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Alberta’s Plan to Clean Up Abandoned Wells Confronted by Confusion and Uncertainty

abandoned oil wells

Alberta’s plan to provide oil and gas companies with tax relief in return for cleaning up abandoned well sites has been met with criticism, and questions regarding the program’s structure and funding source continue to be raised.

Economists, landowners, experts, and the Opposition NDP have all expressed concerns about the Liability Management Incentive Program pilot project proposal.

The initiative could help some farmers, but it might also increase “negative public sentiment toward the sector,” according to research issued by Scotiabank analysts late last week.

“Moreover, we also believe the program goes against the core capitalist principle that private companies should take full responsibility for the liabilities they willingly accept,” according to the report.

The province has stated that no final decisions have been made regarding the initiative, which would provide royalty breaks worth $100 million.

Many oil companies are remaining silent about the proposal. However, on Monday, Cenovus said it was evaluating the initiative and would provide an update soon.

“We’ll determine how it may affect our plans after we’ve seen more details,” wrote the company in a statement.

Cenovus reported receiving 1,455 certificates of reclamation from the Alberta Energy Regulator between 2019 and 2021.

This program may be a part of a “dramatic acceleration” in well cleanup, said CAPP vice president Brad Herald last week.

“We look forward to the consultation process with the Alberta government on their proposed Liability Management Incentive Program and will work to ensure the momentum built in the reclamation of legacy sites in Alberta continues,” he stated.

On her weekend radio show broadcast across the province, Smith mentioned that previous governments were partially responsible to blame for poorly cleaned-up wells.

“Because we’re targeting it so closely on the worst wells, we’re looking at sites, for instance, that have been inactive for 20 years that were drilled prior to 1990, so these are kind of the worst of the worst sites,” said Smith said, stating regulators should have demand well cleanup from companies in past years.

Professor of economics at the University of Alberta Andrew Leach said on Monday that Smith’s remarks imply that the industry is willing to leave liabilities in place indefinitely.

“When the premier comes out and says, ‘This is reclamation that would not have otherwise happened,’ that’s a big shot across the bow to the industry,” said Leach.

“Because she’s essentially saying, ‘You oil and gas producers are not going to meet your legal obligations to Albertans.'”

Even though oilsands are irrelevant to the program, Leach pointed out that such a strategy might have long-term effects on other liabilities in the scene, such as enormous oilsands tailing ponds and site reclamation.

Original source material for this article taken from here

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Written by Olivia Woods

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