“A long time ago in a galaxy far, far away…” — opening scene, Star Wars
The first thing I thought of when I heard the word RStar was the opening sequence in the first Star Wars movie: yellow letters scroll up the screen and the audience learns about the evil Galactic Empire and its ultimate weapon, the Death Star.
And while Danielle Smith’s RStar doesn’t have the power to annihilate the entire planet, it goes a long way towards dragging Alberta deeper into the muck of cronyism and the erosion of the rule of law.
Why?
Because under RStar, an industry designed program, the government would grant oil and gas companies royalty tax credits (valued at $20 billion) to incentivize them to clean up the abandoned wells they are legally obligated to clean up anyway.
There are so many reasons why RStar is a really bad idea.
Lobbyist to premier
Prior to Smith becoming premier she was a lobbyist for the industry. She lobbied Sonya Savage, Kenney’s energy minister, to implement RStar. Savage demurred saying RStar didn’t align with Alberta’s royalty structure and would violate the polluter pay principle. No kidding!
After Smith became Alberta’s premier, she replaced Savage with Peter Guthrie who knows nothing about the industry but is happy to push RStar.
Why does Smith think RStar is such a good idea (leaving aside the obvious, that she likely made some promises and now she has to deliver)?
“Joint obligation”
Smith starts by saying RStar will incentivize reclamation for the “worst” abandoned wells which were approved in the 1980s when environmental laws were more lax than they are today. Since the companies drilled under these “lax” environmental laws, Albertans have a “joint obligation” to help the companies bear the cost of reclamation.
This is nuts.
The industry is well aware that environmental laws (like all laws) may become more stringent over time. They call this “regulatory risk” and disclose this risk to their shareholders.
Cenovus, for example, specifies “abandonment and reclamation” and “regulatory compliance” as two of the many risks that may have a “material adverse effect” on the company.*
Contrary to what Smith says, there is no excuse for a company to be caught flat footed by the tightening of “lax” environmental laws. And there’s absolutely no reason why the Alberta taxpayer should step in if a corporation failed to anticipate the need to properly abandon its wells at the appropriate time.
If a company acts irresponsibly, that’s on them, not on us.
Incidentally if Smith wants to ensure ‘lax’ environmental laws don’t bite the industry in the butt in the future, she can pass tougher environmental laws today and avoid the problem altogether.
Reclamation boom
Smith says the $20 billion in royalty credits will create 366,000 jobs and $8.5 billion in royalties (how she came up with these numbers is unclear).
Fine, but more jobs and royalties don’t justify forcing Albertans to shoulder part of the burden of cleanup when an industry-funded cleanup program will have the same effect.
The Alberta Liabilities Disclosure Project says industry-funded cleanup would result in an annual economic boom of 10,000 full-time jobs, $780,000,000 in employment income and a $2 billion contribution to Alberta GDP every year for 25 years. ALDP provides the calculations to backup its assertion, which is more than we can say for Smith.
Hypocrisy
What makes RStar doubly painful is the hypocrisy of the government that touts the industry’s ESG rankings and spends millions on War Rooms and satellite offices in Washington and Houston to spread the word that Alberta is “the world’s best choice for responsible, sustainable and long term energy supply” while at the same time rolling out a pilot plan to “incentivize” industry with our tax dollars to get them to comply with existing laws.
To put it bluntly, Smith just skewered the “Alberta is the world’s best choice for energy” message.
Principles
In addition to it being immoral to pay someone to obey the law, Smith’s RStar proposal violates the “core capitalist principle that private companies should take fully responsibility for the liabilities they willingly accept.”
It also violates the polluter pay principle which holds that oil and gas companies are legally responsible for the retirement of their infrastructure.
Both principles support the argument that cleanup funds should come from the company owning the well, not the public.
A simple solution
We could spend hours turning ourselves into pretzels trying to understand Smith’s loopy justification for RStar.
Or as Mark Dorin of the Polluter Pay Federation suggests, we could demand two things:
- For abandoned wells: The government should enforce the law requiring oil and gas companies to clean up their mess by properly abandoning wells and reclaiming well sites.
- For orphan wells: The government could put pressure on industry to increase its contributions to the orphan well fund to clean up the mess left behind when companies go bankrupt or are insolvent.
It’s industry’s turn
The Alberta government has given the Orphan Well Association $335 million in loans since 2017. The federal government announced a $200 million loan to OWA and an additional $1 billion to Alberta’s oilfield service companies for cleanup and reclamation work.
It’s time for the industry (which is recording windfall profits) to pitch in.
Remember that scene at the end of Star Wars, where Luke Skywalker dropped a proton torpedo into a port that started a chain reaction that blew up the Death Star…
…this is a possibility Danielle Smith should take into account.
*2021 Annual Report, p 59
Susan on the Soapbox 
I expect that Smith’s next move will be to pay convicts to stop breaking the law.
Thanks for mentioning ALDP. My wife and I know some of the people involved and they do great work. More publicity for them would help inoculate the public against the Orwellian fever affecting Smith’s mind.
