Reg­u­la­tor apol­o­gizes for spook­ing oil­patch with $260B cleanup cost es­ti­mate

Of­fi­cial gave worse case sce­nario and we re­gret it, says agency in state­ment

StarMetro Calgary - - FRONT PAGE - Emma McIntosh STARMETRO CAL­GARY Steph Wech­sler NA­TIONAL OB­SERVER Carolyn Jarvis GLOBAL NEWS Mike De Souza NA­TIONAL OB­SERVER

The Al­berta En­ergy Reg­u­la­tor is apol­o­giz­ing for a “stag­ger­ing” pre­sen­ta­tion, made last Fe­bru­ary by one of its high­es­trank­ing of­fi­cials, that warned the prov­ince’s oil­patch that it could be sit­ting on an es­ti­mated $260 bil­lion in fi­nan­cial li­a­bil­i­ties.

The li­a­bil­ity es­ti­mate fac­tors in the costs of shut­ting down and clean­ing up oi­land-gas sites at the end of their use­ful­ness. That in­cludes in­ac­tive wells, pipe­lines and tail­ings ponds in the oil­sands.

Premier Rachel Not­ley noted that the prob­lem was sig­nif­i­cant.

She said the li­a­bil­i­ties would be hard to ad­dress amid the “big­gest oil price drops in gen­er­a­tions,” adding that com­pany prac­tices have im­proved, but after decades of buildup, the ex­ist­ing prob­lem is “not one that we can fix overnight.”

The de­tails of the pre­sen­ta­tion, made by the reg­u­la­tor’s vice-pres­i­dent of clo­sure and

li­a­bil­ity Robert Wadsworth, riled up the Al­berta and fed­eral leg­is­la­tures when made pub­lic in a re­port on Thurs­day by Na­tional Ob­server, Global News, the Toronto Star and StarMetro Cal­gary.

The es­ti­mated li­a­bil­i­ties Wadsworth cited in his Fe­bru­ary

pre­sen­ta­tion are $200 bil­lion greater than the pre­vi­ous cal­cu­la­tion made pub­lic by the reg­u­la­tor. The AER had pre­vi­ously said the cost was just over $58 bil­lion.

The joint me­dia re­port, based on speak­ing notes re­leased through Free­dom-of-In­for­ma­tion

leg­is­la­tion, re­vealed Wadsworth’s thoughts on the “flawed” na­ture of Al­berta’s over­sight. He warned the in­dus­try to pre­pare for tougher rules crack­ing down on a grow­ing num­ber of in­ac­tive sites.

Wadsworth has de­clined to give an in­ter­view about his re­marks. The reg­u­la­tor said ear­lier this week in a state­ment that the es­ti­mates he re­leased were based on a worst-case sce­nario in­volv­ing a “com­plete and im­me­di­ate” shut­down of the en­tire in­dus­try.

But fol­low­ing the me­dia re­port, the reg­u­la­tor went fur­ther, sug­gest­ing the de­ci­sion to use the num­bers in the pre­sen­ta­tion was a mis­take.

“We want to apol­o­gize for the con­cern and con­fu­sion that this in­for­ma­tion has caused,” the state­ment reads. “The num­bers are stag­ger­ing: $260 bil­lion in to­tal li­a­bil­ity, which is $200 bil­lion more than we have con­sis­tently re­ported.

“This par­tic­u­lar es­ti­mate was cre­ated for a pre­sen­ta­tion to try and ham­mer home the mes­sage to in­dus­try that the cur­rent li­a­bil­ity sys­tem needs im­prove­ment.

“While the mes­sage to ad­dress li­a­bil­ity is im­por­tant, the num­bers were not val­i­dated and were based on a hy­po­thet­i­cal worst-case sce­nario.”

That state­ment ap­pears to be at odds with Wadsworth’s pre­sen­ta­tion, which stated the $260-bil­lion fig­ure was likely low.

The $58-bil­lion cal­cu­la­tion, ac­cord­ing to Wadsworth’s pre­sen­ta­tion notes, is based on self-re­ported num­bers from in­dus­try.

CANA­DIAN PRESS FILE PHOTO

Al­berta Premier Rachel Not­ley told reporters Thurs­day that the high cost of clean­ing up the oil patch is an is­sue she’s raised since she was in op­po­si­tion.

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