Friday, November 04, 2016

Alberta's Hundred Billion Dollar Hangover Cure

There's these two guys, see? Regan Boychuk and Brent O'Neill. Two Albertans. They want to revive Alberta's collapsed labour market while, at the same time, cleaning up the mess "up north." And they figure a hundred billion dollars should just about cover it.

First, however, they'll have to get the Alberta government to face the problem it's spent decades ignoring - the environmental catastrophe sometimes called the Tar Sands.

Their proposal, "is built on several premises. The first is that the time for fossil fuel extraction has ended in Alberta. The low fruit has been picked and nobody saved anything for the future.

"The second is that climate change has become a clear and present danger. “We need to start making a real reduction in man-made emissions so our future generations have the same opportunities we once did” says the RAFT proposal.

"The best way to respond to this emergency — as well as increasing oil price volatility — is to wind down the industry and re-employ people in a massive environmental clean-up, RAFT proposes. While industry has a legal obligation to clean up its inactive wells and abandoned pipelines, it probably won’t spend the money unless government tackles some surprising legal obstacles.

"Cleaning up has many economic benefits. It puts oil service companies back to work and would employ thousands throughout the province. The clean-up would last decades and fixing leaking wells would reduce methane pollution into the atmosphere."

"Current liabilities for the conventional sector, the plan notes, include 444,000 oil and gas wells (only 200,000 are actually pumping liquids), 430,000 kilometres of pipelines (the distance to the moon is 384,000 kilometres), 30,000 oil and gas facilities, 900 square kilometres of oil sands development, 220 square kilometres of tailing ponds and “a 11.2 million ton sulfur pile that dwarfs the great pyramids of Egypt.” (The sulphur is another waste stream from bitumen upgrading.)

"No one has argued about the environmental necessity of a clean-up.

"Consider the size of the environmental burden. Last month the Alberta Energy Regulator reported that the forecast cost of reclaiming inactive oil and gas wells and abandoned facilities now totalled more than $30.6 billion. (When I first reported on these liabilities nearly a decade ago they amounted to $9 billion.)"

But there's a snag.

"Incredibly, the regulator holds only $240 million in its clean-up fund. That potentially leaves taxpayers on the hook for a $29-billion clean-up bill if laws and policies don’t radically change in the province and country.

"It’s widely agreed the industry-funded regulator, directed by a former oil patch lobbyist, has failed to grasp the gravity of the situation or the inadequacy of its current policies.

"That means the final bill for just for 75,000 [conventional oil] wells (not including 60,000 wells that pump less than 10 barrels of oil a day and are no longer economic) could be as high as $82 billion.

"The oil sands add to these growing environmental liabilities.

"Alberta’s auditor general has already warned that the province’s clean-up fund of $1.6 billion is grossly inadequate to cover an estimated $21-billion clean-up liability for just eight oil sands mining sites and 19 coal mines. Treating the toxic water in the tailing ponds might cost another $24 billion.

"Industry and the Alberta government have known about these liabilities for years. And the principle that industry is responsible for cleaning up its polluted sites is widely accepted.

And what would theft be without an Artful Dodger?

"...part of the problem results from small changes made to the federal Bankruptcy and Insolvency Act that effectively made it legal for oil and gas companies to declare bankruptcy and walk away from unreclaimed wells. The changes basically ensured that other creditors got paid while the public got stiffed with the environmental bills."

"In an article in University of Toronto Faculty of Law Review, Alexander Clarkson proposed changing federal law to declare well reclamation a “super priority.”

"That would give clean-up costs priority over creditors who extended risky loans to the company.

"More importantly, it would force bankers and other creditors to factor in environmental risks when lending to the highly indebted oil patch."

The Scam - Three Card Monte

"Cenovus, for example, paid only $3 million in royalties on bitumen sales worth $1.1 billion in the first six months of 2016. That’s less than a one per cent royalty.

"CNRL Resources paid $6 million on sales of $1.9 billion worth of bitumen.

"Suncor paid $48 million in royalties on $4.7 billion worth of gross bitumen sales. And on it goes.

"Many of the oil sands companies making money tend to own refineries and are what industry calls “integrated producers.” They include big oil sands players such as Suncor, Imperial, Husky and Cenovus.

"Even when oil prices are low these integrated players make huge profits by buying low-priced bitumen, upgrading and refining it and then selling high-priced refinery products in the North American market. Oil prices might be low but gasoline prices remain surprisingly high."

In other words, the screwing of the province and people of Alberta is nearly complete and, as usual for someone screwed over, they're left with a parting gift - environmental devastation and an enormous clean up bill. That's what they get from decades of utter neglect by Conservative governments (and now Notley's to boot).

Ralph Klein instilled the Mardi Gras mentality in Alberta's legislature and no one's been able to shake it since. Oh there was wealth, vast wealth supposedly but, oddly enough, there's nothing to show for it today except for that cesspool in the backyard. Shoulda listened to Peter Lougheed ...but, no.


Troy said...

I was thinking about this, a few days back. Worst case scenario, Alberta can't afford any of this, and has to begin creating its very own Zone Rouge. Many of those lands are probably unfit to live, right now, never mind in the future, though.
It would take honesty, a trait seemingly in short supply in Canadian politicians, these days. Honesty, courage. It shouldn't be that hard to admit any of this, but there's no one in power speaking about this. It's all outsiders, now.

Toby said...

Most of the mess will never be cleaned up.

The Mound of Sound said...

The problem that most worries me is the threat of catastrophic contamination of the Mackenzie River watershed, the third largest fresh watershed in the world. Those tailing ponds cannot be neglected.

Toby said...

If previous industrial cleanups are any indication, nature will have to do for the Tar Sands. Sorry about the Mackenzie River but the guilty will evaporate before cleaning up their mess.

Anonymous said...

I have been trying to find a map of the fracked gas activity in BC, with no success.
BC has the biggest fracked gas exploitation anywhere.
Fracked gas poisons the water table and life itself.
It is likely impossible to clean up a fracked gas drilling area .
I also cannot find photos of the above ground destruction of fracking in BC.
Fracked gas exploitation will likely prove to be a much bigger cleanup threat than the tarsands ever will.


the salamander said...

..thanks for that .. quite an astounding proposition ..

The ablity to 'walk away' or fake that wells are still productive etc.. is simply stunning. Surely some intrepid journo will stitch together who's Government & which Ministers & 'justice department' lawyers tweaked legislation to accomodate Big Oil. Oh right, that would be herr Harper & cabin boy Ray Novak that wiped out navigable waters protection.. habitat protections etc etc.. such that tar sands tailing ponds & fracking whether for shale oil or natural gas could skip environmental review. And you can't have meddlesome scientists & biologists talking to media about toxic waters & dying ecosystems.. or methane

The numbers are simply shocking. And FYI California is now becoming aware of overpressurized wastewater injection.. forcing toxic fluids into remaining aquifers that hold drinkable water.. The beat goes on .. or is the beating?

Dr Purva Pius said...
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