Alberta’s Rockefeller Coups, Part 2: American Style Democracy

Posted On By Blair Fix

Alberta’s Rockefeller Coups, Part 2: American Style Democracy

December 4, 2022

Regan Boychuk

Author’s note: At the end of the First Cold War, Canada tried to make the polluter pay. This resulted in the United States launching an unknown, but successful coup in Alberta over the course of 1991-92. And the results of that coup are the single biggest threat to a liveable future.

This three-part series will document the secret January 17th 1991 ‘no-lookback’ deal over oilfield cleanup, the December 5th 1992 selection of Ralph Klein as the leader of Alberta’s governing party, and the April 9th 2003 US recognition of Alberta’s oilsands as “bankable” reserves.

American Style Democracy

The Supreme Court of Canada rejected the oil and gas industry’s appeal of the Northern Badger case over polluter pay on the first anniversary of the US regulatory coup, January 17th 1992.1

It was the last gasp of Canadian efforts to assert independence from “the political masters in Washington”2 at the end of the First Cold War. But it was already too late.

The Canadian defense of polluter pay was concerted. The efforts of the executive, administrative, and judicial branches of provincial and federal government – in coalition with the accounting industry, the banking sector, the media, and public opinion – should have overcome America’s January 1991 ‘no-lookback’ interference.

And it would have been enough to resist the regulatory coup, if not for the political dimension of US subversion. If not for Ralph Klein.

Calgary is the headquarters of Canada’s oil and gas and bitumen industries. Ralph Klein was mayor, 1980-89, and hosted the successful 1988 Olympics. He ran in March 1989’s provincial election and was appointed environment minister just as Canadian efforts to assert polluter pay were coming to surface.3

But even a consensus of Canadian institutions proved no match for a hostile premier serving the world’s richest and most powerful industry.

In April 1991, the coup’s regulatory tool — ‘Alberta’ oil and gas regulator, John Nichol — gave a speech informing industry of the secret ‘no-lookback’ deal that meant they wouldn’t have to worry about paying for cleanup — regardless of what the law or courts or public opinion may say. April also brought disingenuous calls for royalty cuts, which were obediently delivered in time for 1991’s Christmas bonuses and repeated again the next year.4

Some extra walking-around-money was no doubt nice, but the regulatory coup required a political tool to thwart the Canadian consensus on polluter pay. Amendments to Alberta’s ruling party constitution also adopted in April 1991 created what Americans call an “open primary” for the Alberta Conservative Party’s 1992 leadership convention.

“Initially the Party was quite proud of its new democratic credentials”, University of Calgary political scientist Ted Morton wrote. “But … they have had significant and unintended consequences. … The rules favour ‘outsider’ candidates over candidates supported by the Party Establishment.”5

But before we can explain Klein’s triumph as a Party outsider in December 1992, we have to rewind to the year’s opening to see how the stage was set.

Although he knew better, coup tool John Nichol told the reporter covering Canada’s top court upholding polluter pay in January 1992: “It’s certainly going to hurt … But that’s the oil and gas business. You can’t just drill wells and walk away from them.”6

Alberta’s energy regulator has tried to hide both records, but we know from two smoking gun documents that officials from the provincial regulator (as well as the provincial departments of energy and the environment) met with industry lobbyists on January 17th 1991.7

We know that, despite the Canadian consensus on polluter pay, contrary “principles were agreed to” at that meeting — the same day the US first fully-flexed its hegemonic muscles in Iraq, asserting the Bush Doctrine of ‘What we say goes.’8

When bankers publicly accepted the polluter pay principle in November 1991, the same group that had struck the ‘no-lookback’ deal immediately established a subcommittee to deal with the crisis of bankers abandoning polluters.

The coup’s subcommittee put its recommendations for incorporating the secret ‘no-lookback’ deal into oil and gas regulation in a 46-page report summarizing 10 months of work. They submitted their report two days after CAPP held its fake cleanup conference in Calgary in November 1992.

One of the subcommittee’s first orders of business had been meeting with the Canadian Bankers Association, who were obviously brought onside the coup and set about organizing a hoax of a newspaper series on oilfield cleanup to help cover the coups’ tracks.

In the spring of 1992, the provincial newspaper of record sent two reporters into the field for two months to report on the repercussions of the Northern Badger court case upholding the polluter pay principle.

