Prime Minister Justin Trudeau said his government is investing $1.7 billion to clean up orphan wells in British Columbia, Alberta and Saskatchewan to keep people working during the COVID-19 pandemic.
Trudeau made the announcement Friday morning and said the goal is to create immediate jobs in these provinces, while helping companies avoid bankruptcy.
“These wells, which are no longer in use, can be detrimental, not only to our environment but to people’s health,” Trudeau said.
“Cleaning them up will bring people back to work and help many land owners who have had their wells on their property for years but haven’t been able to get them taken care of and the land restored.”
The prime minister said this investment will help maintain 5,200 jobs in Alberta alone.
“COVID-19 has brought many industries to a halt and workers across the country are struggling as a result,” he said.
“Right now, workers and families are struggling because of things beyond their control. Both the devastating effects of the pandemic and the price war driven by foreign interests are a challenge.”
In a statement Friday, Premier Jason Kenney welcomed the funding, saying it is an important first step to support those who work in Alberta’s energy sector.
“How we come through this economic crisis will depend in large part on the survival and the successful recovery of our country’s largest industry – the energy sector – on which some 800,000 Canadian jobs depend,” he said.
“This funding will immediately save or create thousands of jobs, keeping energy service companies going during these devastating times. It will also help us bring sites back to their original condition, leaving a cleaner environment for future generations.”
Kenney added, though, that more support is needed to deal with the crisis in Canada’s energy sector.
“Our energy sector is facing its biggest challenge ever, and we need to be sure that industry can access the capital it needs to survive and thrive in future years. When the auto sector and the banks were threatened during the global financial crisis a decade ago, the economic strength of Alberta, powered by the energy industry, ensured that Canada was able to provide the urgent support they needed,” he said.
“We will continue to work with the federal government to ensure that the energy sector now gets the support it needs as it faces its own threats from both the COVID-19 pandemic and the Saudi-Russia price war.
“This unprecedented disruption in the world energy markets will eventually recede. Better times for the industry are a matter of when – not if – but only if the industry survives the next couple of years. We need to make sure Alberta is prepared and ready for the global recovery when the time comes. Alberta’s energy industry is the lifeblood of our provincial economy – and the largest subsector of Canada’s economy, as well as one of its biggest employers. The energy sector helps some of our country’s most important industries thrive, including health care, manufacturing and transportation.”
In a statement, the Business Council of Alberta said the funding announcement is welcome news for energy companies, working Albertans and the environment.
“This is a win-win, that will keep thousands of Albertans working in some of our hardest hit industries, while also improving the environment. However, additional support is still needed, specifically liquidity, for some of Canada’s most significant energy companies.”
The Canadian Association of Oilwell Drilling Contractors was also pleased with the announcement, saying the investment will put companies back to work for an extended period of time.
“This announcement is great news for service rig companies, and means many of our members can count on steady work this year,” said CAODC president & CEO Mark A. Scholz.
The CAODC said it also looks forward to working with the federal government to develop additional measures of support for Canada’s oil and gas service industry.
“We appreciate the federal government being receptive to our concerns during this crisis,” Scholz said. “We anticipate additional announcements of liquidity support for our members. Our sector can play a significant role in reopening the Canadian economy and producing jobs and opportunity.”
The Canadian Association of Petroleum Producers echoed the positive sentiments.
“Reducing environmental liabilities is a priority for the oil and natural gas industry and this initiative will allow important work to accelerate, while supporting thousands of jobs,” CAPP president and CEO Tim McMillan said in a statement.
Alberta NDP environment critic Marlin Schmidt said the funding will help put thousands of Albertans back to work, while supporting responsible resource development.
“The UCP government must use this money in a way that ensures polluters still pay for the cleanup of their sites. They must also set clear targets and timelines for well cleanup now and into the future. I also hope the UCP will ensure landowners and municipalities are compensated for wells on their land,” Schmidt said in a statement.
The Opposition also used the announcement as an opportunity to press the Kenney government to do more for local businesses in other sectors.
“There are still a lot of Albertans and businesses struggling to make ends meet,” Schmidt said. “I wish Premier Kenney and the UCP would step up and provide real leadership to support all Albertans and all sectors of our province instead of constantly relying on the federal government to act first.”
Feds to establish Emission Reduction Fund
In addition, Trudeau announced the federal government will establish a $750-million Emission Reduction Fund — with a focus on methane — to create and maintain jobs through pollution-reduction efforts.
The fund will include $75 million to help the offshore industry cut emissions in Newfoundland and Labrador, he explained.
The fund will primarily provide repayable contributions to firms to make them more competitive, reduce waste and pollution and protect jobs, according to the prime minister.
“Right now, many energy firms are experiencing a cash crunch so they don’t have the funds to invest in technologies to reduce emissions or fix methane leaks,” he said.
“Through the wells and methane initiatives, we estimate that we will maintain roughly 10,000 jobs across the country. Just because we’re in a health crisis doesn’t mean we can neglect the environmental crisis.”
The prime minister said the feds are also working with BDC and EDC to expand credit support for at-risk medium-sized energy companies so they can maintain operations and keep employees.
“We are also encouraged by news that the government is working with the Business Development Bank of Canada and Export Development Canada to strengthen support for corporations who are most at risk,” McMillan said.
“Liquidity is a real and immediate challenge for oil and natural gas producers and CAPP has been working with the federal government to identify urgent action needed to address the dire situation. We are awaiting additional details on the expansion of support — a critically important matter as companies try to weather the current crisis.”
When asked if the federal government would purchase shares in oil, as it did in 2008, Trudeau said the focus from the start was to help families.
“We also saw clearly that the oil industry is facing particular challenges because of what’s happening on the international markets with the price of oil, because of a lowering demand due to the disease,” he said.
“We will continue to see if more needs to be done.”