Thanks Reynold. I don’t know why it took so long for the media to catch on to this story. Perhaps it’s because we’re swamped with a new UCP scandal every few days, or maybe the media thought people weren’t interested in dry stuff like royalty credits, but the basic principle of using tax dollars (my money) to pay companies to obey the law is outrageous. That alone should have made this story headline news.
Thankfully the ALDP didn’t give up. They do incredible work.
It would be great if you’d do a column on them Susan. And mention a few names. We know one fellow who has worked very hard, for very little recompense, to make the problems of unclosed and orphan wells more well known to Albertans. And it does seem to me that the main stream press ignores them.
Perhaps there’s reasons for that. And those reasons are costing us. Big Time.
What I find surprising is why anyone is shocked by what is happening? RStar is just the latest cash giveaway to the oil industry and certainly will not be the last.
Smith is a shill for the oil industry, plain and simple. Apparently, she is still a lobbyist for the oil industry and being Premier is just a side hustle. Smith is well aware she will not be Premier forever and those massive corporations appoint Directors(Which pay very well).
Rest assured that for however long Smith is Premier, there will never be enough money available for health, education and welfare but there will always be plenty of cash available for the oil industry.
In reality, a core capitalist principle is privatize the profits and socialize the losses and cleanup.
Yes. And its way past time we stopped falling for it.
Jaundiced Eye: I agree. Although I’d say the RStar scam takes kowtowing to industry to a whole new level. It’s one thing to give them tax breaks and subsidies and to “cut red tape” so they can do whatever they want unimpeded by regulations aimed at protecting people and the environment, but it’s quite another for the government to take royalties owed to Albertans (as Lougheed said, we own the resources, the royalties are a form of payment) and give them to industry in return for industry obeying the law. That is outrageous.
It is legalized robbery and I just sent them a message and hope everyone that agrees should do the same PLEASE
I wish I could say I can’t believe it, but Danielle Smith’s lack of any common sense has compounded her ongoing stupidity. Her actions have set a dangerous legal precedent. As a law-biding Albertan I have to pay a fee to camp on Crown land. My government said that fee was supposed to go toward keeping our environment clean! If I litter I will be fined and rightly so. Now Danielle Smith allows the big boys to default on their share of fees as an incentive to force them to do what the rest of the entire province is legally obligated to do when it comes to being environmentally responsible!!?? So I guess these criminals need to be paid a cash incentive not to rob those environmental banks—sounds like crazy town to me. When is the next election??
Catherine…it’s definitely crazy town and it continues to get worse. It will be interesting to see what (if anything) comes from the fact that Sonya Savage said RStar violates the polluter pay principle and doesn’t align with Alberta’s royalty regime. Despite the fact Smith moved Savage out of Energy and into Environment, this could be damaging to Smith. To say nothing of creating a wobble within cabinet.
tHIS WOMAN SHOULD NOT BE ALLOWED ANYWHERE NEAR POLITICS.
THE ucp IS BAD ENOUGH BUT WIH HER ON TOP MEANS WE LOCK OUR DOORS AT NIGHT AND DON’T GO OUT AFTER DARK. IT WILL TAKE MORE EYES THAN A POTATO TO KEEP TRACK OF HER!
Pretty much this woman needs mental health help as soon as possible – please remove her before we give all our money so she can make some juice fortune under the table.
John and Carlos, while I hesitate to comment on Smith’s mental health I wholeheartedly agree that her policies are (1) geared to the extreme fringe of her base and (2)make absolutely no sense whatsoever.
She’s exhausting but we need to stay on top of her until she’s gone on May 29.
Take your outrage to the door for your constituency ndp candidate…its fun…conversations about reality is what we need now……….and it willl energize you to do something other then emote and despair. We’ve door knocked 8 polls so far, and after we take a wee break to mourne our inability to see through anti just transition BS we’ll be back at er. Join us
Rachel Notley dug us out of the UCP hole and brought us forward to number 1 of all the 10 provinces. I want more of that!
Let’s go get it. The conversations on the door are much more interesting and nuanced than in former years……..good people who’ve always voted conservative because it was their tradition are far less certain their future lies in that direction any longer.
Why are we surprised? She’s paying her debt to the big guns and buying votes at the same time. Disgusting. I would say that she feels badly for the poor oil industry- likely the second most discriminated against group. Hopefully there is a special place in hell for this ignorant woman and her united chaotic party.
Sharon, what surprises me is how many people (including some who’ve sent me snarky notes) support this reduction of royalties that would otherwise have gone into health, education, etc.
Get out and work for your ndp candidate if you don’t lie the way things are now…and after we win, refuse to go home and let the weak willed play ucp lite.
And it’s not like Alberta has the highest royalties in the first place.
WOW
As a Director of ALDP I’m glad you wrote this.
I hope it makes a difference… As a student of public policy I am appalled that this “policy” of the UCP is likely to be put in place.
Thanks for your articulate and cogent writing.
Dale
You’re very welcome Dale! You guys are doing great work.
The Big Cleanup Report is a joy to read. Well researched and well written.
Here’s the link for those who may wish to read it: https://www.aldpcoalition.com/_files/ugd/6ca287_2ffe90ca7c354d3eac43b5f141b6ec8a.pdf
Dale
Thank you for this report – it is time Albertans realize how badly managed we have been for the last 43 years of Conservative rule. They cannot blame anyone else because there was nobody else running Alberta.