The resulting series, “Big Oil, Big Cleanup”, consisted of multiple articles each over multiple days. It remains the most incredible journalism on these issues, before or since. Everyone was talking about how many skeletons were in the closet and how they were all getting cleaned up now.9

Except we now know that the Edmonton Journal series was fake.

No one ever cleaned up anything extra after Northern Badger. So while industry executives and professionals might have talked a good game for reporters in the summer of 1992, they never actually cleaned anything up.

They didn’t have to. They had a ‘no-lookback’ deal in their inside pocket.

Adding insult to coup-ery, the evidence that no one ever cleaned anything up has been staring us in the face for decades. The most ubiquitous chart (below) in the long debate over ‘orphan’ oil and gas wells in Alberta shows the dramatic growth of inactive wells in recent decades:10

Figure 1: The growth of inactive wells. This figure charts the annual totals (1990-2017) of new wells drilled (blue) and old wells plugged (green), with the cumulative total of Alberta inactive wells (red). Source: Alberta Energy Regulator Freedom of Information and Protection of Privacy request #2018-G-0041

The explosion of inactive wells after industry executives were exempted from legal liability over cleanup in 200011 has always been obvious from the chart, but what the underlying data proves is that Northern Badger never caused anyone to cleanup anything in the first place.

The Alberta Energy Regulator (AER) had always refused my requests to share the spreadsheet underlying the above chart. They refused when Canadian journalists asked. But when a Canadian stringer for the New York Times asked the AER, it must have confused them; they released the spreadsheet.

No cleanup is a curious result of the Canadian consensus on polluter pay if Albertans are independent of foreign domination and live in a democracy that respects our wonderful energy law. No cleanup is less confusing, however, if there was a secret deal promising the world’s richest and most powerful industry it would never have to clean up after itself.

And when the Alberta Liabilities Disclosure Project’s cleanup estimates are combined with the lack of profits in Alberta oil and gas since 2009, it is obvious that the oilpatch has been looted well past solvency:12

Figure 2: An insolvent legacy. This figure charts the annual net worth (remaining profits – accumulated liabilities) of Alberta oil and gas production, 1971-2018. Normal profit = One-time 10% return on investment (green); excess profit = >10% return on investment (gold); accumulating cleanup liabilities (grey) include conventional crude oil and natural gas wells, pipelines, and facilities; shortfalls in cashflows (red) have accumulated since 2010’s royalty cuts incentivized horizontal fracking. When liabilities exceed remaining profits, as happened in Alberta ~2005, the industry is insolvent — unable to fund its own retirement. The right axis charts the public’s plummeting share of industry revenue (black) captured by royalties and land sales. Source: Author’s calculations from Alberta Liabilities Disclosure Project and Canadian Association of Petroleum Producers data.

Not only has the polluter not paid, but ‘Alberta’ regulators have also stood idly by while the polluter has plunged hundreds of billions deep into insolvency. Alberta’s oil and gas industry has not behaved according to provincial or federal law. But the oilpatch has behaved according to the Bush Doctrine, which includes the imperial principle that the US polluter will not pay.

The Bush Doctrine rules in Alberta still, but we know from the spreadsheet shared with the NYT, that it also had immediate effect. No one cleaned up anything more in 1991 or 1992 than they had in 1990. The polluter never ever paid.

That also means that one of the (if not the) first publication(s) of the Canadian Association of Petroleum Producers (CAPP) — a cleanup manual — was fake. And that means CAPP’s oversubscribed cleanup conference in Calgary on November 16th 1992 was also fake.

All this raises supreme suspicion about Party newcomer Ralph Klein and the sale of 120,000 new Party memberships (still a Canadian record?), including tens of thousands at the polling booth doors at second round voting on December 5th 1992 that gave Ralph Klein a landslide.13

While drilling new wells in Alberta had been down 30% in 199214 – supposedly because of Northern Badger – it sprang back to unexpected life in 1993 under Alberta’s new premier, who then easily sailed his new oil-fueled ship to victory in June 1993’s provincial election victory. Klein’s first term saw the ‘no-lookback’ coup consolidated and neoliberal austerity administered.

