Alberta’s new energy minister has promised to maintain an order protecting the Rocky Mountains in the province from coal development, for now.
However, Peter Guthrie says his department is already working on a controversial program to give oil companies breaks on their royalties to clean up old wells, The Canadian Press reports.
Guthrie told a news conference Tuesday he has no plans to withdraw an order from his predecessor, former pipeline executive Sonya Savage, that restored protections for the Rockies from open-pit coal mines. “It will stand,” he said.
Savage’s 2021 order restored protections to those beloved landscapes after encouragement from the United Conservative Party government led to a series of mountaintop removal mine proposals from coal companies. Those proposals were widely opposed.
New Premier Danielle Smith has mused about reopening the coal mine debate. Guthrie wouldn’t say how long he’ll keep the current order in place.
“I don’t have an answer on that,” he said. “But for now, there are no changes planned.”
Not good enough, said Opposition New Democrat energy critic Kathleen Ganley.
“It doesn’t give me any comfort at all,” she said.
She said the United Conservatives have shown themselves willing to open those landscapes to development in the past and may do so again. If Guthrie plans to maintain the order long-term, Ganley said he could have said so.
“They should be very clear,” she said. “The public has been extremely clear.”
At the news conference Tuesday, Guthrie confirmed his department is studying an industry proposal intended to encourage the cleanup of old wells and drilling of new ones by granting royalty credits on new production based on remediation spending. Estimates suggest that if the so-called RStar program grants the C$20 billion in credits industry is seeking, Alberta taxpayers would forego $5 billion in revenue.
“We are working internally on this,” Guthrie told reporters, adding any announcement is “weeks if not months away.”
In an email, Alberta Energy spokesperson Scott Johnston confirmed Guthrie’s statement.
“We are exploring ways to help clean up some of the most expensive projects and older inactive oil and gas sites by providing more incentives to industry,” he wrote. “No decisions have been made yet.”
On Thursday, the Globe and Mail said the Alberta Energy Regulator is planning to increase the industry’s mandated spending on abandoned well cleanup from $422 million this year to at least $700 million in 2023 and an anticipated $992 million by 2027.
The increase comes “at the behest of the provincial government to overhaul the liability management framework for oil and gas wells,” the Globe writes. “Rural municipalities say that companies aren’t spending enough on remediation efforts, particularly as the industry enjoys record profits thanks to sky-high commodity prices.”
AER President Laurie Pushor said most companies have responded well to the measure. “Companies have really embraced the notion that… Albertans expect them to do better,” he told the Globe. “But also, their financial realities are that they need to be attending to this like any other obligation.”
Rural Municipalities of Alberta President Paul McLauchlin welcomed the increase but questioned whether it was sufficient to deal with the “significant amount of unclean wells” across the province. “You would think at a price point that we are right now with [strong] free cash flow, that would be a priority,” he said. “Instead, what the priority for a lot of oil and gas businesses is, is share buybacks and dividends.”
The other factor now is the RStar proposal. CP says the plan has been widely criticized by energy economists, who say it would transfer money to companies who don’t need it to do work that most are doing anyway. They point out fossil companies are already legally obliged to clean up their mess.
Previous government programs to help pay for well cleanup came when oil prices were low. That is no longer the case.
The plan was also rebuffed during Savage’s tenure as energy minister. She wrote then that RStar wouldn’t fit within Alberta’s current royalty structure and would clearly violate the polluter-pay principle, one of the foundations of environmental regulation.
Smith, however, spoke strongly in support of RStar when she was a lobbyist for the Alberta Enterprise Group, representing some of the province’s largest businesses.
That connection between Smith and an influential business lobby over a policy the government has already rejected once should raise concerns, said Ganley.
“We see a premier who was a lobbyist on this issue and suddenly the issue has been reopened,” she said. “I think that is a concern from both a policy perspective and a governance perspective.”
The main body of this report was first published by The Canadian Press on November 8, 2022.