Just Make Sure No One's Looking

Ottawa is preparing to relax regulations governing the release of effluent from some Tar Sands tailing ponds. It was bound to happen in the Great Northern Petro-State of Canada.

Ottawa and the Alberta government are in the early stages of crafting new rules with industry to authorize discharges of treated effluent into the Athabasca River, even though the sector’s biggest companies have yet to show they can effectively clean the toxin-laced water on a commercial scale. 

The federal government is targeting final regulations for 2022 modelled on existing rules that authorize releases from metal, mineral and diamond mines, provided contaminants are within regulated limits for “deleterious” substances under the federal Fisheries Act, according to documents obtained by The Globe and Mail. The changes would also require approval under Alberta’s Environmental Protection and Enhancement Act.

Now, don't worry. It'll all be done right, just as it always has been - in a way, sort of, sometimes. It's better if you don't look, just sayin'.

Ottawa says it would put in place stringent environmental controls before permitting any discharges, seen by some as a necessary step for cleaning up the tailing ponds and restoring them to their predevelopment state 

The industrial waste has attracted international scorn for killing migratory birds, including the deaths of 1,600 ducks in a Syncrude Canada Ltd. tailings pond in 2010 that led to a $3-million penalty for the company. 

In 2015, the Alberta government eased regulations and began developing policy and criteria for tailings water release after the industry said it could not meet more stringent cleanup standards.

Let's unpack that. The Bitumen Barons knew that they were bound by "stringent cleanup standards" when they built all those tailing ponds. They went ahead and built those leaky tailing ponds and filled them with all manner of toxic crap knowing full well about those "stringent cleanup standards." Then, after the deed was done they went to the Alberta government whining "I don't wanna" and so the Alberta government watered down those "stringent cleanup standards" to suit the industry. Now Ottawa is jumping on the dirty tailings bandwagon.

Those tailing ponds are a constant threat to the world's third largest watershed, the Mackenzie.

What could possibly go wrong?

There's an answer to that question in a companion piece in today's Globe. Think of it as the "orphan well hustle." It's sort of like reverse asset laundering. The giants unload 'end of life' wells onto companies that have no money for clean up costs. How in hell do they get away with that? Well the article describes them as "pliant regulators," a common feature in petro-states.

Like a Vampire Sizzling Under the Noonday Sun

The more unviable the Athabasca Tar Sands become, the more extreme measures politicians will accept to keep that corpse warm.

There's nothing for it but to drag it out into the burning light of day.

One thing we all know - all of us - is that to these small-minded politicians with their "next electoral cycle" vision, 70 years might as well be 70 centuries. Hell, even their kids will probably be long dead by then.

Imagine if you could just tell the bank how much money you think you owe them and that you’ll settle up 70 years after you move out. Wouldn’t that be easier? 

That is essentially the deal Suncor has been granted by the Alberta government regarding the ballooning liability from their oil sands tailing ponds and related reclamation requirements. 

Like all other operators in the industry, every year Suncor presents the Alberta taxpayer with an estimate of what the corporation thinks it will cost to reclaim the artificial lakes of toxic sludge it has created, in Suncor’s case since mining began in1967. No supporting documentation required.

...Collectively, tailings ponds now cover 25,000 hectares in northern Alberta and contain a poisonous brew of organic acids, benzene, lead and fine clay particles that have not significantly settled out in 50 years. The result is lakes of toxic yogurt impounded by the largest earthen structures in the world.  

Alberta has the constitutional right to manage resources as the province sees fit, but the current situation could be described as regulatory humiliation. Bitumen royalties make up less than four per cent of the provincial budget and capture a similarly puny proportion of the market value of bitumen produced by the companies.

Since 1975, the province produced over 4,800 trillion cubic metres of natural gas, 17.4 billion barrels of conventional crude and 11.4 billion barrels of bitumen with cumulative current value of $1.7 trillion.
Successive governments since Premier Peter Lougheed somehow managed to convert this vast resource bounty into a growing public debt of $43 billion. 

This shockingly inept fiscal management could soon become the problem of all Canadian taxpayers if the largely unsecured liabilities of bitumen tailing ponds are included in the equation. Cleanup costs, as estimated by industry, amount to $27 billion, while other observers put the risk closer to $48 billion. Only $1.4 billion is currently secured by cash reserves from the companies; the rest is backed only by the value of unmined bitumen. 

What happens if global economic forces or disruptive technologies render the remaining bitumen reserves uneconomic? The oil sands are consistently touted as a driver of national economic growth. What if they instead become an expensive and worthless mess the rest of the country is on the hook to clean up? 

An unfolding disaster around abandoned conventional oil and gas wells offers an illuminating glimpse into the future. 

Last March, Chinese-controlled Sequoia Resources announced to provincial regulators it was broke and walking away from 3,000 oil and gas well sites with a potential cleanup liability of $500 million. Sequoia posted no reclamation funds to cover remediation costs, as is typically required, because Alberta regulators granted the failing company exemptions from solvency requirements.

...Throwing federal money at disasters created by captured local regulators is sadly a storied Canadian tradition. 

After operating for 56 years and producing seven million ounces of gold worth almost $12 billion, the Giant Mine in Yellowknife went into receivership in 2004, leaving Ottawa with a $1-billion remediation bill. The Sydney tar ponds cleanup in Cape Breton cost Canadians another $400 million. Ottawa has already contributed $30 million to Alberta’s orphan well fund — a trickle that could soon become a deluge. 

Economic cheerleading by federal and provincial politicians and the mainstream media on behalf of the oil industry is doing the public a great disservice. When the party is over in the oil patch, Canadian taxpayers may find themselves doing the dishes.

It's sad to see Trudeau going down the same path as Harper and Notley doing her best to be even more Tar Sands friendly than her successor, Kenney.