Part three of this series will pick up the story after Klein’s Conservative Party secured a second term in 1997. A seven-member subcommittee of the Alberta Securities Commission’s Oil and Gas Taskforce would set about in 1998 to rig Canadian securities markets. Six months after the US occupation of Iraq, the Taskforce succeeded …

Notes

  1. CH 18/1/92

    CH 18/1/92 Jeff Adams “Well cleanup will cost $4.5 billion” Calgary Herald (18 January 1992): C9

    ‘Alberta’s oilpatch has begun declaring a painful, $4.5 billion financial liability: the price tag for cleaning up the province’s 90,000 well sites. … 90,000 wells at $50,000 apiece means $4.5 billion … the Canadian Institute of Chartered Accountants has begun insisting that individual companies acknowledge their share of the costs. Their acknowledgments will be in 1991 annual reports to be released soon. One of the first companies to bite the bullet is Ranchmen’s Resources Ltd., which has cut shareholders’ equity by $6.2 million and earnings by $300,000. Price Waterhouse accountant Lloyd Godfrey noted the new rules don’t force companies to set aside actual cash for the eventual cleanups. But firms must begin allowing an amount from each well’s production revenue, or list the future costs as a current financial liability for the entire company. The first method means a drop in potential earnings while the second takes a slice out of shareholders’ equity. Either way, it’s bad news for shareholders. “It’s certainly going to hurt,” agreed [ERCB’s manager of drilling and production John] Nichol. “But that’s the oil and gas business. You can’t just drill wells and walk away from them.” … So many companies have walked that he said the ERCB is stuck with as many as 100 orphan wells for which no owner can be found. No owners means no one to pay environmental reclamation costs. The [ERCB], fearing more companies will try to escape their responsibilities, is awaiting passage of legislation later this year that will speed up the rate at which non-producing wells must be declared abandoned and then cleaned up. The new law, now in draft form before a government-corporate committee, will also begin assessing fees on owners of suspended or inactive wells, with the money going into a fund to pay for reclamation. … [“chief operating officer of Petroleum Financial Consultants Inc., a Calgary firm that estimates well reclamation costs for owners, buyers, lenders and insurance companies”, Donald] Bain said the Northern Badger case has highlighted the importance for banks and insurance companies of conducting environmental assessments before they lend money or underwrite drilling projects. The same goes for major investors and would-be partners. These assessments will show how much cleanup will be needed. The costs must be included in a well’s overall production costs when judging its economic viability. The higher the costs, the narrower the profit margins – and the sooner depleting production will result in shutdown. “Companies can’t go on producing, with no thought of the day of reckoning,” argued Bain, a former Canadian Imperial Bank of Commerce executive who helped put together the 1987 deal in which Hong Kong billionaire Li Ka-shing bought 43 per cent of Husky Oil Ltd. of Calgary. … “For any company that’s been burying its head in the sand, the new rules are going to hurt,” [Petroleum Financial Consultants President Charles] Dove said.’

    ↩︎

  2. Stein & Lang 2007 pp. 126-27

    Stein & Lang 2007 Janice Gross Stein and Eugene Lang The Unexpected War: Canada in Kandahar Toronto: Viking Canada 2007

    pp. 126-27: Canadian foreign minister during US’ 2003 Iraq invasion and its 2004 coup in Haiti, professor Bill Graham: “Foreign Affairs view was there is a limit to how much we can constantly say no to the political masters in Washington. All we had was Afghanistan to wave. On every other file we were offside. Eventually we came on side on Haiti, so we go another arrow in our quiver.”

    ↩︎

  3. Finch 2008 p. 41

    Finch 2008 Oilpatch historian David Finch “The great royalty debate” Alberta Views v11#2 (March 2008): 38-41

    p. 41: Alberta Premier (1992-2006) Ralph “Klein’s alliance with industry emboldened oil companies in their sense of entitlement to a publicly owned resource.”

    ↩︎

  4. Nichol 1991; CH 11/4/91, CH 24/4/91, EJ 7/11/91, G&M 8/11/91, EJ 4/6/92 & CH 5/9/92 (‘royalty cuts’)

    Nichol 1991 John R. Nichol “Orphan wells: Who is responsible, for how long, and at what cost?” Canadian Association of Drilling Engineers/Canadian Association of Oilwell Drilling Contractors Spring Drilling Conference (Calgary: 10-12 April 1991) Paper #91-30: 6pp (finally available from AER library for fee)

    pp. 1-4: “For the last three years a joint task force composed of representatives from industry … and the financial community have been reviewing the question of responsibility for wells in general, with a view to reducing the number of orphan wells and the associated cost to the people of Alberta. This paper reviews the history of this work.

