Industry, workers split over oilsands bailout, well reclamation funding

By Catherine Griwkowsky March 25, 2020

As Ottawa finalizes a multi-billion-dollar aid package to address Canada’s economic hurdles during the coronavirus outbreak, arguments have broken out about which stakeholders in the ailing oil and gas sector should be the focus of any help.
 
A collection of environmentalists, social justice organizations, unions and faith groups sent a letter to Prime Minister Justin Trudeau on Monday, calling for a “Just Transition Act” that would put money towards transitioning oil and gas workers away from the fossil fuel industry.
 
The letter calls on Ottawa to give income support to oil and gas workers, regardless of their immigration status; to dedicate stimulus money to training and education in sectors like energy efficiency, technology, health care and renewable energy; and to bolster orphan well cleanup.
 
The signatories, which include the Canadian Association of Physicians for the Environment, Environmental Defence and Greenpeace Canada, say orphan well cleanup funding should be independently administered, with input from Indigneous communities, local governments and landowners — rather than led by oil and gas companies. 
 
Currently in Alberta, oil well reclamation is funded by industry through the Orphan Well Association and regulated by the Alberta Energy Regulator.
 
The letter said money for orphan well cleanup should be tied to a regulatory change to make sure the public is not left on the hook for billing in the future.
 
“Oil and gas companies are already heavily subsidized in Canada and the public cannot keep propping them up with tax breaks and direct support forever,” the letter states. “Such measures benefit corporate bottom lines far more than they aid workers and communities facing public health and economic crises.”

Legislators, companies advocate for corporate incentives
While workers are the material focus of some concerns, politicians and industry leaders have also stressed the need to support companies.
 
Last week, Conservative MP Shannon Stubbs introduced Bill C-221, The Environmental Restoration Incentive Act, in the House of Commons, which would give oil and gas firms a tax credit for decommissioning old and inactive oil wells and establish a flow-through share mechanism to get private investors to fund well closures, remediation and reclamation.
 
Mark Scholz, the president and CEO of the Canadian Association of Oilwell Drilling Contractors, supports incentivizing private investment.
 
“Programs designed to incentivize private investment in well reclamation, for instance, would help provide consistent work over time, which is the foundation for building a steady labour force again in the oilfield services sector,” he noted in a news release.
 
Premier Jason Kenney and Finance Minister Travis Toews previously asked the federal government for similar measures.
 
“Frankly, what we’re hearing from Ottawa is they’re not particularly interested in something like flow-through shares,” Kenney said at a news conference on Monday, adding that the federal government’s previously announced $10-billion national aid package will not be enough to meet Alberta oilsands’ needs.
 
“Our assessment is that our producers need access to a backstop,” he added. “Some of them are having their lines of credit impaired.”
 
Following the implementation of a backstop, Kenney said he would mull measures similar to the Troubled Asset Relief Program, which was utilized by the U.S. government during the 2008 financial crisis to bail out banks by buying back toxic assets.
 
Federal Finance Minister Bill Morneau hinted at money to finance the cleanup of orphan oil and gas wells last week as part of the economic recovery package.
 
The UCP government has already pledged $113 million in funding for the Alberta Energy Regulator’s industry levy for six months and extended a $100-million loan to the Orphan Well Association.

Recommended Posts