Laws ignored to the benefit of oil companies and their own symbiotic relationship with them. God knows how many have benefited from this close relationship and blind eye to the clean up they were supposed to have done as the wells became unviable.
Dale – try this one more time
Thank you for this report – it is time Albertans realize how badly managed we have been for the last 43 years of Conservative rule. They cannot blame anyone else because there was nobody else running Alberta.
Laws ignored to the benefit of oil companies and their own symbiotic relationship with them. God knows how many have benefited from this close relationship and blind eye to the clean up they were supposed to have done as the wells became unviable.
The UCP playbook: Gain political contributions by selling policy promise indulgences that generate profits.
– Remove the cap on insurance premiums for profit performance
– modify the used car dealer conduct standards to remove consumer protections that inhibit profit margins.
– remove the cap on electric rates to raise profit performance
–
Excellent examples Douglas. Thanks.
Why should we the public pay anything to clean up these abandoned wells?
It is my understanding that when the oil companies were awarded the rights to drill the signed an agreement to clean them up when they were depleted.Over the years
Prices of gas has increased dramatically and the oil companies just jam it to us
‘strewth Fred!
Danielle works for someone, but it sure isn’ Albertans. Thieves, it seems to me.
On the other hand she’s figured out that all you need to do to garner support in the province is make ‘blue truck quacking noises’ and coal roll the feds. Hocus Pocus!
I mean hell, being honest I don’t particularly care for the Trudeau(s), but only idiots salivate when the UCP rings that bell. Rachel had the feds eating out of the palms of Albertans’ hands, for anyone willing to look at it realistically and not through the beady little eyes of the UCP and Alberta’s Lobbyist In Chief Danielle Smith.
Nothing to do Fred but keep your eye on the ball and keep reminding everyone to remember in May that Rachel Notley and the NDP did some really fine work during their term, despite the merde cabaret left by generations of industry pocketed ‘machine bosses’ like Danielle Smith.
Fred, the Hislop interview with Duane Bratt below suggests that RStar is a bail out for junior oil companies that are struggling despite the rise in oil prices. That makes it even more egregious!
GoinFawr: I loved your last paragraph, “keep your eye on the ball…”
Numbers Susan, how dare you bring numbers into the conversation!
But seeing as …
let’s say Alberta’s approximately 4.5 million people grows to 5.0 million people in 10 years. probably low, but for argument’s sake, let’s go with this please.
Without resorting to actually appropriate mathematics, we might say that’s a mean average of about 4.75 million Albertans in each of the coming 10 years.
$20B in foregone royalties is what Madam Premier is estimating would be the cost of RStar.
Mean average cost then comes out to $2B a year. That seems to work out to about $420/year/Albertan to get people to do what they have agreed to do as condition to access Albertans’ carbon riches, without having to receive additional payment.
Perhaps each Albertan could use that $420/year for something else, like maybe paying for energy costs?
Ah, probably a silly idea.
But Susan, you got this guy thinking.
Mikegklein: now that you’ve calculated the numbers I’m even more ticked off. Why should I pay $420/year to make someone obey the law when the government could just enforce the law and he’d do it for free.
Thanks for running the numbers!
Thank you, Susan. I am reminded of Alberta Senator Paula Simons’ Parliamentary Question one year ago: What exactly did we get with our (2020) Money?
On Monday,February 21, 2022, Sen. Paula Simons cited a report from the Parliamentary budget officer (PBO) released in January that shows more than half a billion federal dollars for orphan and inactive well cleanup has gone to large energy companies.
…..of the $1 billion in funding to Alberta, more than half had been given to large companies it considers to be viable.
“I asked (the PBO) whether any of that $556 million had gone to cleaning up actual orphaned wells. And I was informed by the parliamentary budget analyst that not one single orphan well in Alberta — not one — had been cleaned up with this grant money,”
https://calgary.ctvnews.ca/what-exactly-did-we-get-alberta-senator-questions-hundreds-of-millions-to-clean-up-orphan-wells-1.5792062
Imagine, if you dare, what Smith & the Utter Chaos Party would do with all the extra health-care money they’re demanding–if the Feds did NOT attach any strings….
Mike J: you nailed it!
Thanks, Verna. Given that it’s the Alberta government that decides who gets this money I think that’s an excellent question to ask Premier Smith, Energy minister Guthrie and Environment minister Savage.
Normally when a business fails to live up to its legal obligations it is assessed a fine. Here, though, the UCP government is planning a sort of “reverse fine”: pay them to fulfill their legal obligations.
I wonder where else this might work? Maybe we can get CRA to pay us to file our taxes on time? Maybe Service Alberta will pay us to renew our vehicle registrations? Perhaps municipalities can pay us to pay our property taxes?
This is getting crazier and crazier.
If you are a card carrying UCP member with an oil company that existed during the ‘lax regulation years’ you may already be eligible!
jerrymacgp: I mentioned earlier that some of Smith’s supporters don’t seem to understand why RStar is wrong, hopefully your excellent examples will open their eyes. (fingers crossed) Thanks.
