‘How a fox would design a chicken coop’: Alberta rural leaders on oil well cleanup plan

EDMONTON — Alberta’s Rural Municipalities leader says a proposal from the oil and gas industry to give the industry royalty credits to clean up abandoned wells is like asking the fox to design the chicken coop.

Paul McLauchlin also says the proposed RStar program would have such far-reaching implications for future earnings that it deserves a vote.

“Is (RStar) for Albertans or is it for the industry?” McLauchlin said Thursday. “When I look at it, it’s just like a fox would design a chicken coop.”

He made the comment after United Conservative Cabinet ministers heard criticism from rural political leaders of the RStar program at the association’s fall convention.

“I always want to stay in my lane, but at the same time, we’re stewards of the land and we represent 85 per cent of the province (geographically),” McLauchlin said.

“From our members, you’ve heard a real backlash saying, ‘You (propose) to use public funds to actually promote something that you’re obligated to (do) just by operating these facilities.

“Our members didn’t seem convinced today.”

McLauchlin said Albertans deserve a say in RStar.

“If you’re dealing with future royalties, you should make it an election (or) referendum conversation,” he said.

“(If) you take your great-great-grandchildren, your future grandchildren’s payments and use them now to promote rehabilitation, that’s a great discussion that all Albertans need to have.”

Earlier this week, Energy Minister Peter Guthrie confirmed that his department was studying RStar, which would encourage the cleanup of old wells and the drilling of new ones by providing royalty credits on new production based on spending by sanitation.

Guthrie said an announcement is weeks, if not months away.

Estimates suggest that if RStar grants the $20 billion in credits the industry seeks, Alberta taxpayers would forgo $5 billion in revenue.

RStar has been widely criticized by energy economists, who say it would funnel money to companies that don’t need it to do the work most are doing anyway. They say energy companies are already legally obligated to clean up their messes.

Previous government programs to help pay for well cleaning came about when prices were low. This is no longer the case with the benchmark West Texas Intermediate oil price currently hovering around US$90 a barrel.

Proponents say the program would encourage new drilling, help clean up Alberta’s 170,000 abandoned wells and create jobs.

Prime Minister Danielle Smith, in a speech to the association on Thursday, did not specifically mention RStar, but said: “We are working on finding a long-term solution to clean up unused well sites so that we can also bring that land back into production.”

Smith was a strong supporter of RStar last year when she was a lobbyist for the Alberta Enterprise Group, representing some of the province’s biggest companies.

RStar was pushed back at the time by then-Energy Minister Sonya Savage on the grounds that RStar would not fit Alberta’s current royalty structure and would violate the polluter-pays principle, which is one of the foundations of environmental regulation.

Savage was moved from the energy portfolio by Smith two weeks ago to a new post as minister for the environment and protected areas.

Smith reiterated in a recent interview that she always stands up for RStar.

“I know that (RStar) will be a way to clean up some of our old well sites,” she told the Western Standard in a live broadcast Oct. 21 interview.

“It’s creating a black eye for us internationally, and I’m very motivated that we find a process to get those pits back to the end.”

The opposition NDP said it was concerning to see a policy promoted by Smith the lobbyist and rejected by the now reopened government under Smith the prime minister.

McLauchlin said he too was trying to figure out why a policy rejected by the former UCP energy minister is now back on the table for the new UCP energy minister.

“It’s quite confusing to know what has changed in the meantime,” he said.

This report from The Canadian Press was first published on November 10, 2022.


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