Saskatchewan premier Brad Wall is correct to make cleanup of abandoned oil wells a priority, but his request to get federal funding to speed up the job is off base.
His heart is in the right place. He sees abandoned well clean up as a worthy make-work project for jobless oil industry employees and is asking for $156 million.
Farmers are interested in this issue because so many oil and gas wells are on agricultural land. Deteriorating abandoned wells threaten to contaminate their groundwater.
But with the economy in the doldrums and the government in Ottawa running a deficit, any special federal spending should be targeted at projects that will pay future dividends.
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In the recent federal election, a plurality of Canadians accepted the Liberal party’s surprising plan to run deficits.
With interest rates low, Canadians could see value in spending to expand the economy, create jobs and improve quality of life.
Projects that eliminate transportation bottlenecks, ease movement of goods and people, foster introduction of new technology and train workers for new jobs are attractive investment targets.
But government borrowing can only go so far before it creates more problems than benefits. Lines must be drawn and priorities set. And helping an industry clean up self-generated problems is a step past that line.
Orphaned, abandoned wells didn’t suddenly appear because of the crash in oil prices.
They are a long-term problem created by industry and government inaction.
The solution must be addressed through improved industry commitment and more robust regulation.
Companies in the oil industry contribute to funds that clean up well sites that are abandoned and orphaned because the owner company has gone out of business, but allocations to the funds are inadequate.
The situation in Alberta is similar to Saskatchewan, only much larger in scope, with many thousands of wells inactive for more than a decade and due for reclamation.
With energy industry profits eliminated by $30 a barrel oil, the sector currently has little capacity to address the problem. Indeed, increased bankruptcies in the industry mean more inactive wells are being abandoned.
In such situations it can make it hard to enforce polluter-pay principles.
But few things make people more angry than companies that reap windfall profits in good times and then in bad times walk away from the environmental problems they have created, leaving the taxpayer to foot the clean-up bill.
Oil prices will eventually return to profitable levels so policy must be put in place now to ensure than when they do, adequate funds are generated from the industry to fix this problem.
Also, more oversight is needed to ensure that wells not formally abandoned but in limbo and unlikely to ever produce again, are reclaimed in a timely manner.
In seeking to give work to laid off energy workers we must not set a precedent for taxpayers footing industry liabilities.
