Federal government rebuffs request to reallocate well cleanup funds
Pandemic-era program to keep riggers on the job
• Alberta is asking the federal government to allow it to keep $137 million in funding it failed to use for oil and gas well cleanup for the same activities on Indigenous land.
The federal government, meanwhile, says it has already granted Alberta an extension to spend the full $1-billion fund, arguing the province failed to spend a large portion of the fund created to give jobs to oil and gas workers laid off in the first months of the COVID-19 pandemic.
Alberta’s request to allocate the funding to site cleanup on Indigenous lands has received backing from chiefs from Treaty 6, 7 and 8 territories, and the Indian Resource Council.
At the heart of Alberta’s request is funding created by the federal government early in the COVID-19 pandemic that was structured to save jobs and jump-start efforts to reduce the number of abandoned wells in Alberta.
In late April 2020, the federal government announced a wide-scale economic response plan that included its Site Rehabilitation Program (SRP) — a $1-billion fund to chip away at Alberta’s backlog of abandoned oil and gas wells. The funding came as thousands of oilfield workers were unemployed during the height of COVID-19, resulting in more than 4,000 jobs being created.
With that program coming to a close, $137 million of that $1 billion remains unused. The federal government is requesting it be returned to Ottawa, according to the Alberta government, which currently holds the money.
Cleaning up an abandoned well can cost between $100,000 and several million.
“Even though the money has lapsed, it’s just simply a time in the calendar,” said Alberta Energy Minister Brian Jean.
He did not say why the funding hasn’t been spent.
“They’ve already allocated this on the books. Just let us keep it, manage it and clean this up.”
An Enoch Cree Nation chief said the First Nation has a growing population and limited land base, meaning imminent land stewardship is needed.
“This is a liability of the lessees, and the Alberta government is holding them accountable through the Well Closure Program. However, time is not on our side,” said Chief Cody Thomas.
The SRP has resulted in 1,824 inactive well sites being closed amid the Indigenous community grant program, which set aside $133.3 million to clean up inactive
wells in Indigenous communities.
Martin Olszynski, a University of Calgary resource lawyer and frequent critic of the province’s remediation policies, said the federal program “wasn’t intended to subsidize well cleanup” despite it indirectly having that effect.
“The primary rationale was about sustaining jobs in the context of broader COVID relief,” Olszynski said.
As oil and gas companies have rebounded sharply from low commodity prices, some have in recent years posted all-time record profits. In that context, the SRP’S intended use has come and gone, Olszynski said.
“This is essentially now an industry subsidy. What we’re talking about here is subsidizing well cleanup that should have been done and should be the responsibility of the operators of those wells.”