Just a few years after the boom, energy companies are shedding distressed wells for next to nothing. It’s a brisk trade in junk assets — and it’s going virtually unchecked by regulators. Who will pay to clean it up?
JEFF LEWIS ENVIRONMENT REPORTER
JEFFREY JONES MERGERS AND ACQUISITIONS REPORTER
MEDICINE HAT, CALGARY, TORONTO AND LANCER, SASK.
PUBLISHED NOVEMBER 23, 2018
UPDATED NOVEMBER 24, 2018
And they wonder why their industry has a bad reputation and so many opposing adding more pipeline capacity.
Many respected financial and environmental experts in and outside of the oil and gas industry saw this coming. Even many average Canadians were concerned based on a trend of behavior by large corporations, regulators and government.
Here is summary from the 6 month investigation by the Globe but I suggest reading full article to get more informed.
$235M Provincial “loan” to AER – the industry-funded regulator charged with both promoting and policing, to replenish cleanup fund after record number of insolvencies.
– Large Corp sells 1000’s of wells to small Corp for $1 with $136M or more in required cleanup liabilities. AER approves and now they bankrupt. One of many similar stories (or frauds?) with tax payers on the hook but many are responsible yet already living paycheck to paycheck or worse.
– A looming financial and environmental crisis: Of the 610,696 oil and gas wells in AB, SK & BC, some 20% are sitting inactive. Almost 2/3 of these 122,456 idle wells have been shut off for more than 5 years. And a growing proportion are owned by companies that can least afford the required cleanup.
Those in government know that taxpayers will have to pay, if they do not impose rules requiring that funds be set aside from current sales to clean up old properties. These are 2 very separate issues. Clean up costs, and safely getting the product to market. The pipeline issue is primarily a market protection scheme, funded by off shore oil producers. Energy East could have cut into Saudi sales to fuel eastern Canada, so it had to go. Proof that this fake enviro fight is targeted at Alberta oil: No one is funding any objection to new US pipelines, except those which serve Canadian producers, like KXL would.
Want proof that govt is run by idiots? Nutley wants to buy tank cars, with which Warren Buffet’s BNSF can make more profit. They will fall over often and spill far more than a new pipeline. Trudeau and Butts made Cdn pipelines impossible to build, then pretend that they want to fix their problem. The evil media are unanimously silent on this complicity.
Regardless this tarnishes the industry and at $15 a barrel for tar sands oil, producers are losing money. They cant stop pumping from active wells or they cool after investing for years in heating and can be permanently damaged.
They betting on prices climbing. To try and stem the bleeding and fund active wells they loosing money on they trying to dump wells at or near end of life along with the costly cleanup liabilities. They ignored cleanup for the ones already shutdown when prices were sky high and they had huge profits. Greed and corruption of regulators and government got us here.
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