Home Canadian News Cleaning up Alberta’s oilpatch could cost $260 billion, regulatory documents warn

Cleaning up Alberta’s oilpatch could cost $260 billion, regulatory documents warn


Cleaning up the Alberta oilpatch could cost an estimated $260 billion, internal regulatory documents warn.
The staggering financial liabilities for the energy industry’s mining waste and graveyard of spent facilities were spelled out by a high-ranking official of the Alberta Energy Regulator (AER) in a presentation to a private audience in Calgary in February.
The estimated liabilities are far higher than any liability amount made public by government and industry officials.
The official, Rob Wadsworth, vice-president of closure and liability for the AER, says a “flawed system” of industrial oversight is to blame.
He called on all stakeholders to accept tougher regulations and move away from a system that now allows the largest companies to take centuries to clean up their toxic well site graveyards.
“We can continue down our current path until the impacts are felt by the public … or we can start to implement the numerous changes that we now know need to be made,” the document says, adding that the liabilities are underfunded and the collection of security funds from industry is “insufficient.”
Until now, the public has been told the liabilities have been calculated at about $58 billion, far less than Wadsworth’s estimate. The report does not spell out what he based his estimate on and Wadsworth declined an interview. The government, meanwhile, has only collected $1.6 billion in liability security from companies.
The liabilities include costs that companies must assume to shut down aging and inactive oil and gas exploration wells, facilities and pipelines once they are no longer needed. Another significant part of the liability is the clean-up of toxic tailings ponds from oilsands extraction mines near Fort McMurrray. The ponds have sprawled to cover an area the size of Kelowna.
The tailing ponds are used by companies to dump the waste from the mining of bitumen. The process normally requires hot water to separate bitumen from the oily deposits of sand beneath the boreal forest in Alberta, leaving behind a yogurt-like sludge.
The AER said Wadsworth’s presentation provided “a snapshot in time of estimated total liability” and was based on a “worst-case scenario” of a complete industry shutdown.
This seems to contradict a statement in Wadsworth’s presentation that the estimates are “likely less than the actual cost.” He also warned in his presentation that liabilities from conventional wells were getting larger due to an “increasing number of licensees with questionable financial capacity to meet closure obligations.”
The AER also says that “industry companies are responsible” for the costs in Wadsworth’s estimate.