Alberta losing $21M a year in royalties from wasted natural gas: report

Shell sour natural gas processing plant which produces methane, propane, butane, ethane, condensate and sulphur plant in Alberta. Photo by Eye Ubiquitous / Rex Features

 The Alberta government is missing out on millions of dollars in royalties because of wasted natural gas, a new report suggests. But the Canadian Association of Petroleum Producers (CAPP) says changing the rules around gas conservation would result in an even bigger loss of revenue.

The Pembina Institute, a policy think tank focused on reducing the use of fossil fuels, said in a briefing report that Alberta is losing up to $21 million a year in energy royalties because of unaccounted leaks, or natural gas that is intentionally vented.

Progress Alberta suggested that adds up to $105 million over five years.

LISTEN: Progress Alberta explains why Albertans should be concerned about the royalties being lost because of “wasted natural gas”

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“This money is just going away forever and instead of investing that money into things we want, it’s just vanishing,” said executive director Duncan Kinney, who prior to joining Progress Alberta, was part of a Pembina Institute project called Green Energy Futures.

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Alberta has regulations in place when it comes to capturing gas from venting and energy firms must pay royalties on any natural gas or oil that is sold in Alberta. But CAPP’s president told 770 CHQR on Thursday that capturing natural gas is not always “economical.”

He said in some situations, where a well is far from pipeline infrastructure, capturing the gas may be too costly.  He suggested changing the rules could force those wells to stop production and therefore quit paying royalties altogether.

“That would be the reality for a great number of facilities today if that requirement – with no economic test – was put forward,” CAPP president and CEO Tim McMillan said.

McMillan said the oil and gas industry currently pays the Alberta government almost $3 billion in royalties from oil and natural gas.

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In a statement Friday, the NDP government said it is “committed to reducing industrial methane pollution by 45 per cent.”

“We know what’s at stake, including jobs and the health of the planet we leave behind for our children and our grandchildren,” the statement from a spokesperson for Minister Margaret McCuaig-Boyd said.

“That’s why we appreciate the commitment of our partners to working with us on a made-in-Alberta solution for reducing methane pollution that’s focused on protecting jobs and economic growth.”

McMillan said CAPP has put forward a plan to capture natural gas in a way that preserves the highest number of jobs and still reaches the target.




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