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Oil site cleanup program sees 18,000 applications in 4 days, ‘significantly’ over expectations

Natural resources minister says new program to reclaim orphan wells has been ‘significant’
WATCH: Natural Resources Minister Seamus O'Regan on Tuesday faced questions during a virtual sitting of the House of Commons about whether the Canadian federal government is doing enough to support the oil sector, its workers and communities that depend on the industry, including from Conservative MP Blake Richards, and said uptake on a new program to reclaim orphan wells has been "significantly higher than expected."

Natural Resources Minister Seamus O’Regan says interest in a new federally-funded program to put oil industry workers back to work cleaning up abandoned wells in Alberta amid the coronavirus pandemic has been “significantly higher” than expected.

During a virtual meeting of the House of Commons on Tuesday, O’Regan was pressed by Conservatives on why the federal government hasn’t yet released an industrial support package for the energy sector akin to the multi-million-dollar industrial package unveiled earlier that day for the agricultural sector.

READ MORE: Trudeau announces $1.7B to clean up orphan wells in B.C., Alberta, Saskatchewan

In response, O’Regan pointed to the government’s investment of $1.7 billion in funding for B.C., Alberta and Saskatchewan natural resource firms to hire energy workers to restore and reclaim well sites.

Of that funding, $1.2 billion went to Alberta and $1 billion went specifically to launching the new Site Reclamation Program, which began taking applications on May 1.

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O’Regan’s office referred questions on the program to the Alberta government, while a spokesperson for Alberta Energy Minister Sonya Savage said there have been close to 20,000 applications in four days.

“The Site Rehabilitation Program has seen significant uptake by oilfield service companies to remediate inactive and abandoned wells,” said Kavi Bal, press secretary for Savage.

“By end of day on May 4, more than 530 companies had filled out nearly 18,000 grant applications.”

Canada’s oil and gas sector gets financial boost
Canada’s oil and gas sector gets financial boost

The goal described on the program website is to “get Alberta’s specialized oil and gas labour force back to work” and speed up environmental efforts to reclaim abandoned oil and gas project sites.

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It comes on the heels of years of devastation in the Alberta oil and gas sector caused by low crude prices and difficulty getting resources to market, combined more recently with the economic shutdown of the coronavirus pandemic and a global price war between Russia and Saudi Arabia.

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During a virtual meeting of the House of Commons finance committee Tuesday afternoon, one oil industry representative warned that while the well cleanup work is a “welcome start” to federal support for oil industry workers, the sector’s challenges are only growing more serious.

READ MORE: Funding to clean up Saskatchewan’s orphan wells a ‘positive first-step’ says Premier Moe

“There’s an urgent need for additional measures for the oil and gas industry,” said Ben Brunnen, vice-president for oilsands fiscal and economic policy at the Canadian Association of Petroleum Producers.

Brunnen said his association estimates the industry needs between $27 billion to $30 billion in liquidity measures and tax relief beyond what’s been announced so far.

He also warned the industry is likely to see an additional 30,000 to 40,000 jobs lost by the end of 2021 without additional support, particularly to the larger companies.

While there’s no timeline on when more support could come, federal officials have repeatedly stressed that the wage subsidy will help oil and gas companies keep on their staff and said that $15 million to $60 million for loans available from the Business Development Bank of Canada will also help.

The government has also set up a repayable loan program with $750 million available until the end of next year for oil companies that want to use the money to reduce their greenhouse gas emissions.

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Critics, however, argue those won’t do enough to address the immediate needs of oil companies.

READ MORE: Jason Kenney predicts unemployment in Alberta could rise to 25% amid COVID-19

Alberta Premier Jason Kenney has warned one in four Albertans could end up out of work as the pandemic crisis continues and offered similar remarks last month urging the federal government to do more.

“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.”

Prime Minister Justin Trudeau says the funding is expected to create 5,200 jobs in Alberta alone.

The program applications remain open until May 31.

Coronavirus outbreak: Federal money to clean up orphaned wells in Alberta is a good start: Nixon
Coronavirus outbreak: Federal money to clean up orphaned wells in Alberta is a good start: Nixon