    … Clearly, if the people of Alberta were going to have to pay some significant amount toward solving this problem, they would look to the Board to develop stricter abandonment and suspension regulations to permit it. But as regulators, we are well aware that regulation is not always the most efficient way of getting things done.

    … ERCB … philosophical approach … motivated by … the large companies selling properties (low producing wells) to stripper operators that may produce them to their economic limit … but who then may be unable or unwilling to abandon the wells properly. That could result in those wells becoming a public liability.

    … Another of the Board’s objectives with respect to the suspended/inactive well population was … to reduce the number of wells in this category, particularly those wells that have no potential or remaining asset value … and that should be abandoned now rather than be left sitting until they become orphans.

    … There has been an increasing number of well blowouts or uncontrolled flows associated with suspended/inactive wells over the last few years”

    CH 11/4/91 Henry Cybulski “Beleaguered oilpatch wants royalty cuts” Calgary Herald (11 April 1991): E1ff

    CH 24/4/91 Henry Cybulski “Royalty bite starting to hurt” Calgary Herald (24 April 1991): E1ff

    EJ 7/11/91 Richard Helm “Oilpatch relief expected” Edmonton Journal (7 November 1991): A1ff

    G&M 8/11/91 Cathryn Motherwell “Santa comes early to oil patch” Globe and Mail (8 November 1991): B1ff

    EJ 4/6/92 “Incentives fail to revive oil industry” Edmonton Journal (4 June 1992): E7

    ‘Drilling is down more than 30 per cent from last year with fewer than 60 rigs working.’

    CH 5/9/92 Gordon Jaremko “New rules cracking down on industrial polluters” Calgary Herald (5 September 1992): B4

    “All the banks have implemented policies to assess environmental risks,” reports [Canadian Bankers Association] CPA commercial affairs director Brian Farlinger. “It would be inconceivable now that a lender wouldn’t want an environmental audit done.” … The private environmental policing stems from a string of painful lessons learned in court cases over pollution damages, Farlinger explains. … Cases that drive the trend include a recent one in Alberta’s Court of Queen’s Bench. [Northern Badger (1991 ABCA 181) ] … The [CPA’s new] guidelines set out a program that goes beyond holding environmental audits when new loans are made. The policy calls for lasting “diligence,” with loan agreements requiring regular pollution checks, guarantees by borrowers that they will keep their operations clean and commitments to repair environmental damage promptly. Every business borrower faces a check called a “phase one” environmental audit, including inspections and reviews of operations’ history. Any hints of trouble trigger “phase two” audits. These call out all the environmental troops to investigate soil, air and water conditions, then require repairs as conditions for granting loans. Businesses are taking the advice to heart.’

    ↩︎

  5. Schumacher 1993 p. 8 (‘constitution amended’); Morton 2013 pp. 31-32 (‘favours outsiders’)

    Schumacher 1993 Stan Schumacher in MLA Paul MacEwan, MLA Stan Schumacher, MLA Tony Whitford, MLA Gary Farrell-Collins, MHA Len Sims, and MLA Doreen Hamilton “Reforming the leadership convention process: A roundtable discussion” Canadian Parliamentary Review v16#3 (Autumn 1993): 7-9

    p. 8: “Recent leadership conventions have become highly controversial on two fronts. First, the practice by campaign organizations and special interest groups of paying party membership fees to recruit instant party members who help elect sympathetic delegates of slates of delegates has undermined the integrity of the leadership selection process.

    The second controversial dimension of the selection process is the cost and financing of recent leadership campaigns. Large sums of money and resources are now needed by the campaign organizations for leadership contestants to mobilize support and to ensure the selection of delegates.

    Several provincial parties have [begun] … selecting their leaders through direct election by all party members in good standing. … Parti Québécois … in 1985 and 1987. … Progressive Conservatives in Prince Edward Island in 1987 and in Ontario in 1990. The Liberal Party of Canada at its 1990 national convention adopted a policy resolution that supported the direct election of its next leader.

    In Alberta, the Conservative Party leader, Premier Ralph Klein, was elected through direct election process in December 1992. Amendments to the Alberta Conservative Party constitution were adopted in April of 1991 at our annual convention.