No. Nothing convinces UCP voters that they are wrong.
“Give me Full Stupid Helmsman! Ramming Speed Ahead” the drunk insane Captain roared!
Smith signaled this program in the PostMedia rag sheets as a lobbyist months before winning the UCP leadership race. As the UCP is the OG mafia’s political arm (as was the Wildrose and the Progressive Conservatives before them) , this egregious raid on the Provincial treasure shouldn’t surprise anyone – sicken most ok, but shouldn’t surprise.
Looks like economic transition out of Big Carbon in the Alberta context is nothing more paying Little Carbon to clean up their mess they have already been paid to clean up. Whoduh thunk? No shame on this greedy pipsqueaks.
Look on the bright side, we get to legitimately add “Stupid” to “ignorant” when talking about Ms. Smith and her gang of UCP mean stupid Grade 8 remedials.
Lee and Ingamarie I found it interesting that the CEOs of the big oil and gas companies are not vocally supporting RStar. I saw one oil exec quoted who said RStar was a bad idea, it made the industry look like it was shirking its legal responsibility. Yup. That’s true. That plus the fact that according to Duane Bratt it’s less about cleaning up abandoned wells and more about a bailout for junior oil companies that are struggling.
For sure Susan…..but I’m not convinced by those Oil Men who speak up against Danielle……….at bottom, none of them ever intended to spend money putting the earth back together again. Who knows…….maybe they have data to suggest it isn’t possible. When it comes to Carbon Capture though, most of them keep quiet about the utilization part of the boondoggle. That’s where CO2 pipes carry the noxious stuff to…wait for it!!….unclosed oil wells to perform Enhansed Oil Recovery…EOR for maximum confusion.
They’ve been taking our money………and our resources, for decades. It’s hard for me to believe any of them are seriously against a plan to shower them with more of the public’s money. Anyone who still trusts the industry hasn’t been doing enough research I fear.
Bad plan or not……..they’ll take the money.
Ingamarie. I worked in Canada and the US and in both countries the CEOs supported the party in power because if they were nice to the government, the government would be “nice” to them. I agree with your point on not trusting industry to do the right thing, that’s why we need stringent legislation AND governments who enforce it.
If anyone in Alberta still claims innocence concerning who it is exactly, that the UCP government, and its predecessor the Conservative party has supported and been financed by for decades………this latest giveaway should alert them.
But then, we already have the WAR ROOM to make it clear who our tax dollars are defending….and where our investments and public pensions are designed to go. However, evidence doesn’t seem to make much difference to UCP voters….many of them too busy hating Ottawa and F…..ing our Prime Minister, to do the financial calculations we so badly need.
Our hospitals are on the verge of collapse. Alberta young people who want to go into medicine can’t find spots in our universities recently gutted by UCP cuts, and housing for hard working Albertan young families is essentially unaffordable or non existent.
There’s plenty of places in the economy that could use some government assistance; but for those social needs, the free market has no time or money to invest. The real emergency is that the richest industry on earth needs help continuing to rake in massive profits, while Joe and Jill taxpayer bribe them into cleaning up the inevitable mess those profits outsource.
Danielle Smith for Premier!!! Four more years of private fossil fool wealth creation!!! Four more years of eroding public services!!! Four more years of high school graduates leaving the province to find training elsewhere…..if they can afford it!!!
Who votes for this?? And how do they sleep well at night???
Ingamarie: you asked who votes for this. According to Don Braid it’s conservatives who think she’s dealing with “practical problems– health care, inflation — and that’s good enough” for them.
In reality she’s not dealing with anything so I guess that shows you who we’re up against.
“Simple Simon met the pie man going to the fair….” living in Alberta is an out-of-world experience at the current time. The UNITED COMMUNIST PARTY in Alberta seemingly has declared war on its’ citizens in a ‘Kremlin like way under the authoritarian leadership of the party elected leader’. Theiving oiligarchial deceiving hench persons still want pie and not have to spend their dollars to have any. In disgust I can only reply in the same matter as the United Communist Party responds to the majority of Albertans as they continue to decimate the infrastructure of what is soon becoming the laughing stock of the magic land where we dwell.
Papajaxn: you’re right, The Smith government is a gong show that never ends. Yesterday Smith issued an open letter to Trudeau demanding he retract the Just Transition plan and give Alberta a veto over anything that materially impacts Alberta’s oil and gas sector. Today Trudeau published the Sustainable Jobs plan without acceding to Smith’s demands. So what’s she going to do now? Throw herself on the ground and have a tantrum?
RE: “Smith starts by saying RStar will incentivize reclamation for the “worst” abandoned wells which were approved in the 1980s when environmental laws were more lax than they are today. Since the companies drilled under these “lax” environmental laws, Albertans have a “joint obligation” to help the companies bear the cost of reclamation.”
Guilty Graham: “It’s a fair cop, but society’s to blame.”
Church Police: “Right, we’ll be charging them too. And now I would like to conclude this arrest with a hymn…”
– Taken from Monty Python’s silly “Dead Bishop” sketch. Danielle Smith is making reality funnier every day, but not in a ‘ha-ha’ way.
