Municipal politicians in Alberta are troubled by a proposed provincial program that would give oil and gas companies public dollars to clean up abandoned wells, saying the companies owe outstanding taxes and need to clean up after themselves anyway.
“It’s exactly how a fox would design a henhouse,” Rural Municipalities of Alberta (RMA) President Paul McLauchlin told a news conference earlier this month.
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“Is it for Albertans or is it for the industry? And when I hear, ‘Oh, it’s decreasing environmental liabilities,’ well, that’s an obligation anyway.”
Designed by an industry group, the R-Star proposal would use billions of dollars of taxpayer-funded royalty breaks to subsidize oil and gas companies to clean up abandoned wells. Premier Danielle Smith and Energy Minister Peter Guthrie have both expressed support for the program in the past, but it has been criticized by legal experts, energy economists, and the province’s own internal analysts, says CTV Edmonton.
“If I have an unpaid speeding ticket, I can’t renew my licence,” said one delegate at an RMA event, adding that the Alberta Energy Regulator should treat oil companies with unpaid taxes the same way.
Guthrie said his ministry is gathering information and will work with Alberta Municipal Affairs to explore “all options.”
McLauchlin said the province can find out how much money is owed by simply asking municipalities. He said RMA has been pushing Alberta to impose real consequences on companies that fail to pay their taxes. And while the province has given municipalities the power to issue special liens to recover some of the missing revenue, RMA says the process is complicated and doesn’t work in all situations.
McLauchlin said that if the R-Star program was designed properly, he would “support it 100%” because “it addresses a need.” But he warned that large companies—which can afford the cleanup costs—would be able to game the new program without strict controls in place, and he questioned whether it makes sense to use future royalties for current liabilities.
As it is currently designed, the program would divert funding away from other government priorities like education or health care, said Andrew Leach, an economics professor at the University of Alberta. He questioned whether the program would help small, financially strapped oil companies that can’t reclaim abandoned oil and gas sites, the Globe and Mail reports.