Insufficient disclosure obscuring billions in Alberta oil sands liabilities, advocates say
[url]https://www.theglobeandmail.com/business/article-alberta-oil-sands-insufficient-disclosure-billions-environmental/[/url]
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Shareholders of Canada’s largest oil and gas ([url]https://www.theglobeandmail.com/topics/oil-and-gas/[/url]) companies could be left with a shortfall of tens of billions of dollars for future environmental liabilities tied to spent wells and oil sands mines, and insufficient disclosure and auditing are obscuring the problem, an investor advocacy group warns in a new report.
Investors for Paris Compliance (I4PC) has estimated a $113-billion gap between a figure that a senior Alberta regulator official had tallied for total decommissioning liabilities in 2018, and what the top 15 energy companies carry on their books for abandonment and reclamation obligations.
The estimate stems from an analysis of the financial statements of the companies, which show wide variations in how they account for future cleanup, making comparisons difficult for investors.
The issue of underfunded environmental liabilities from tens of thousands of inactive wells and aging oil sands mines has been a years-long public-policy headache for successive Alberta governments, the energy industry and rural landowners.
?To reach the $113-billion shortfall figure, I4PC took an estimate of total industry liabilities of $260-billion quoted in 2018 ([url]https://www.theglobeandmail.com/business/article-alberta-research-group-tallying-cleanup-cost-for-oil-and-gas-wells/[/url]) by a senior Alberta Energy Regulator official as a worst-case scenario. The amount, which was revealed in a presentation that media outlets obtained in a Freedom of Information request, took Albertans aback, as it was about $200-billion more than had been previously quoted in the regulator’s public communications.
The report acknowledges some of those spent wells and equipment have been cleaned up, but the industry has increased production significantly since then, resulting in more future decommissioning obligations. Hence, it kept the figure constant in the study, and adjusted it to 2025 dollars, for a total of $282.4-billion.
The 15 largest oil producers, representing 64 per cent of Canadian production, collectively report $67-billion in liabilities on their books at today’s market prices versus their proportional share of the AER estimate. The gap is 2.7 times the amount in their financial reports, the study says.
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[url]https://www.theglobeandmail.com/business/article-alberta-oil-sands-insufficient-disclosure-billions-environmental/[/url]
?
Shareholders of Canada’s largest oil and gas ([url]https://www.theglobeandmail.com/topics/oil-and-gas/[/url]) companies could be left with a shortfall of tens of billions of dollars for future environmental liabilities tied to spent wells and oil sands mines, and insufficient disclosure and auditing are obscuring the problem, an investor advocacy group warns in a new report.
Investors for Paris Compliance (I4PC) has estimated a $113-billion gap between a figure that a senior Alberta regulator official had tallied for total decommissioning liabilities in 2018, and what the top 15 energy companies carry on their books for abandonment and reclamation obligations.
The estimate stems from an analysis of the financial statements of the companies, which show wide variations in how they account for future cleanup, making comparisons difficult for investors.
The issue of underfunded environmental liabilities from tens of thousands of inactive wells and aging oil sands mines has been a years-long public-policy headache for successive Alberta governments, the energy industry and rural landowners.
?To reach the $113-billion shortfall figure, I4PC took an estimate of total industry liabilities of $260-billion quoted in 2018 ([url]https://www.theglobeandmail.com/business/article-alberta-research-group-tallying-cleanup-cost-for-oil-and-gas-wells/[/url]) by a senior Alberta Energy Regulator official as a worst-case scenario. The amount, which was revealed in a presentation that media outlets obtained in a Freedom of Information request, took Albertans aback, as it was about $200-billion more than had been previously quoted in the regulator’s public communications.
The report acknowledges some of those spent wells and equipment have been cleaned up, but the industry has increased production significantly since then, resulting in more future decommissioning obligations. Hence, it kept the figure constant in the study, and adjusted it to 2025 dollars, for a total of $282.4-billion.
The 15 largest oil producers, representing 64 per cent of Canadian production, collectively report $67-billion in liabilities on their books at today’s market prices versus their proportional share of the AER estimate. The gap is 2.7 times the amount in their financial reports, the study says.
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