Thank you for Monty Python GoinFawr: it’s SO appropriate!
Let’s stop pretending that the UCP government has principles of any kind. They don’t. They’ll give Alberta’s future away to corporations without a care in the world. What’s in it for us? Absolutely nothing. What’s in it for Danielle Smith? Good question. There must be a whole lot of something to sell out a province like this. A whole lot.
Worst of all, Alberta’s unelected premier is confident that the people of Alberta will do nothing about it. If she gets away with this before she has a mandate from the citizens in a general election, just imagine what she’ll do if she wins. This is Smith’s grandest authoritarian moment. A donkey dressed in blue could win the next election, and it just might, unless the mice of this province roar.
MM: well said. I loved the reference to the mice in your last sentence. Indeed the mice must roar. They have absolutely nothing to lose and everything to gain.
I apologize if this repeats
Danielle Smith just confirmed exactly what we all suspected – She is working directly with the oil companies and she will give our money away like peanuts and then she will complain that the deficit is too high and cut more taxes to the same Oil companies.
What a nice land of free honey and milk for oil companies. We have been doing this for 4 decades and we do not care. No wonder they do not leave, this is better than the 3rd world, here they do not need security to rob us. They use our premiers.
The media of course, for the most part on the Oil companies side do not even report it.
If she is not booted with this one we are SCREWED big time. We will pay all of it.
So much for the market fundamentalists. What it really is = legalized robbery by a premier.
Does that matter in Alberta? I do not believe so – it has not mattered for 40 years.
We paid to develop the oil sands process. We paid for drilling and clean up – the oil companies took all the profits in pure dollars.
Great capitalism.
Capitalism is a conveyor belt for moving money from the poor to the rich. It’s working as designed.
YOU GOT THAT ABSOLUTELY RIGHT
They have a nice story about market competition but that only applies to the peons.
Carlos and Reynold: I agree with your comments. So why, pray tell, are people who get screwed by the system continue to support it? What is going on in their heads?
So the recently chosen UCP leader, who was a paid lobbyist for this program, replaces the Minister who at the time was not so keen on it with someone else and then this program suddenly appears as government policy.
So many potential conflicts here for Smith. I also wonder if any people closely associated with this lobbying, or the companies that would benefit from this program, contributed to Smiths leadership campaign or to the UCP recently.
I recall years ago when Smith was the leader of the Wildrose Party and regularly railed against all the corruption of the PC’s and their cozy relationships with donors and others that they had various financial relationships with. I suppose that was then and this is now.
Conflict? What conflict? This is how kleptocracy works, those out of power are jealous because they’re not getting as much graft as those in power.
“That was then.” Smith was paid to be a gadfly, and make threatening noises at Ed Stelmach to remind him to mind his manners. “This is now,” when Smith the paid shill for Big Oil is expected to produce–and needs big bucks to buy the next election.
Dave, you raised the point that Bratt raised in his interview with Hislop. Bratt said the thing that is guaranteed to bring down a conservative politician is corruption. And yet I don’t hear a lot of people complaining that Smith the political lobbyist brought RStar to the Kenney government and failed, and now Smith the premier is pushing it through. Bratt said this may not be illegal but it’s certainly immoral. Which leads us to the bigger question, do die hard UCP conservatives have morals?
Perhaps old UCP types think they have morals….but I suspect fear of the changes that are inevitable and hatred for the intellectual left (represented by Justin Trudeau!!!) blur their ethical vision. How else to explain how fiscal tightwads can blithely watch UCP quick fixers distribute billions to failed causes and the richest industry on earth???
Well said Ingamarie.
Good question. I am sure UCP supporters would like to think they do have some morals and I hope they do too. However, I think excess partisanship sometimes blinds people to things or causes them to overlook, ignore or dismiss things they really should pay more attention to.
Smith is in the wooing voters phase right now. So if things like RStar are happening already, what do you think it will be like if she wins and does not have to answer to the voters for several years? People can’t honestly later say they weren’t warned or there were no troubling signs.
Friends, I’m afraid it’s not just a question of morals, it’s also loyalty. Smith’s scam will bail out small, rural-based oil companies. These are the very companies where UCP loyalists work; where their friends and relatives work; some of ‘em own the companies, too. So Smith intends to directly benefit her own crowd; they think of Smith as “one of us.”
That’s why, even if some of them might think “This isn’t right,” they’ll think it very privately. Could you tell your neighbour to his face that if he goes broke, it’s better for the province? If so, I suggest you predial 911 ‘cause you’re likely to need an ambulance.
Less dangerous would be to point out that “you made the mess, you clean it up.” As Markham Hislop and others have pointed out, the small companies’ owners are very conservative (at least when it comes to spending money on environmental cleanup). Playing up the personal-responsibility issue might get past the trained-reflex “Guv’mints don’t tell me what ta do!” reaction. I won’t count on it though; this example from BC shows why.
https://thenarwhal.ca/oil-spill-monitoring-indata-bc/
(Please note, neither the company’s, nor the BC government’s response, inspire confidence.)
