June 18th, 2021

Public facing monetary disaster over orphaned wells, auditor says

By ALEX McCUAIG Local Journalism Initiative Reporter on June 11, 2021.

amccuaig@medicinehatnews.com

The province’s auditor general says more needs to be done in how the Alberta government manages and accounts for its nearly $250 million in environmental liabilities. An advocate for reform in how the government regulates orphaned oil and gas wells says that figure is only a small tip of a mammoth iceberg taxpayers are on a collision course with.

In his report issued Thursday, Auditor General Doug Wylie said the process in which Alberta Environment and the Alberta Energy Regulator manage their environmental liabilities lacks clarity on who is responsible to pay and clean up oil, gas and coal sites.

Those sites are separate from those which form the liabilities under the jurisdiction of the Orphan Well Association.

“We’re looking at it as ensuring there are systems that first identify what the potential liability sites are and who is responsible for those sites and what work is required to be done and by when,” said Wylie.

In his report on the issue, that is far from clear with AER and Alberta Environment – both under the provincial government umbrella – having conflicting interpretations.

The report found instances where both the regulator and ministry concluded neither was responsible for sites even when evidence showed otherwise.

Even within the AER, the report found that regulatory staff did not share cost estimates of environmental liabilities with its own finance staff.

“They became aware of this list through our audit work,” read the report as part of its key findings that there are insufficient systems to track management costs of oil, gas and coal sites under the government’s jurisdiction to clean up.

Reagan Boychuk, co-founder of the Alberta Liabilities Disclosure Project, says the quarter of a billion dollars in government liabilities is nothing compared to the quarter of a trillion in oil and gas environmental liabilities scattered across the province.

And if AER isn’t able to manage its own house, it’s less likely it can ensure private oil and gas firms follow the polluter pay model.

Boychuk called the report, “a small illustration that they are incapable of solving these problems.”

He added, “There is no bigger threat to Alberta than this mess.”

In Cypress County alone, cleaning up wells could see billions in investment and thousands of jobs, he said, and oil and gas companies “can either pay investors or they can flow the money to Albertans’ pockets as wages.” 

But over the last three decades, the former has been the case, said Boychuk, adding the industry-funded Orphan Well Association only has a fraction of a per cent of the cash required to fund reclamation of sites where the owners have become insolvent.

“We either make industry pay while it’s still coming out of the ground or we find some other way,” said Boychuk.

He is calling for a public inquiry to look into the monumental consequences of not dealing with the issue.

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