The Alberta government announced Thursday it would give federal grants to some of Canada’s biggest oil and gas companies. The administration seeks those companies to use the funding to pay contractors who will clean up their aging sites as part of a coronavirus job-creation program.
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Alberta: to clean up its abandoned wells
This order follows Justin Trudeau’s announcement of $2 billion in federal funding to help the industry clean up its older sites. The included provinces are Alberta, Saskatchewan, and British Columbia.
Some of the benefited companies are Canadian Natural Resources Ltd ($31.39 million), Cenovus ($8.99 million), Husky ($5.66 million), Paramount Resources ($5.24 million), and Imperial Oil ($4.67 million).
Through this provincial site rehabilitation program, the Alberta government aims to use $1 billion in transfers from the federal funding. The administration has already started to award this money in phases.
Western provinces have several abandoned wells; for instance, there are currently close to 100,000 inactive wells in Alberta.
In this regard, the total cleanup costs could cost the government tens of billions of Canadian dollars. According to financial experts consulted by CNBC, this situation could potentially leave Canadian taxpayers responsible since the industry will only set aside a fraction of the total investment.
So far, the Alberta authorities haven’t disclosed how much of this funding would create or save any jobs. Nor whether it would reimburse companies for contracts they had already planned.
“The programs are an important support for employment, especially in the service and contracting sector,” told CNBC Kim Guttormson, Husky spokesperson.
Kavi Bal, press secretary to Alberta Energy Minister Sonya Savage, defended the cleanup funding.
“Alberta’s government does not award grants to oil companies but directs the funding to oil field service providers, so the money is used to create jobs while addressing environmental liabilities.”
On the other hand, Mark Dorin, a former oil industry worker, and landowners’ consultant said he believes the provincial funding program is flawed and will not create jobs.
“Those who were abandoning wells anyway [are] the ones who are taking advantage of this federal program,” Dorin told Global News in an interview. “In other words, we’re not creating any jobs.”
Regulatory experts think Alberta’s plan to deal with oil and gas liabilities would improve if it accepted longstanding proposals to fix the problem. Some examples in this regard would include things such as setting timelines for well closures and collecting security deposits for new sites.