All this is why I think Smith’s scam will be very popular with many UCP supporters—because it’s popular with their bosses.
And let’s not forget a lot of those little ‘wannabe’ oil companies got into the business because the Big Five sold them a mess of oil wells….a few of which were still profitable but many of which were stranded assets in eminent need of clean up. Big Fossil fools saddled little fossil fools with the big boys clean up mess. Some of those little companies have already gone bankrupt which is why there are so many ‘orphan wells’.
Your analysis is sound………but we’re all leaving out one future scenario that should shock and scare the pants off all Albertans. Carbon Capture, Utilization, and Storage carries a hidden danger……….in the States, where the technology is further ahead, they have miles of CO2 pipelines running everywhere to many of these under performing wells….and they’ve already had one dangerous CO2 pipeline rupture.
Instead of cleaning those abandoned wells up, Big Oil is likely stalling toward the day when captured CO2 from one area can be transported to unprofitable well heads and injected into those open sores to bring up more oil. That’s what EOR stands for ENHANSED OIL RECOVERY.
Needless to say, the CO2 isn’t ‘sequestored” safely underground in that instance….it comes floating to the surface in most cases. BUT: if we can keep the urban progressives lite in the dark long enough…….its a great jawb opportunity for all those little companies eager to take part in the Alberta Energy Sector.
Our grandchildren don’t stand much of a chance….the way things stand in Petroberta.
Hi ingamarie. I’d say carbon capture is little more than an expensive distraction from the real solution—the world needs to BURN LESS STUFF. That won’t help the current crop of oil companies, especially bitumen extractors. Some folks have calculated (don’t ask me how) that bitumen-derived fuels deliver only slightly more energy than what’s required to extract, “upgrade,” and refine them. It’s called “energy return on energy invested” or EROI. It’s one reason bitumen will be among the first fossil fuels to be abandoned. Tailings ponds—lakes, really—and air pollution are another.
EOR using carbon dioxide has indeed been used for some time; it’s a “tertiary recovery” process. (Primary is oil gushing out under its own pressure. Secondary is pump jacks, used when the wellhead pressure falls.) There’s a depleted field in southern Saskatchewan (I forget the name) that’s been using carbon dioxide from, ironically, an American experimental “clean coal” plant built in Jimmy Carter’s (?) presidency. Some years ago, somebody discovered that CO2 was leaking from old wells in the depleted field. It ought to be a warning for anyone advocating EOR by carbon dioxide injection, but I doubt it will.
Alberta is supposed to have large areas of rock suitable for carbon sequestration. I wouldn’t know, I’m not a geologist. But hopefully 1) the geologists are right, since Alberta’s gonna subsidize this regardless, and 2) the UCP have been listening to the geologists. Likely they have, since they’re, you know, OIL geologists.
I do NOT expect Rachel Notley to do anything but support all this, including enormous subsidies. Personally, I’d tell Alex Pourbaix to stick a crowbar in his wallet and buy some Cenovus shares for his very own. That way he’d have a personal stake in the outcome (not merely annual gifts called “stock options”) and he’d have a genuine reason to make it all work. Ditto for all the other CEOs who’ve been whining that the Feds aren’t giving them enough money.
One small hope: in 2020, when the Feds were creating the Covid emergency funding programs, oil companies whined for help with carbon capture among many other things. The word then was, government money would be available (eventually) for carbon capture—but NOT if it was used for EOR. We’ll have to see whether the “just transition” strategy eventually includes funding for CCUS+EOR.
Susan: Thanks for sharing another great blog. I do remember Star Wars, from long ago. Also, I remember a song called Video Killed The Radio Star. I wonder if there is a way to kill this RStar nightmare, which we have to pay $20 billion for. We also have Ralph Klein to thank for instigating this. He wasn’t stringent with oil companies to resolve any damages they did. Because of this, we have to pay $260 billion to deal with this matter. It’s appalling. I’ll play some more fitting music. This is a Mick Jagger and Keith Richards composition, by the Rolling Stones, from 1966, called Out Of Time. This is in my music collection.
Dwayne, I remember this song, but I didn’t remember that the xylophone played such an important role. One can only hope that when May 29 rolls by the UCP will also be out of time. Thanks!
Susan: That’s the late, great, Brian Jones on marimba. The multi-instrumentalist in the band.
A lot of twitter discussion today about the difference between orphan wells and abandoned wells. Smith’s Exec Director tweeted about “the worst orphan wells” and is getting many questions about that which he has not yet answered, such as in these threads:
https://twitter.com/BankesNigel/status/1624669410899423232
We need to watch what Smith and her people say and clarify every time which kind of well they are talking about and which companies are involved.
I think Smith just blathers out any old BS, and she has to be held to specific details and fact checked on everything.
Valerie, thank you for this thread. It illustrates the sad fact that Smith’s office hasn’t a clue what they’re talking about. Which is interesting because for a while I thought Smith was dense and not listening to her people. Now it appears that her people (or at least a good number of them) are just as just as dense as she is. The blind leading the blind is never a good thing in government.
Smith speaks with authority about things of which she has little or no knowledge. She never apologizes even when she backtracks some of her more thoughtless and worrisome comments.
