 2020.
Estimates of the cost of cleanup vary widely.
The Alberta Energy Regulator puts the sticker price at $18.5 billion. The Alberta Liability Disclosure Project, a coalition of landowners and academic experts, has estimated it at $70 billion.
An internal estimate by the regulator, officially disavowed, came in at $260 billion.