Scotiabank says royalty credits for well cleanup would damage industry’s reputation

Scotiabank is warning that the Alberta government’s plan to give oil companies a royalty credit for cleaning up their old wells could damage the reputation of Canada’s oil and gas industry. A pedestrian walks past a Scotiabank branch in downtown Calgary, Alta., Friday, Sept. 16, 2022.THE CANADIAN PRESS/Jeff McIntosh

CALGARY — Scotiabank is warning that the Alberta government’s plan to give oil companies a royalty credit for cleaning up their old wells could damage the reputation of Canada’s oil and gas industry.

Scotiabank said in a report Thursday that companies such as Canadian Natural Resources Ltd., Cenovus Energy Inc., Paramount Resources Ltd. and Whitecap Resources Ltd. could be poised to benefit from a proposed United Conservative Party government pilot project that would give $100 million in royalty breaks to companies that fulfil their legal obligations to restore old oil and gas wells.

But the bank said the proposed RStar program has the potential to generate negative public sentiment toward the sector.

Scotiabank says the program also goes against the core capitalist principle that private companies should take full responsibility for the liabilities they willingly accept.

Environmentalists, economists, landowners and analysts within Alberta Energy have all opposed the program.

But the Canadian Association of Petroleum Producers says RStar could be part of a dramatic acceleration in cleaning up the 170,000 abandoned and orphaned wells in Alberta.

This report by The Canadian Press was first published Feb. 9, 2023.

Companies in this story: (TSX:BNS)

The Canadian Press

News from © The Canadian Press, 2022. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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