A penchant for using ‘imprecise language’ certainly doesn’t lend credibility to someone who employs it as often as she does.
I guess Albertans will have to ignore the noise she generates and judge her by her legislative actions then, and she certainly doesn’t want that.
A Hendickson and GoinFawr: in the beginning people said Smith was smart because she was articulate. I suppose being on talk radio all those years taught her something. However, I read a column the other day about ChatGPT. the author said just because it’s fluent doesn’t mean it’s sentient. I think the same hold true for Smith. Just because she’s fluent doesn’t mean she’s smart.
About corruption and Smith and junior oil companies; this interview is excellent:
Thanks for this Valerie. I was very interested in Duane Bratt’s comment that RStar is not an environmental program to clean up orphan wells, but rather a bailout of struggling junior oil companies who can take advantage of the royalty credits. He and Markham Hislop also made the point that the junior oil companies are much more hard core conservative than the big companies.
Yes. The little guys always try harder
Prof. Bratt’s analysis is well worth taking 13 minutes of your time to watch.
Hislop has made the point about small O&G companies before, on the EnergiMedia web site. He found that CAPP has a distinct split personality, as they represent both bitumen (the “big 5” oil producers) and conventional (small and medium) producers. The little guys tend to hate being told to “waste money” cleaning up their messes.
https://energi.media/
Big oil did not clean up properly after Exxon Valdes or after the huge gulf spill; they just covered and hid most of the contamination.
Nothings really changed.
Albertans have never been honest.
https://www.theguardian.com/world/2009/apr/25/ottawa-northumberland-advert
It’s called the Alberta advantage!
yes trailblazer I agree with you.
The Alberta Advantage that the UCP talks about all the time means the unregulated fast track money making machine that Alberta politicians like to offer the oil companies. Unfortunately when the NDP was in power they did not stop this machine either. It was much easier to just let it be.
yes
Thanks trailblazer2017: this point is well worth remembering. Big oil says it will do a lot of things, the real issue is does it deliver on it’s promises.
A long time ago I worked for a big petrochemical company. I was discussing the importance of corporate social responsibility with my CEO. He said all that mattered was shareholder value, if we made the shareholders happy then we’d have money left over to engage in things like like corporate social responsibility. Unfortunately we never seemed to have enough money left over to do a good job of it. And that’s why we need tough health, safety and environmental laws.
Corporations don’t act out of the goodness of their hearts, they act because they’re force to act under the law. Which is why RStar is so objectionable. We should not have to pay corporations to obey the law.
You could look on the bright side; I’m sure Monty Python wold agree…..
I am much reassured by Susan and all you who respond to Susan. Critical thinking, examining evidence, logic, humanitarianism, justice, fairness, democracy, neighbourliness – all these bond in this column.
I am much disturbed by Susan and all us who respond to Susan. We have identified the basic issues long before Susan has pointed them out. We have Susan pointing to the evidence and making it clear it is legitimately evidence of governance dysfunction.
We see more and more evidence demonstrating that our initial perspective and judgement have been correct.
Yet, here we are with the government that we have. Here we are with the high probability that this will continue in our names, in Albertans’ names. This is very disturbing.
You are right on the money Mikegklein
It clearly demonstrates a total ineffective system we like to call democracy.
It is nothing but a nice looking cover on a corrupt, sick and undemocratic complex labyrinth that only the politicians have access to.
Carlos: I can’t argue with that. It’s true.
Maybe we can begin to change this situation even if ever so slowly. I am convinced this is possible. I am likewise convinced that it will start slowly, very slowly, but it will reach that tipping point Gladwell made so famous.
The transition is already well underway….we just don’t recognize it yet, blinded as we are by our illusions of human ultraomnipotence.
let’s all get off our computers and our high horses and go out and practice this common sense analysis on the neighbours in our home constituencies. Win or lose it will help us grow…..and perhaps fuel the transition that is coming, whether we’re ready for it or not.
For the love of the land, let’s get off our computers and go volunteer for the ndp candidate in our area……talking to our neighbours, listening to their concerns is good for us….and for the future, win or lose in the May election
I would … if we had one. The two Grande Prairie constituencies — Grande Prairie [urban] & Grande Prairie-Wapiti — have yet to see nominations held by either the NDP or the UCP. Grande Prairie MLA Tracy “Aloha” Allard recently announced she won’t be running again due to her health (Parkinson Disease). Grande Prairie-Wapiti MLA & Finance Minister — and UCP leadership first runner-up — Travis Toews has not announced whether he will run again.
As for the NDP, while they are nominating candidates at full speed all over the province, often in contested nominations, I have seen no hint of a nomination being scheduled here, in either of the two ridings.
That is shocking. I don’t envy Rural Ridings though. We were members of the Rural Caucus until our defeat in 2019 and it takes a lot of work to organize in rural Alberta…perhaps for reasons that should be more obvious than they are.
I agree Mikegklein. In a way we’re preaching to the choir but we’ll keep at it until we reach the tipping point (hopefully just before May 29 this year).
Susn: Here is my second song pick: It is from 1965, and was written by Beau Charles and Buddy Randell. This is from a New Jersey group, The Knickerbockers. It is called Lies.
