NEW EPISODE - Drill & Dash: The Oil & Gas Liability Crisis with Martin Olszynski

[00:00:00] Martin Olszynski: There's a trajectory here. There's a trajectory that we're on, and there's no doubt in my mind that nothing about our current approach to this problem is moving us away from that trajectory, and that trajectory is for this to all fall on the public's lab.

[00:00:16] Ed Whittingham: Hi, I'm Ed Whittingham, and you're listening to Energy Versus Climate, the show where my co-host, David Keith, Sara Hastings-Simon and I debate today's climate and energy challenges.

On October 16th, Sara and I recorded a live webinar with special guest Martin Zelinski at the University of Calgary. Our tongue in cheek title for the show is Drill and Dash, the Oil and Gas Liability Crisis. It turned into a pretty lively and wide ranging conversation that sparked a flood of audience questions.

Proof that this issue hits close to home for many Albertans especially. So without any further ado, here's the show. Hello everyone and welcome to season seven, episode three of Energy Versus Climate. My name is Ed Whittingham and I'm joined by my co-host Sara Hastings-Simon. David is tied up in Chicago today, either with university work or he is being apprehended by ice.

It's one or the other, we're not quite sure which. Just yesterday, CBC reported. That a consortium of advocacy groups is pushing back on Alberta's current strategy for dealing with inactive oil and gas wells. They're criticizing it's too weak and arguing that it fails to protect taxpayers and the environment.

And that, uh, the strategy really shifts too much of the costs, of cleanup to taxpayers rather than holding industry accountable. And this has brought the latest salvo in really a long running struggle over who bears the cost of Alberta's resource legacy a decades old liability crisis in which we've got weak regulation, deferred cleanup, and shifting policy frameworks that repeatedly push environmental risks onto the public purse.

While oil and gas players seem to be able to walk away from aging wells. It's also, that is our topic today. The province is growing oil and gas liability crisis, the billions upon billions in unfunded cleanup and reclamation costs. That's gonna fall somewhere between industry, government, and the public, and in basically how it could reshape Alberta's fiscal and environmental future.

So today we're gonna explore how we got here, what's being proposed to fix it, and how to avoid repeating these mistakes with the next generation of resource extraction, like say, extraction of critical minerals. The CBC article I just mentioned quotes. Our guest today, Martin Olszynski, is associate professor and chair in Energy Resources and sustainability at the University of Calgary.

And a law professor has been re researching the oil and gas liability issue for the past eight years. I think it's fair and no exaggeration to call Martin the preeminent academic, uh, authority on liability risk in Canada's energy sector and oil and gas in particular, and someone whose work has really helped to shape scholarly and policy debates.

He's testified before the Parliament and the Senate. He's appeared before the Supreme Court of Canada, and he served on the Federal Environment Minister's Advisory Council on Impact Assessment. That is a mouthful. Welcome to EVC Martin. Thanks very much for having me. Hey, we're thrilled to have you. Uh, so we're gonna start today with a primer on the liability crisis, and I'll do that with Martin.

Uh, after that, uh, Martin, Sara and I are gonna have a three-way conversation on those topics, how we got here, what's on the table, what we need to get out of this big fix that we're in, and then onto your questions. So, Martin, just before we dive into the big picture. Maybe give us a sense, like how did you come to being the preeminent academic authority on this topic?

[00:03:49] Martin Olszynski: I don't know if I can totally accept the premise of the question, but what I'll say actually is, it is interesting. So, I mean, I was a government lawyer before joining the University of Calgary here, uh, in 2013. So before that I was a lawyer at DFO. Fisheries and Oceans Canada. And actually a lot of my work involved impact assessment around oil sands mines, you know, the Curl mine, uh, the Jack Pine mine.

So I've always been aware tangentially, sort of, about the size and scale of some of these environmental impacts. Um, but it was really around 2017 actually. Um, you know, some of us might remember the McLean's magazine used to do this roundup of important graphs at the end of every year, and it was like this real big, uh, geek fest.

I remember, you know, on Twitter back when Twitter wasn't what it is now. Uh, everyone talking about these things and, and it was a, actually a graph by Francis Woolley, who's an economist at Carlton, I think. And, and she had this graph that showed. The size of the Sydney Tar Ponds and then the cost per Hector of Remedi and reclaiming those.

And it was just, you know, it was massive. Like, it just completely, the, the cost per Hector was like 4 billion, $4 million I think it was. Exactly. And then she took the size of the oil sands tailings ponds, which is a time roughly just the tailings ponds was around 20,000 hectares. And she showed how much money was sent aside.

It was about $40,000 in security set aside for that. So, you know, it, it didn't take much to sort of figure out that there was a very significant problem here and that it really dwarfed the scale of anything that we really dealt with and encountered in Canada. And so that really turned my mind to okay.

