Alberta eases security payment burden for oilsands companies

However, for a brief period last year, oil prices crashed into unprecedented negative territory. That reduced the value of assets to the point at which companies would have had to pay “billions and billions” of dollars more, Fairweather said.

Prices have since rebounded and asset-to-liability ratios have recovered.

But companies, if they so choose, will have their 2020 payments assessed on a formula based on their revenue that doesn’t consider the overall value of their assets.

Fairweather emphasized the move is temporary. Energy Minister Sonya Savage has promised an overall review of the program this summer. The review is to be done by Alberta Environment.

The province’s auditor general has said the program is underfunded and leaves the province exposed to clean up costs.

The program now holds just under $1.5 billion — just under $1 billion from oil and gas companies — a small fraction of what remediation costs would be.

Martin Olszynski, a professor with expertise in resource law at the University of Calgary, criticized Thursday’s announcement. The one situation that would have forced the industry to pay into the fund has now been nullified, he said.

“Why does this one (price) blip matter? The fund isn’t nearly big enough. Anything that puts more money in there is a good thing.”

Olszynski said there’s little need for a review of the security program. Plenty of research has already shown that Alberta needs better guarantees that resources will be there to clean up the landscape after the oilsands are gone, he said.

“What’s the problem?” he asked. “Why shouldn’t (industry) put more toward this program that everybody knows is underfunded?

Alberta eases security payment burden for oilsands companies

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