During a time of economic uncertainty, the last thing energy companies need is new fees and regulations that damage the ability for oil and gas producers to stay profitable or even hold their heads above water.
But that’s exactly what is happening after the Alberta Energy Regulator was put in a position to deal with the recent Redwater Energy ruling which opened up loopholes in provincial and federal legislation – and it’s putting jobs at risk.
Both the provincial Oil and Gas Conservation Act and the federal Pipeline Act dictate to energy companies and industries their financial obligations for cleanup and reclamation projects. But the Redwater court ruling has compromised Alberta’s well reclamation program by interpreting the federal Bankruptcy and Insolvency Act as making well cleanup the lowest priority or even something that can be ignored.
With a vacuum of leadership from the NDP government and no attempt from Premier Rachel Notley to plug the new loopholes, Alberta’s regulator resorted to jacking up the Liability Management Ratio (LMR) required for any purchases or investments by 100 per cent. This means, among other things, Alberta’s junior oil and gas sector’s ability to buy and sell assets is severely diminished, which in turn leaves them even more exposed than to bankruptcies. This barrier to selling assets actually imposes an increased risk to the Orphan Well Fund rather than mitigating that risk.
Let’s be clear, it’s the responsibility of government to balance the principles of growing the economy and providing good stewardship over our air, land and water. But this new policy is doing more harm than good.
This is especially the case given the repeated blows our energy industry has faced since the NDP took office. The cocktail of tax increases, including the introduction of aggressive new carbon taxes, is making our producers less competitive at a time when other North American jurisdictions are ramping up production.
Doubling the LMR means less than 30 per cent of current businesses in the industry are even eligible to buy an asset, and this severely hampers the ability of junior, and even some larger, oil and gas players from being able to invest in our market.
Junior oil and gas players are the lifeblood of our energy sector and a key job creator across the province. The government should be doing all they can to help, not hurt, companies that employ thousands of Albertans across the province.
There are solutions available. Instead of sitting behind the regulator’s decision, Premier Rachel Notley should aggressively press the federal government to fix this loophole in federal bankruptcy law.
Industry has shown its willingness to fund environmental reclamation. Assets pledged for reclaiming energy sites should not be used for other purposes in the case of bankruptcies and it’s up to both provincial and federal governments to fix this as soon as possible.
The ever increasing cumulative regulatory burden being imposed on our energy industry is negatively impacting their ability to attract investment; and this latest burden will further compromise the ability of our industry to bounce back.
Wildrose will continue to push the NDP government to act. Premier Notley needs to understand that many of our junior producers are the drivers of innovation and job-creation, and are a lifeline for communities across our province.
Let’s start treating them with the respect they deserve.
Leela Aheer is the MLA for Chestermere-Rocky View and the Wildrose Shadow Energy Minister