Critics warn plans to improve Alberta’s wells for a royal gift: ‘Islands for free’ | Media Pyro

Critics fear Alberta’s new United Conservative premier is preparing to introduce a plan that would use billions of dollars in taxpayer-funded royalties to pay energy companies to comply their legal work and cleaning up old wells.

The project, called RStar, created by an industry group, has been criticized by legal experts, influential economists and government insiders.

But for more than a year, Danielle Smith and the new members of her cabinet have been campaigning for the plan, which allows companies to use land costs to get credit from royalties. .

“I love it,” Smith said on a 2021 YouTube broadcast, where he is a spokesperson for the business group Alberta Enterprise Group. He also wrote a letter of support in July as party president to then energy minister Sonya Savage.

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Peter Guthrie, now Smith’s energy minister, voiced his support in parliament.

“I encourage all members of this House and the community at large to support RStar,” he said in April 2021.

On October 22, the day after he joined cabinet, Guthrie told the Airdrie Today newspaper that RStar was one of his top priorities.

“RStar is a pilot project that will stimulate the cleanup and renewal of wells, and by doing so, will provide a leading number for future drilling,” Guthrie told the outlet.

Some new cabinet ministers such as Jeremy Nixon of Aging, Community and Social Services have expressed support for RStar.

The Canadian Press has asked Smith and Guthrie if they still support RStar. They didn’t answer.

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But critics say the stakes remain high for the new government led by Smith.

“(Smith) has made it very clear that this is a very loud, neon-glowing main event,” said Regan Boychuk of the watchdog group The Cultural Expressions Project of Alberta, which Smith spoke about. project

Under RStar, companies can get money for repairing old wells up to the full amount of the well’s credit as determined by Alberta’s electricity regulator. That credit will go toward earnings from new manufacturing operations to reduce costs or be sold to another operator.

“It’s like moving more of your income into a lower tax bracket,” said Andrew Leach, an economist at the University of Alberta who has seen the details of the proposal.

Advocates say the project will encourage new drilling, help clean up Alberta’s 170,000 abandoned wells, and create two jobs. In a letter written while Smith was still confident, he cited a consultant who estimated that $20 billion in RStar revenue would create 366,000 jobs and $8.5 billion in wages.

Critics weren’t sure.

Leach said RStar will pay for the work that most all companies do as a legal requirement for their mining licenses.

“The companies that will be able to use this are the companies that aren’t disappointed,” he said.

“We are not concerned about companies that have active mining projects and are meeting their recovery objectives. They’re doing exactly what they’re supposed to be doing, and (we’re giving them) extra credit and great value.

There is less demand for the project when oil prices are high, Leach said. He said the $20 billion in RStar revenue would cost the state only $5 billion in street costs up front.

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Boychuk said that in addition to transferring assets to companies that don’t need them, RStar will use a taxpayer-funded resource to save hundreds of Alberta companies whose wells have gone dry without cleaning up.

“Danielle Smith’s program gives them money for free,” he said. “It’s amazing. It’s a real spoil.”

According to Kathleen Ganley, New Democrat Energy Commissioner, the plan will change the foundation of environmental law.

“It’s a violation of the double-fee principle,” he said.

Ganley said there is no guarantee the project will create new jobs. It is also not open to inspection.

“There is no clear and precise schedule and new works will be started to change the works that have already been done but the public will pay for it. And they pay in a way they don’t understand.

Even Alberta Energy employees have expressed skepticism.

In a June 30, 2021, letter obtained by The Canadian Press, Savage wrote to the Freehold Owners Association, a group that represents private owners of mineral rights.

Savage, who was energy minister at the time and is now on the Environment and Protected Areas list, said: “The application has nothing to do with federal government or our approach to accountability. and support the pay-as-you-go program.”

However, Boychuk said, it may be coming to Alberta.

“That’s been (Smith’s) priority for two years. Alberta is about to burst into her throat.

Ganley cautioned that RStar could be brought in without going through the council — if there were any second thoughts.

“Hopefully talking about the file and hearing from the office will help them make a better decision. A lot of people think that’s a good thing.”