Dr. Swann Debates Bill 14 – An Act to Support Orphan Well Rehabilitation (Committee of the Whole) – 23 May 2017

Taken from the Alberta Hansard for Tuesday, May 23, 2017.

Bill 14 – An Act to Support Orphan Well Rehabilitation (Committee of the Whole)

Dr. Swann: Thanks very much, Mr. Chair. I’m pleased to speak in committee on Bill 14, An Act to Support Orphan Well Rehabil-itation, clearly a win-win, with the federal government offering to front the interest, at least, on a significant loan to industry. At the same time we’re going to create jobs and clean up some important liabilities for all Albertans, particularly our children and grand-children, with the Orphan Well Association. Presently the orphan well fund can only be used to pay for suspension, abandonment, and related reclamation costs in respect of orphan well facilities and sites.

The bill also proposes to authorize the President of Treasury Board and Minister of Finance to make loans. In its current form the Oil and Gas Conservation Act does not specifically allow that. This is obviously enabling legislation that will potentially be a win-win for employment, our economy, and these important delayed and deferred cleanup costs, that hold a potentially fairly large liability for future generations. The government is making the changes to allow a $235 million loan to the Orphan Well Associ-ation, to allow the fund to repay the loan.

As has been stated, there are 83,000 inactive wells and 69,000 abandoned. In March of this year the Orphan Well Association had an inventory of 2,000 orphan wells to go through closure activities. It managed only 185 wells last year with an annual budget of $30 million. It’s scheduled to increase to $60 million in the 2019-20 fiscal year. This will entirely be covered by industry levies.

I have only a few questions that don’t appear to be clear in the current bill. It authorizes the loan money to the Orphan Well Association but doesn’t specify a loan ceiling or a repayment schedule apart from the 10-year, full repayment. It’s not clear how that’s to be shared, especially with companies that are perhaps struggling financially, and whether, in fact, at the end of the day, we will see the big companies stepping up with their share and the smaller companies again deferring and declining. Those are some specific details, but it seems to me that Albertans deserve to know how and in what manner the loans will be repaid, and we have a right to know at the start just what those terms of repayment are in the interest of protecting taxpayers from undue risk. They should be written into the bill.

This loan should also be a one-time deal, and it should reflect that, that this is not a pattern for future decades. While Premier Notley insisted that the $235 million loan doesn’t replace the orphan levy or the polluter-pay principle . . .

The Acting Chair: Hon. member, refrain from using names.

Dr. Swann: Sorry?

The Acting Chair: Refrain from using names. You used the Premier’s name.

Dr. Swann: Oh, thank you. Yes.

Bill 14 is worded in such a way that the door is being left wide open for government to make future loans. That needs to be addressed, too, I think. In terms of honouring the polluter-pay principle, we need to ensure that is clear, that this is not setting a pattern for future defaults, I guess, by the industry.

Bill 14 is also not prescriptive about what any loans to the orphan wells can be used for. I guess, if the price of oil happened to jump by double, I would wonder whether some of this money already given could then be used for other purposes besides the purposes of abandonment and reclamation. Without it being more specific, I wonder if we are again not quite holding them sufficiently to account.

Finally, I think there is a reason to call for this bill to have a review process, to within one to two years report back to Albertans to let us know how this fund is being used and how effectively it is accomplishing the goals it set out to do. It’s part of due diligence, accountability. It also, in my view, should be written into the bill, certainly, before any future lending is given. It seems to me that within the next one to two years it would be good to know what’s working and how well it’s working.

Those are some of the concerns in an otherwise laudable bill, that, as I say, is a win-win for Albertans, for our environment, and for our workplace. Thank you, Mr. Chair.