“I will do nothing” | FR24 News France


OTTAWA – Energy leaders on Friday announced a new well rehabilitation program launched by the Liberal government, saying it was weeks too late and could not provide the cash needed by businesses hit by a monumental shock on the demand for oil.

Prime Minister Justin Trudeau has said that Ottawa will spend $ 1.7 billion to clean up abandoned oil and gas wells in the oil-producing provinces as part of an effort to protect businesses from the economic downturns of COVID-19. Environmental groups applauded the move, while official industry sources and provincial leaders also supported the new spending.

But several oil sector leaders said the program was woefully below needs and expectations.

“It won’t do anything,” said Grant Fagerheim, managing director of Whitecap Resources in Calgary. “If it’s as good as it can be, it will do very little or nothing to help business operations.”

For weeks, the industry has been asking Ottawa to establish new lines of credit specific to oil and gas companies, which are pushing back a historic drop in oil prices as governments close their economies in an effort to stem the spread of the virus. Canadian crude prices have recently dropped to US $ 4, straining an oil industry that was only beginning to recover after the market collapsed in 2014.

“I don’t think there is a full appreciation and understanding of the seriousness of what we are dealing with,” said Fagerheim of the Liberal measures.

Trudeau also announced a $ 750 million fund to reduce methane emissions. He said the funds would allow Canada to “continue to fight climate change and reduce emissions while keeping people working.”

“This is an opportunity for us to make sure that Albertans get to work to clean up their province,” he said.

An oil chief, who asked not to be named because of the sensitivity of the issue, said the announcement appeared to adhere closely to Ottawa’s environmental messaging trends, rather than responding to immediate concerns about private sector balance sheets.

“I think they have calculated that it would be politically unpleasant in Ontario and Quebec to provide direct support to oil and gas,” said the person.

I don’t think there’s a full appreciation and understanding of the gravity of what we’re dealing with

An official in the office of the Minister of Natural Resources, Seamus O’Regan, said that no final decision had been made on the provision of repayable oil-specific loans.

The media reported in March that a bailout for the oil and gas sector could reach $ 20 billion, including immediate liquidity options and the possibility for Ottawa to buy shares in besieged energy companies.

Ottawa has already rolled out a host of programs to help private businesses, including an inter-economy wage subsidy program that is expected to cost approximately $ 73 billion.

Businesses can also request lines of credit from the Business Development Bank of Canada and Export Development Canada. EDC and BDC announced Friday that they will expand their current oil and gas loan program, which currently allows small loans between $ 15 million and $ 60 million to cover operating costs.

Trudeau said on Friday that the abandonment program would “keep” 5,200 jobs. The Canadian oil and gas sector cut tens of thousands of jobs in 2019 alone, according to PetroLMI, and is expected to lose more in 2020 as prices remain depressed.

Meanwhile, official voices representing the energy sector, including Alberta Premier Jason Kenney, applauded the announcement. Industry insiders are now hoping that additional lines of credit could be deployed in the weeks or months to come when a possible recovery plan for the Canadian economy enters its final stages.

“This is essential to get thousands of people in the energy industry back to work immediately,” Kenney said in a tweet. The Petroleum Services Association of Canada said the announcement was “very welcome because it will create jobs for petroleum service workers and provide environmental benefits.”

Greenpeace Canada and other environmental organizations also supported the funding, saying the move “puts people above polluters.”

Shortly after media reports that Ottawa was preparing $ 15 billion in oil and gas support, a coalition of 84 environmental groups sent an open letter to Trudeau urging him to reconsider his decision.

“Giving billions of dollars to failed oil and gas companies will not help workers and will only prolong our dependence on fossil fuels,” the coalition wrote in the letter of March 23. “Oil and gas companies are already heavily subsidized in Canada and the public cannot continue to support them with tax breaks and direct support forever.”

Observers have long worried about the thousands of inactive and abandoned oil wells littering Alberta, Saskatchewan and British Columbia, warning that it is an environmental liability that will cost billions of dollars to reverse . Alberta alone has approximately 91,000 inactive wells and 7,300 abandoned wells.

The $ 1.7 billion funding represents “a lot of money” for remediation, but whether it helps reduce the number of orphan and inactive wells in Western Canada depends entirely on how the money is spent, said Marla Orenstein, director of the Natural Resources Center of the Canada West Foundation.

The funding could help improve balance sheets by removing some of the environmental commitments of these troubled companies, or, on the other hand, the lack of additional liquidity for the sector could lead to the bankruptcy of some companies, leaving additional orphan wells.

In the last recession caused by Alberta’s oil prices, a slew of companies, including Lexin Resources, Redwater Energy, Houston Oil and Gas and Trident Exploration, went bankrupt, imposing millions of dollars of environmental responsibility on the company. ‘Alberta Orphan Well Association.

“Whether it turns out to be a reverse bailout for some companies or whether it induces other types of change, it really depends on how they use that money,” said Orenstein.

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