Regulator apologizes for spooking oilpatch with $260B cleanup cost estimate
Official gave worse case scenario and we regret it, says agency in statement
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.
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.