    The events that led to the adoption of a direct election process may be traced back to the 1985 leadership convention. …”

    Morton 2013 Ted Morton “Leadership selection in Alberta, 1992-2011: A personal perspective” Canadian Parliamentary Review v36#2 (Summer 2013): 31-38

    pp. 31-32: “The 1991 leadership reforms can best be described as creating what the Americans call an”open primary.” Not only is it based on the one-member, one-vote principle, but the membership requirement is essentially “open”. That is, there are no pre-requisites such as prior party membership or cutoff dates for purchasing a membership. Memberships can be bought at the door of the polling station on the day of the vote for $5. The system allows for two rounds of voting.

    … Outsiders win, Establishment favourites lose

    This is the most obvious consequence of the new leadership selection rules. … In the 1992 leadership, Edmonton MLA and Cabinet Minister Nancy Betkowski was beaten by Ralph Klein, the former mayor of Calgary. Betkowski had a long history with the Party and substantial Cabinet support. Klein was a relative new-comer to the Party. While Klein had the support of many back-benchers, he was not endorsed by a single Cabinet minister. Klein campaigned against Betkowski by labeling her as “part of Tory Establishment.” In the first round of voting, Klein surprised Betkowski by tying her, each receiving 31% of the votes. Cabinet Minister Rick Orman was a distant third with 15%, and withdrew, endorsing Betkowski. Indeed, six of the seven defeated first-round candidates endorsed her. These endorsements notwithstanding, Klein buried Betkowski in the second round of voting, 59% to 40%. The number of “new” voters surged by over 35,000, and they supported Klein by a large margin.”

    ↩︎

  6. CH 18/1/92 [see endnote 1]↩︎

  7. Nichol 1991 [see endnote 4]; Well Licence Subcommittee 1992

    Well Licence Subcommittee 1992 Well Licence Criteria Subcommittee “Specific criteria to be applied by the ERCB when a well license is issued or transferred” DRAFT (18 November 1992): 46pp (Available again from the AER library, which temporarily denied its collection included this report or anything related to Nichol 1991.{7 January 2022 correspondence with “Lisa” })

    p. 6: “At a meeting held on 17 January 1991, certain principles were advanced as a basis for a program to address the abandonment of wells. The basic principle advanced was that an Abandonment Fund would be established by industry to pay for the share of downhole abandonment costs of insolvent or non-existent well licensees and working interest owners in a well.”{see Yewchuk & Wray 2022}

    pp. 1, 7: “An increasing number of corporate insolvencies, bankruptcies and reluctant licensees, coupled with rationalization activities that are shifting assets between different sectors of the industry, are all contributing to growing fears of unmanageable future abandonment problems if issues are not addressed now. … The number of transfer applications that appear to be an attempt to avoid abandonment responsibility, have increased in the past several years. … The licensee profile has changed rapidly over the past 12 months. There is an increasing number of new licence applicants who are relatively unsophisticated in the industry, with limited understanding of the obligations and risks associated with holding a licence. … An increasing number of licence applicants have inadequate financial resources to meet future well-abandonment liabilities. In many cases, the applicant does not recognize that such a responsibility exists. … In a number of recent cases, well-licence transferors have disposed of valuable assets, leaving only liabilities within a corporate shell and thereby generating future orphan wells. … There is an increasing incidence of new licence applicants who have a previous record of corporate deficiencies, both within direct and associated companies. Deficiencies include failure to respond to ERCB directives, unpaid surface/mineral lease rentals, etc.”

    Yewchuk & Wray 2022 Drew Yewchuk and Chris Wray “How is the Orphan Fund Levy set? Alberta’s oil and gas clean-up costs in 2022” ABlawg (17 March 2022): 9pp

    ↩︎

  8. Chomsky 1994 pp. 4-5 & 25: “the rich men of the rich societies are to rule the world, competing among themselves for a greater share of wealth and power and mercilessly suppressing those who stand in their way, assisted by the rich men of the hungry nations who do their bidding. The others serve, and suffer.”

    Chomsky 1994 Noam Chomsky World Orders: Old and new New York: Columbia University 1994

    pp. 4-5 & 25: Reflecting on Third World calls for a new world order at the end of the Cold War, Chomsky quoted Winston Churchill at a similar dawn after World War II: ‘The government of the world must be entrusted to satisfied nations … none of us had any reason to seek anything more … Our power placed us above the rest. We were like rich men dwelling at peace within their habitations.’ {Churchill, The Second World War (Boston: Houghton Mifflin 1951) v5: p. 382} Chomsky then summarizes and clarifies:

    “To rule is the right and duty of the rich men dwelling in deserved peace.

