When Alberta’s oil cleanup bill comes due Canada will end up paying

Alberta has a quarter trillion in liabilities and less than $20 billion to cover them

National Pollutant Release Inventory (NPRI)

Podcast version of the article

Alberta is claiming yet again that Canada doesn’t have its back. That’s why they tried to bite the hands off of the rest of Canada in the last federal election by voting en masse for a party that promised to do much, much less about climate change.

They ignored the reality that the Liberals under Trudeau had approved the pipeline immediately after gaining power, gave it significant social license in Canada and globally with the carbon tax and environmental regulation, and then bought it outright for $4.5 billion when it appeared that the owners were realizing that Alberta’s oil was going to be first off the market regardless. They ignored the reality that the Liberals under Trudeau have driven more movement on the pipeline than Harper and Kenney did in more than a decade in Ottawa. Instead, they are believing the disinformation flowing from Kenney and his new propaganda arm, the energy war room that they’ve rebranded the Canadian Energy Centre, as if it’s there for Canada instead of just Alberta.

But Canada has Alberta’s back in a big and ugly way: cleaning up the mess Alberta has allowed the oil patch to make of it over the past 40 years.

Cleaning up Alberta’s fossil fuel industry could cost an estimated $260 billion, internal regulatory documents warn.

Alberta regulator privately estimates oilpatch’s financial liabilities are hundreds of billions more than what it told the public

Yeah. A quarter of a trillion. I mean, sure that’s only about $200 billion USD, but still. That’s per Rob Wadsworth, vice president of closure and liability for the Alberta Energy Regulator.

That’s not the only report on the on-the-ground reality instead of the in-the-propaganda rags reality.

A report from the C.D. Howe Institute estimates that there are roughly 450,000 wells in the province — a well for every 1.4 square kilometres in Alberta. It’s estimated that at least a third, 155,000, of those wells are no longer producing, but have not been reclaimed, representing a financial liability for the company that owns them.

The story of Alberta’s $100-billion well liability problem. How did we get here? | The Narwhal

The C.D. Howe Institute isn’t exactly some leftist PR mill for aging Marxists. It’s a conservative institute, empirically oriented, non-partisan and its reports are cited in Parliament by Conservative, Liberal and NDP politicians. It’s been instrumental to free trade, strict economic policy and lower corporate tax rates. Dismissing its findings would be like listening to Donald Trump’s tweets instead of NPR for factual information.

How much is in Alberta’s industry funded cleanup fund for orphaned wells? $30 million. How much is in Alberta’s industry funded cleanup fund for overall liabilities? $1.6 billion. What are the liabilities again? $100-$260 billion.

The available funds are orders of magnitude off of the scale of the problem. That’s part of the reason oil companies intentionally shuffle older wells into abandonable corporate shells. And it’s cheaper still to just never do anything with a played out well and just let it sit there as if it’s productive while paying the minimal leasing fees.

And it’s not like the Ponzi scheme of increasing oil revenues is going to pay for this. International capital is fleeing the oil sands. Alberta’s product will be first to see the taps turned off as global demand flattens and disappears. It’s too heavy, too high in carbon for extraction and too far from water, with or without a pipeline. That was always the premise, that they would clean it up tomorrow out of oil profits. But tomorrow is never coming, and that’s been clear for years.

So the oil industry isn’t going to have the money to clean this up. All they’ll have the money for is continued lobbying for far too limited cleanup funding so that the problem eventually gets dumped in the Alberta government’s lap to pay for. And successive waves of Alberta politicians will let them, because it’s really hard to get elected if every single oil executive sees you as a threat, aka someone who isn’t going to accept their bullshit.

Thankfully, there’s the Heritage Fund! Surely the trillion dollars that they’ve socked away will pay for the cleanup, right? Oh, wait, there’s only $18 billion in that fund, a tiny fraction of the cost of the cleanup. The liability is 15 times bigger than the available savings, and growing. And that money was supposed to be for diversification and a post-oil economy, not cleaning up the mess that is left behind.

Hey, Alberta’s a rich province. They’ll just pay for it out of government revenue from taxes and the like, right? Oh, wait, the Alberta government has been sucking at the teat of oil royalties for decades instead of developing a sensible fiscal policy. They spend more on services than any other province, but are crushed every time the global oil price tanks. They’ve cut royalties instead of increasing them. And they have consistently treated their idiocy over sales taxes as an advantage as opposed to the deeply unwise fiscal policy it is.

No, the oil industry and Alberta are going to leave Canadians from outside of Alberta with a quarter trillion dollar liability to clean up. And we will.

But we’re going to be really pissed at Alberta and Albertans for decades over it.