They sound so much like The Beatles here. Another fitting song.
Dwayne, you’re right, the do sound like the Beatles. Great song, very fitting.
Susan: Here is my final song pick. This is a live performance of Don’t Stop, by Fleetwood Mac, from 1997. It was written by the late band member, Christine McVie, who passed away, not long ago, at age 79. I saw Fleetwood Mac live, and I have this in my music collection.
Dwayne, I haven’t been to many live concerts, but this is one I would have loved to have seen. Don’t stop thinking about tomorrow is a good motto for us.
I was talking to a group of seniors the other day. They are an amazing group of political activists. I asked them how they kept going given what a gong show Alberta is. The elderly lady who just bought herself a Cricket (a device she uses to make protest signs) said this government makes her so mad she can’t stay at home. So they get out there and make their voices heard.
Good advice for us all!
We have to get rid of Daniel Steel,we have to get a new leader, I will be voting for NDP.We will keep an eye on the purse strings.
Agreed Ken!
Rachel Notley in her term in office dug us out of the UCP perpetual debt leading us to number 1 of all the provinces in GDP. I want more of that.
Well Rachel Notley is a regular smart and dedicated person. Danielle Smith is in to help create her absurd world of an independent, undemocratic Christian Taliban state fully enslaved to big business.
Her belief that First Nations and Europeans had a fantastic relationship and conquered the tough Canadian environment together is quite laughable. Seriously?
Yes Europeans used native people to survive but soon learn how to cheat and dispose them as fast as possible.
Carlos, it amazes me that Smith continues to say these bone-headed things. I am beginning to think that she and many of her supporters believe it to be true.
Yes, John, I want more NDP too.
Please remove from your list as John died January 4.. his wife Barbara
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I’m so sorry Barbara. I’ve changed the list. Hopefully this won’t happen again.
Well, well. It turns out Danielle Smith is just following Jason Kenney’s example. Remember the orphan-well cleanup program from the early-Covid days of 2020? Over a billion dollars from the Feds to create jobs and remediate orphan wells. Turns out it didn’t work quite that way.
https://thenarwhal.ca/cnrl-cenovus-oil-cleanup-subsidies/
To summarize, PM Trudeau announced the program with these goals: create jobs, clean up “inactive and orphan” wells (not the same!), save struggling companies from bankruptcy, and help out “landowners, municipalities and indigenous communities” afflicted by abandoned, unremediated wells.
Impressive list, but the Kenney UCP cut it down to jobs and (some) cleanup. The implementation had one other, major effect: CNRL and Cenovus, #1 and 2 on the list, were relieved of their obligation to clean up their own mess. This bit of corporate welfare “completely erases any talk about the polluter pays principle, which it completely violated.” (Quotes are from the Narwhal article.)
So yeah, the federal program became (even more of) a bailout for Big Oil. A few other players benefited too. Some wells got cleaned up. Hopefully, there are less leaky wells around now.
It may also have been the inspiration for Danielle Smith the lobbyist’s “R-Star” bailout program. I can’t say, but the similarity in outcomes (as described so far) is striking. Big Oil will get subsidized again, and taxpayers will pay their cleanup costs again. The big difference with R-Star, or “Liability Management Incentive Program,” is it’ll probably benefit small companies even more than the big ones. You know, the little non-Calgary companies whose owners Danielle Smith feels are “our people.”
Sounds about right. We’re paying out of our own torn pockets to fund the destruction of our children’s future……and we’re too busy quarreling with each other too often, to have the time to pay attention to where the big money keeps going.
Things are going to get worse…that’s unavoidable, given the bright ideas of the people we keep choosing over anyone intelligent enough to grasp the reality we’re facing.
Mike J and Ingamarie: the conservatives argue that more tax dollars to support public healthcare and education and seniors is bad, but more tax dollars to support corporations is good. It’s all part of the myth that profitable corporations create jobs therefore everyone is happy, when in actuality profitable corporations pay dividends to make their shareholders happy, everyone else is on their own.
Exactly Susan……….and we all need to get up to speed about that. I have a grand daughter who wants to be a doctor….she can’t even get into nursing school and her marks are in the high 80’s. We need essential workers badly….but the UCP red tape cutters cut a lot of ‘fat’ from our institutions of higher education as well……millions and billions for fossil fools……..but we have to raid the third world to find nurses…because that’s cheaper????
We can’t any longer afford the corporate welfare that keeps an arrogant 10% happy.
Susan, the Lib/ Con divide is getting larger, thanks to polarization coming from neocon US “think” tanks—and Donald Trump nihilists. The Liberals and NDP are the parties of quiet support for Big Business. Little change there.
The Old Tory parties (Progressive Conservative) used to answer to Big Business openly. The newer neocon parties (Conservative Party of Canada, Saskatchewan Party) answer to small business as well—and are more reactionary as a result. That’s not good.
Worse, the latest libertarian/ reactionary parties (Peoples’ Party of Canada, United Conservative Party) answer to big business, small business—and most of all, they answer to their own selfish impulses. But boy oh boy, are they ever loyal to their own.