    It is only necessary to add two footnotes. First, the rich men are far from lacking ambition; there are always new ways to enrich oneself and dominate others, and the economic system virtually requires that they be pursued, or the laggard falls out of the game. Second, the fantasy that nations are the actors in the international arena is the standard doctrinal camouflage for the fact that within rich nations, as within the hungry ones, there are radical differences in privilege and power. Removing the remaining veil of delusion from Churchill’s prescription, we derive the guidelines of world order: the rich men of the rich societies are to rule the world, competing among themselves for a greater share of wealth and power and mercilessly suppressing those who stand in their way, assisted by the rich men of the hungry nations who do their bidding. The others serve, and suffer.

    These are truisms. As described over two hundred years ago by Adam Smith, the often mis-represented hero of contemporary Western self-congratulation, the rich men follow “the vile maxim of the masters of mankind”: “All for ourselves, and nothing for other people.” They naturally use state power to achieve their ends;{Smith 1776 bk3, ch4, v1, p. 437} in his day, the “merchants and manufacturers” were “the principal architects” of policy, which they designed to assure that their interests would be “most peculiarly attended to,” however “grievous” the impact on others, including the general population in their own societies.{Smith 1776 bk1, ch11, v1, pp. 276-78} If we do not adopt Smith’s method of “class analysis,”{Smith 1776 bk1, ch11, v1, p. 276} our vision will be blurred and distorted. Any discussion of world affairs that treats nations as actors is at best misleading, at worst pure mystification, unless it recognizes the crucial Smithian footnotes.

    As in any complex system, there are further nuances and secondary effects, but in reality, these are the basic themes of world order. There is no little merit in the description of world order, old and new, as “codified international piracy.””

    Smith 1776 Adam Smith An Inquiry into the Causes of the Wealth of Nations 5th edn. [1789] Edwin Canaan (ed.) Chicago: University of Chicago 1976

    ↩︎

  9. For a sampling, see EJ 18/7/92a-d

    EJ 18/7/92a Erin Ellis “Big oil, big cleanup: Mopping up after the oil boom” Edmonton Journal (18 July 1992): G1ff

    ‘Only two things seemed to matter during those glory days of the oil boom: getting it out of the ground and getting paid for it. No one worried too much about dumps of oil, drilling chemicals and sludges at the well site. Just bury it. Spills of oil and salt water were unpleasant, but considered a price of doing business. When reserves of conventional crude oil peaked at 1.2 billion cubic metres in 1968, environmental regulations in the oil business scarcely existed. …twilight appears to have arrived for Alberta’s conventional oilpatch… But the industry that laid the golden egg for Alberta is still treated differently from any other. Hazardous chemicals from the oilpatch don’t have to follow the same rules applied to similar wastes made by other businesses.’

    EJ 18/7/92b “Thousands of inactive wells may pose threat” Edmonton Journal (18 July 1992): G3

    In the past, an accounting manager with Petro-Canada explained to the Edmonton Journal ‘companies figured the money they could get from salvaged equipment at a site was enough to cover the cost of cleanup’. The Journal was quick to add, ’the new accounting practices don’t stem from a burning desire to protect Mother Earth. Instead, it’s simply a matter of shareholders getting an accurate assessment of the value of their investment.

    “If you’re an investor, you want to know what the true financial picture is and if a company hasn’t put in the costs of abandonment … it won’t paint an accurate picture of the company,” said Howard Samoil of the Environmental Law Centre in Edmonton. “It’s natural evolution of the industry. These are the retirement activities. Like any responsible person sets aside money for retirement.”

    … Recent court cases [Northern Badger] have also shown the environment comes before paying creditors and can even dig into the pockets of corporate bosses. …The lesson is executives must show they have specific plans in place to prevent environmental damage and they must deal promptly with any pollution problems.’

    EJ 18/7/92c “Big oil, big cleanup: Chartered accountants help lay groundwork for cleanups” Edmonton Journal (18 July 1992): G3

    ‘Since the end of 1991, the cost of restoring an oil well or gas plant site has to be factored into a firm’s annual financial statement as a liability. …In the past, companies figured the money they could get from salvaged equipment at a site was enough to cover the cost of cleanup, said [an accounting manager with Petro-Canada, Mike] Barkwell. …But the new accounting practices don’t stem from a burning desire to protect Mother Earth. Instead, it’s simply a matter of shareholders getting an accurate assessment of the value of their investment. “If you’re an investor, you want to know what the true financial picture is and if a company hasn’t put in the costs of abandonment…it won’t paint an accurate picture of the company,” said Howard Samoil of the Environmental Law Centre in Edmonton. “It’s natural evolution of the industry. These are the retirement activities. Like any responsible person sets aside money for retirement.” Recent court cases [Northern Badger] have also shown the environment comes before paying creditors and can even dig into the pockets of corporate bosses. …The lesson is executives must show they have specific plans in place to prevent environmental damage and they must deal promptly with any pollution problems.’

