The provincial government wants to prop up the liquid natural gas industry in Alberta by charging Albertans more to heat and power their homes.
The government’s Mature Asset Strategy (MAS) report, released April 3, suggests that by increasing costs to the consumer, producers will have extra money to use for cleanup and closure of existing wells.
“One of the most significant ways to support Alberta’s marginal and inactive producing asset base is through higher natural gas prices that reflect full-cycle costs, including closure,” the report says.
“This would benefit stakeholders and minimize financial risks to the provincial government.”
Report Widely Criticized
The report recommends how the industry and province can address the cost of cleaning up the thousands of abandoned and orphan wells scattered across the province.
It’s been met with wide criticism.
Rural Municipalities of Alberta said in a news release that the MAS report’s recommendations “prioritize reduced industry liability and regulatory requirements without addressing the critical issue of accountability for payment of taxes or surface leases, or liability obligations.”
The Globe and Mail reported that “critics who have reviewed the draft say many of the recommendations amount to giveaways to a dwindling part of the industry, and are an affront to the polluter-pay principle.”
Billions in Assets
Liquid natural gas is taken from the ground through fracking, a process by which a fluid composed of water and chemicals is injected into rocks deep under the ground, flushing out the gas trapped inside. For the fracking process to take place, companies have to drill anywhere from 300 meters to 2.5 kilometers underground.
After it’s been processed, about half of the natural gas extracted in Alberta is consumed in Alberta. Half of that is used by commercial and residential consumers, and the other half by industry.
Once the wells have been drilled and extraction is underway, companies make billions. Canadian Natural Resources (CNR) reportedly boasts a net worth of $61.51 billion.
However, according to reporting done by The Narwhal, CNR also has 20,000 abandoned oil wells across Alberta. These wells are deep, and the liquid left inside them after the fracking process can damage the environment and the water sources around the wells.
Now, the Alberta government is recommending that consumers pay more so that companies such as CNR have extra funds with which to clean up oil wells.
Polluters Meant to Pay
In 2024, Vermont became the first US state to pass a law requiring oil companies to pay for damages that they have created.
Companies will pay into a government fund based on calculations of how much damage they’ve caused the environment between 1995 and 2024. The government of Vermont will then use that money to upgrade or build roads and bridges or fix sewer systems, among other things.
The law shows what is possible when people and governments decide to make polluters pay, rather than covering the cost of the messes companies make with taxpayer dollars.
Polluter-pay laws exist in Alberta, too, but they are rarely put into practice.
The Supreme Court of Canada explains that a polluters pay principle “assigns polluters the responsibility for remedying contamination for which they are responsible and imposes on them the direct and immediate costs of pollution.”
The Albertan Environmental Protection and Enhancement Act states that it is “the responsibility of polluters to pay for the costs of their actions.” However, Alberta’s MAS does not follow this law. It prefers to pass the cost of polluting on to consumers and citizens.
According to the Supreme Court, polluters pay principles are “found in almost all federal and provincial environmental legislation” in Canada.
Ecojustice, an organization that has previously taken the Alberta government to court for violating people’s rights, calls the government to “go back to the drawing board and create a strategy that protects public interest over profit, and makes polluters clean-up their own mess.”
“The bill for inactive well clean-up alone is anywhere from $33 to $88 billion — or could be much worse,” said Susan Calabrese, Managing Lawyer of Ecojustice’s Alberta office in a news statement. “This proposal has too many unanswered questions and is not in the best interest of Alberta. It should be soundly rejected.”
