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Ottawa (AFP)

Prime Minister Justin Trudeau on Friday announced Can$1.7 billion (US$1.2 billion) to help Canada's oil sector, struggling with low prices, survive a pandemic-related downturn by cleaning up environmental messes.

The money will go specifically to clean up orphaned wells -- inactive and abandoned by defunct firms that may now be contaminating groundwater and leaking greenhouse gases.

The prime minister also announced a Can$750 million (US$535 million) fund to help energy companies cut methane emissions under new, stricter environmental regulations.

"Just because we're in a health crisis, doesn't mean we can neglect an environmental crisis," Trudeau told a daily briefing in Ottawa.

Most of the wells are in the prairies of Alberta and Saskatchewan, where "thousands of energy sites, no longer in use, dot the landscape in various states of disrepair," according to the Alberta Energy Regulator website.

Trudeau said cleaning them up will be good for the environment, for landowners who have to contend with them, and for 10,000 workers the remediation effort will employ.

The issue of orphaned wells "has been festering for years or even decades. Cleaning them up will bring people back to work... and support our environmental targets," he said.

"Many, many energy firms are experiencing a cash crunch, so they don't have the funds to invest in technologies to reduce emissions, or fix methane leaks.

"Today's announcement will allow for this kind of work to be done and create jobs people need during this difficult time."

Greenpeace applauded the move, saying it rightly "helps workers and not polluters."

The Business Council of Alberta agreed in part, saying the federal aid will help many in the oil patch to keep working, but added that the nation's larger oil companies still need help.

"We will continue to look at ways we can support important industries in this country including the oil and gas sector," Trudeau said.

Canada is the world's fourth-largest oil producer, accounting for five percent of global output.

But it has been devastated by oil prices that have fallen as economies ground to a halt because of the coronavirus pandemic.

The situation was compounded by a supply glut resulting from a price war between OPEC cartel kingpin Saudi Arabia and non-OPEC rival Russia.

A compromise hammered out last weekend by Riyadh, Moscow and other crude producers to slash output by around 10 million barrels per day briefly boosted prices but the rally soon fizzled out.

© 2020 AFP