Alberta's energy minister says province won't use public money to clean up abandoned wells

Alberta's energy minister says the government will not draw on the public purse to clean up abandoned oil and gas wells.

"We will not put public tax dollars into cleaning up wells," Brian Jean told reporters Tuesday.

Jean was responding to questions from reporters about a leaked draft report from a government-appointed panel that suggested public dollars may be used to help guarantee reclamation of almost 80,000 inactive wells.

The 71-page draft document dated Jan. 28, obtained by The Canadian Press, includes recommendations such as creating government-owned companies that would acquire mature wells, extract the remaining hydrocarbons and use those revenues to fund the cleanup. It suggests those companies would be backstopped by public funds.

It also recommends setting up an insurance fund financed by industry "but ultimately backstopped by the province."

Jean said he hadn't seen the report.

Alberta Premier Danielle Smith said the province is considering some of the recommendations, but didn't say which ones.

The report will be released next month, she said.

"We're quite excited about it," Smith told the legislature in question period.

'Trust has been broken': report

The province has long debated how to deal with abandoned wells mounting across Alberta despite existing laws that require companies to clean up their own assets. The report was commissioned to investigate solutions.

The report acknowledges "increasing public concern" that taxpayers will be on the hook for industry's responsibilities. It also says "the trust has been broken" between the Alberta government, energy industry, landowners and municipalities.

The report is authored by David Yager, a former oilfield services executive and one-time Wildrose party president who played a key role in merging Alberta's competing conservative parties in 2017. He currently serves as a special adviser to Smith and sits on the board of Alberta's energy regulator.

The association representing Alberta's rural communities said on Tuesday that it felt the consultation process was heavily tilted in favour of the energy sector. Forty-four of the report's 98 participants came from exploration, production and oilfield services. Ten represented municipal governments, or rural and municipal agencies.

"This process definitely was slanted towards industry and very heavily focused with an industry lens," said Kara Westerlund, president of Rural Municipalities of Alberta and councillor for Brazeau County.

The association asked the government to restart the process on several occasions, Westerlund said.

Resource law professor Martin Olszynski said the report contains some positive recommendations, including a potential plan to tie closure securities to wells instead of the licence holder, meaning the money to reclaim the well stays with the well no matter who owns it.

"There's a considerable promise and potential in this suggestion," said Olszynski, with the University of Calgary.

But he said many of the remaining recommendations amount to further subsidization of the industry. He pointed to the report agreeing with well operators who say the program needlessly drives up reclamation costs because of inflexible one-size-fits-all rules.

"They're talking about making it easier for industry to walk away from these sites, and someone's going to bear that burden," Olszynski said.

Paul McLauchlin, reeve of Ponoka County and former president of Rural Municipalities of Alberta, said Jean's commitment contradicts several of the major recommendations in the report.

"I'm very happy to hear that, if that's the case, but that's not what this report says," he said.

McLauchlin said the recommendations were "frightening" and called for a review to take place in public. "Let's have a genuine engagement, not an industry-sided approach, but something that's balanced. Everyone's there for the right reasons," he said.

"I was taught as a kid, clean up your own messes, and I don't want to clean up someone else's."

Nagwan Al-Guneid, the Opposition NDP's energy critic, said the government is failing to hold oil and gas companies accountable.