    EJ 18/7/92d Don Thomas “Big oil, big cleanup: Putting an old oilfield out to pasture” Edmonton Journal (18 July 1992): G3

    ‘Reclamation was the least of drillers’ concerns when the field was developed in the late 1940s. There were no reclamation guidelines, and topsoil salvage wasn’t required until 1978. …Drilling fluids, garbage and some toxic waste such as lead-based pipe joint compounds went into sumps which were later filled in with no record of where they were. Persistent herbicides and other soil sterilants were used to keep sites weed-free and may remain in the soil many years. …Some oil companies try to make private sign-off cash deals with landowners who aren’t fussy about a proper job, says [Drayton Valley Surface Rights Association spokesman Carl] Zajes. It only postpones problems for the next landowner, he says. …Sampling of topsoil and subsoil for sterilant, brine, drill mud, hydrocarbons, garbage, salinity and sodium content may be required on some sites, say Conservation Council guidelines. But they say it’s only necessary to confirm suspicions from examining or smelling the soil. That puzzles Denise Maurice, a soils specialist with Alberta Agriculture. She has done research on reclaimed well sites with crop growth problems. It showed that long-lasting soil sterilants were to blame. A lack of weeds indicates that sterilants are the problem, but the only way to be sure is to test the soil.’

    ↩︎

  10. Wadsworth 2018 p. 7

    Wadsworth 2018 Alberta Energy Regulator Vice President of Closure and Liability Robert Wadsworth “Liability management: Situational awareness” (27 June 2018): 52pp (FoIPP #2018-G-0041)↩︎

  11. Brezina & Gilmour 2003 pp. 32 & 39

    Brezina & Gilmour 2003 Danielle Brezina and Bradley Gilmour “Protecting and supporting the Orphan Fund: Recent legislative changes and AEUB policy amendments designed to address unfunded liabilities of oil and gas facilities in Alberta” Alberta Law Review v41#1 (July 2003): 29-47

    pp. 32 & 39: “Section 20.1 was repealed with the amendments, so under the amended OGCA there does not appear to be any direct risk of liability to directors, officers or controlling shareholders for the abandonment liabilities of the corporation. … Under the amended OGCA, directors and officers have no direct personal liability for suspension or abandonment costs”

    Brezina was Alberta Energy and Utilities Board counsel, Gilmour an associate at Bennett Jones’ Calgary office. They write that the “alternative enforcement power”, which replaced personal liability in the 2000 OGCA amendments, “may be more efficient than pursuing debts from directors and officers though administrative and court proceedings.”[p. 39] Here, ‘may be more efficient’ are weasel words. In fine lawyerly tradition, ‘efficiency’ depends on how you define the concept. It is undoubtedly cheaper and easier (i.e. more ‘efficient’) to not pursue negligent corporate executives/officers/shareholders. But not recovering the funds necessary to fulfill their environmental obligations is very likely to shift significant costs to the public. For a regulator tasked with protecting the public interest, some might recognize such an outcome as less than ‘efficient’.

    ↩︎

  12. Boychuk 2020 pp. 9 & 18

    Boychuk 2020 Regan Boychuk “The liabilities of profit: The sunset economics of oil and gas in Alberta” Economic Society of Northern Alberta invited presentation (7 October 2020): 18pp (65 mins)↩︎

  13. See Schumacher 1993 pp. 7-9 & Morton 2013 pp. 31-32 [see endnote 5] & Stewart 1997 pp.  107-8, 112-17 for the basic facts, though none of them hint at anything untoward. Responsibility for the coup analysis is my own, though I’m collaborating on proving it empirically from the production records of each licence and licensee in Alberta.

