By Canadian Press

Federal oilpatch bailout focus on cleanup of abandoned wells, reduced emissions

Apr 17, 2020 | 1:21 PM

Observers say the federal government’s multibillion-dollar oilpatch bailout package announced Friday should come with strings attached.

“(Money) should be tied to regulatory change in Alberta to ensure the province puts in place a polluter-pays program, so the public is not left with these liabilities in the future,” said Greenpeace Canada spokesman Keith Stewart.

Prime Minister Justin Trudeau announced that his government plans to spend $1.7 billion in Alberta, Saskatchewan and British Columbia to clean up “orphan wells” — oil and gas wells that have been abandoned by their often-bankrupt owners without being remediated.

Ottawa also plans another $750 million to help cut emissions of methane, a potent greenhouse gas that leaks from energy facilities.

Few details were given about the spending and industry spokespeople were not immediately available for comment.  

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Trudeau said the money will support 10,000 jobs across the country.

Stewart said targeting the spending on cleanup does put people to work.

“We’ve been urging the Trudeau government to bail out people and not polluters and today’s announcement is a step in that direction,” he said.

Merran Smith at Clean Energy Canada called the spending “a smart approach.”

“It sends an important signal that the federal government doesn’t intend to back away from its climate plan,” she said in a release. 

“(It’s) inclined to orient relief and, we hope, subsequent stimulus efforts, towards activities that are aligned with their climate commitments and will reduce pollution.”

The package may fall short of industry expectations.

In a March 27 letter to Natural Resources Minister Seamus O’Regan, the Canadian Association of Petroleum Producers asked for a halt to further climate change programs, a freeze on the federal carbon tax, no new clean fuel standard and a moratorium on environmental reporting requirements.

“We encourage them to have a tools-down approach until we have a resolution of the crisis,” director Tim McMillan told The Canadian Press this week.

Others have proposed aid directed at keeping companies alive.

The Business Council of Alberta has called for no-interest loans, loan guarantees, suspending principal payments on existing loans, and taking away for an interim period the ability of banks to call in loans. 

The council has also written an open letter to the federal government asking that it buy troubled companies.

Alberta’s Orphan Well Association lists 11,329 wells, pipelines, facilities and sites in its care as of April 15. Between them, B.C. and Saskatchewan have another 1,300.

The $1.7 billion would average out to about $135,000 per site.

The federal government has said it plans to reduce Canada’s methane emissions by 40 to 45 per cent below 2012 levels by 2025. It has created regulations to achieve that, but has given the provinces a chance to propose their own rules to achieve the same result.

B.C. and Alberta have done so, but analysts suggest the proposals are weaker than Ottawa’s. 

Reductions are achieved by inspecting sites for methane leaks. Federal rules would require inspections at least three times a year. British Columbia would require them once yearly.

Industry has said the best way to achieve the federal target is to let producers focus on an overall goal instead of requiring standard testing for all facilities. CAPP argues that concentrating on the largest emitters instead of imposing across-the-board inspections would give the biggest bang for the buck.

This report by The Canadian Press was first published April 17, 2020

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Bob Weber, The Canadian Press