Federal government announces $1.7 billion for oil well reclamation

Prime Minister Justin Trudeau released details of Ottawa’s highly anticipated oil industry bailout on Friday, promising $1.72 billion for oil well cleanup.
 
The provincial government will administer $1 billion of the package, while $200 million will be given to the industry-led Orphan Well Association in the form of a loan.
 
Another $520 million is set aside for well reclamation efforts in Saskatchewan and British Columbia. 
 
Overall, the effort will fund approximately 10,000 full-time jobs, according to the feds. 
 
There are approximately 4,700 orphaned wells in Alberta and another 91,000 wells deemed inactive. 
 
Further, Trudeau announced $750 million for a new Emissions Reduction Fund focused on methane emissions. The fund will provide “primarily repayable contributions” to oil and gas firms to encourage them to invest in technology that will reduce their greenhouse gas emissions. 
 
Premier pleased but says access to capital is key 
Premier Jason Kenney called the measure a “great first step” in Ottawa’s relief effort for the hard-hit industry, but he said “more support is needed.” 
 
The premier suggested the industry needs access to capital akin to the $13.7-billion auto sector bailout in 2009. 
 
“We will continue to work with the federal government to ensure that the energy sector now gets the support it needs as it faces its own threats from both the COVID-19 pandemic and the Saudi-Russia price war,” Kenney said. 
 
The Canadian Association of Petroleum Producers and the Business Council of Alberta echoed the call for liquidity. The latter said a $15 to 30 billion bailout is needed to sustain Canada’s energy companies and airline industry (Calgary-based airline WestJet laid off 1,700 pilots last week). 
 
Meanwhile, the Globe and Mail reports energy executives are using their own cash to buy back shares while some firms have cut their dividends. 
 
Last night, Kenney noted that the price of Western Canadian Select was trading at negative prices.  
 
Funding cleanup is ‘good news’ for the province: NDP, environmental groups
The official Opposition lauded Ottawa’s decision to direct bailout funds to oil well reclamation as a step in the right direction for “responsible resource development” and job creation. 
 
However, NDP Environment critic Marlin Schmidt said the cleanup effort must include “clear targets and timelines” and ensure “landowners and municipalities are compensated for wells on their land.”
 
For Alberta Liabilities Disclosure Project co-founder Regan Boychuk, the boost to well cleanup is something to celebrate, but ultimately industry needs to pay for reclamation.
 
“If these funds are not repaid by industry once the cleanup work is done, today’s announcement will become another public subsidy to oil and gas,” Boychuk said. 
 
Clean Energy Canada executive director Merran Smith said the crisis is an opportunity for the energy sector to “reorient and rebuild” with a focus on sustainability and stable jobs. 
 
Alberta Federation of Labour president Gil McGowan called the funding a “win-win scenario” and commended the federal government for consulting with workers, environmental groups and landowners, in addition to industry.
 
“Here in Alberta, we’re used to our provincial governments consulting only with industry and then making a policy based on that narrow range of perspectives,” McGowan said in a news release.