The oil companies are rolling in it. According to the Pembina Institute their free cash flow will add up to $153-billion this year, the highest level of profits they have ever seen.
And what are they doing with all this ready cash? Well, they aren’t investing it in new tar sands projects. They have been focusing instead on paying down debt, buying back shares and paying dividends. According to the Bank of Canada, capital expenditures as a percentage of cashflow in the oil and gas industry is at a record low.
And that’s good. But they aren’t investing it in decarbonization efforts either. And that’s not good.
They promised to. Last year the industry group Pathways Alliance, which produces 95 percent of tar sands production, announced a plan to reduce their operations to net-zero greenhouse gas emissions by 2050. Since then, despite receiving a 50-per-cent investment tax credit from Ottawa for carbon capture, the plans to achieve their reductions remain vague and no significant investment decisions have been made by any of its members.
And hovering in the background is the small matter of cleaning up the mess they have already made. Consider the conventional oil industry. Thousands of “orphan” wells—abandoned wells that no longer have a financially viable owner—await reclamation. An orphan well fund, financed by the industry, is proving inadequate. In 2020 the federal government provided $1.7-billion to clean up orphan wells in B.C., Alberta and Saskatchewan while Alberta has announced loans to the Orphan Well Association of $335-million. Taxpayers are paying for the oil companies’ mess.
The tar sands mess will be a lot more expensive. With much about how the tar sands will be reclaimed is unknown, estimates for reclamation range from $31-billion to $260-billion if everything, including pipelines, is added to the equation. To date, the Alberta government has collected the magnificent sum of $1.6 billion in liability security. Some experts have suggested that the situation is an economic and environmental crisis that raises questions about the financial health of the province. Alberta had better not separate because it may take all Canadian taxpayers to pay the bill.
So would it not be appropriate and timely to apply a portion of the windfall profits the industry is enjoying to clean up after themselves? They are using part to pay down their financial debts; they could be using part to pay down their huge and growing environmental debts as well. Better them than us.