    Stewart 1997 David K. Stewart “The changing leadership electorate: An examination of participants in the 1992 Alberta Conservative leadership election” Canadian Journal of Political Science v30#1 (March 1997): 107-28

    pp. 107-8, 112: “the only Canadian example of an all-member vote. Admittedly, the Conservatives have governed Alberta for more than two decades … thus important to keep in mind that the party was choosing a new leader at a time in which opposition parties maintained a strong presence in the provincial legislature and when many pundits were predicting that the Conservatives would lose the next election. When the Alberta Conservatives chose their new leader in December 1992, the continuation of their dynasty was very much in question and Alberta politics were uncharacteristically competitive.7 … many of the concerns raised by critics of the universal ballot are confirmed by the Alberta experiment …

    7 Keith Archer has demonstrated that recent Alberta elections have seen a decline in the level of support for the government, and that much of the one-party dominance in the province stems from electoral system distortion. See Keith Archer, “Voting Behaviour and Political Dominance in Alberta, 1971-1991,” in Allan Tupper and Roger Gibbins, eds., Government and Politics in Alberta (Edmonton: University of Alberta Press, 1992).

    … This study uses a survey of second-ballot voters in the 1992 leadership election to compare universal ballot voters with delegates to the 1985 Alberta Conservative leadership convention.21 …

    21 Information on participants in the process was obtained from a survey of second-ballot voters. Using lists provided by the party, second-ballot voters were identified and surveys were sent to 2,728 of the more than 78,251 voters. A total of 943 usable responses were obtained, and these respondents proved quite representative both in terms of reported vote and region of residence. A systematic sample stratified by constituency was drawn from party lists. Additional information on the sample design is available on request. The survey was funded by a grant from the Central Research Fund of the University of Alberta and could not have been carried out without the support of the Progressive Conservative party of Alberta and the invaluable assistance of Brenda O’Neill.”

    pp. 112-17: “The 1992 Conservative leadership election marked the first use of the universal ballot to select a leader in Alberta. In 1985, when Peter Lougheed retired, Don Getty was elected leader at a traditional leader- ship convention preceded by fierce competition among the candidates at delegate selection meetings. The negative publicity surrounding these gatherings and the anger expressed by party activists prompted the party to change its constitution in order to allow all members to vote directly for their leader. [citing Schumacher 1993p. 8] … There were no deadlines or cutoff points for obtaining a membership.

    The rules for candidates were also minimal. … The candidates were allowed to purchase memberships in bulk from the party and to resell these memberships to possible voters.

    More than 230 polling stations were set up across Alberta including at least one in each constituency. Individuals could purchase memberships and vote at any of these polling stations. …

    … The polls were open on successive Saturdays from 9:00 a.m. until 7:00 p.m. and voters were required to present both a membership card and picture identification as well as to sign a registration card declaring their eligibility to vote (and that they had not previously voted). …

    … A substantial proportion of the voters who made the ultimate choice of leader had very little background in the Conservative party and only marginal involvement in the campaign.

    … Only 5 per cent of these voters had ever held an elected party position and fully 55 per cent of them joined the party for the first time in the year of the vote. Indeed, a full one third took out their memberships on election day (22% on the day of the first ballot and 12% on the day of the second ballot). More significantly, a majority of the participants (55%) admitted to joining the party just to vote for the new leader! … Not only did the 1992 voters possess very shallow roots in the Conservative party, few of them indicated that they wished to be involved more heavily. Only 26 per cent of the voters said that they planned to work for the party in the next election and the same percentage did not expect to vote Conservative provincially.

    Ties to the federal Conservatives were less common than in 1985. … Almost 40 per cent of the voters who held a federal party membership belonged to the Reform party. …

    … The relatively high proportion of Reformers who participated in the selection of a provincial Conservative leader becomes even more striking when one notes the number of Reform members in Alberta. Flanagan reports that on April 8,1992, there were 45,488 Reform party members in Alberta. Using the 78,251 second-ballot voters as a base, it appears that roughly 25 per cent of Reform’s 1992 Alberta membership voted in the provincial Conservative leadership race. This suggests that creating an opportunity for federal Reformers to participate in the activities of the provincial Conservative party was an astute strategic move that kept open a provincial home for thousands of Reformers.32

    32 It is possible that the level of Reform supporters’ participation in the leadership process is underestimated by this study. … It seems likely that a significant number of federal Reformers might have decided not to vote on the second ballot when their preferred options were no longer available.”

    ↩︎

  14. EJ 4/6/92 [see endnote 4]↩︎

Tagged: /////