You know, and she described in that graph I remember the Mind financial security program. And so then I went off and started looking into it and, and it was just one of those, it is like kind of a, a rabbit hole thing. The more I started to learn about it, the more alarmed I was by it. And, and the more I started to think and write about it.

[00:05:38] Ed Whittingham: Well, and 20,000 hectares we're, we're, we're gonna talk about some pretty jaw dropping numbers, uh, as we get into this conversation. Also, just before we actually jumped, uh, before we dropped the curtain on the webinar, I said, is it fair to call the oil and gas liability issue a crisis? And you responded and you gave the number in unfunded liabilities.

Can you just repeat that number 'cause it's another jaw dropping one.

[00:06:03] Martin Olszynski: Yeah. So the number that I use and I'm prepared to defend is around $320 billion in mostly, you know, essentially unfunded. Closure liabilities. And that's taking a 2018 estimate internal Alberta energy regulator estimate of 260 billion and adjusting it for inflation through to 2025.

[00:06:21] Ed Whittingham: Yeah. And I guess, uh, 20,000 hectares we're talking about, uh, size and I know it's a total area of the oil sands, but we're talking about a size larger than some small cities.

[00:06:30] Martin Olszynski: Yeah, absolutely. So a Hector Wright is like the size of a football pitch, like a soccer pitch, right? Or two football fields.

Yeah. It's massive

[00:06:36] Ed Whittingham: now. So big picture, now we're calling it a crisis. What is Alberta's Oil and Gas Liability crisis? You've just given the number in terms of the size and sort of big picture, what's being done about it?

[00:06:49] Martin Olszynski: Yeah, so you know, when we talk about closure liabilities, right? What are closure liabilities?

It's this really unfortunately dull term, I think, for cleanup costs, right? These are the costs of. Decommissioning or, or what we sometimes were referred to in, in the conventional oil and gas sector as plugging or abandoning wells, right? So just shutting them down, shoving the cement down that, that hole but then also the cost of remediating, if there's remediation that has to be done and reclamation, right?

So it's really all those things, decommissioning, remediation and reclamation. And then we talk about it in the two areas, right? So there's the conventional oil and gas space, which will envi involve wells and associate infrastructure and facilities, uh, batteries, uh, pipelines, that kind of stuff. And then in the oil sands mining context we're talking about, of course those massive, uh, mines on the landscape.

So, you know, when we take, when we look at the total footprint, active footprint right now of oil sands mines in Alberta, it's actually a hundred thousand hectares. But that, of course not all of that is tailing ponds and, and that kind of stuff. So there's, there's land disturbance and, and then there's the tailing bonds.

And so it's really the cost. Decommissioning, remediating and reclaiming all of those. Assets, basically, and infrastructure.

[00:08:02] Ed Whittingham: So thinking of that and, and maybe go back to this 300 billion number, you said that you're prepared to defend it. How do we even know what the true liability numbers or like, and I'm saying numbers because they're dueling numbers and, sorry, I'm correcting myself.

If you said 320 billion. Sort of what is your number? How did you arrive at that? And maybe give us the, the official party line coming outta the government of Alberta on the number it uses.

[00:08:27] Martin Olszynski: Uh, and you know, this was kind of like a big deal actually in, in the sort of a history of this file. So in 2018 there was a presentation that was pre prepared by a VP at the time inside the er, Rob Wadsworth.

And, you know, that was somehow got, its its way into the media's hands. It was leaked or something. And, and so there, he broke down. Essentially internal estimates of liability in the conventional space and then in the oil sand space and then in the pipeline space sort of had that separate and distinct.

And so in that piece he said a hundred billion roughly for the conventional oil and gas assets. And that's including. Currently inactive wells, but also marginally producing wells that would include wells that have been abandoned but haven't been remediated and reclaimed, right? So there's a lot of different things in that bucket, but you know, roughly a hundred billion.

And then for oil sands, he suggested it was probably, you know, a hundred billion as 130 billion actually, uh, for tailings ponds. And, um, and then 30 billion, just a rough estimate, essentially, like we know we have a ton of pipelines in the province. No one's actually done the work. And so what happened was, I think they were essentially relying on a nash on a federal estimate by n the NEB or now the CR, to sort of use as a proxy for those pipelines in, in the province.

And so then what's really important to say is that the province did at the time try to sort of like disown this estimate, but they nev, it's really curious actually, if you look at the wording, they talked about it as like a worst case scenario if the entire sector sort of crashed, but they didn't actually.

Attack the numbers, right? So, so we would agree that, you know, that, you know, like I would agree that yeah, that's a worst case scenario. It's not likely, it's for the whole sector just sort of like collapse in like that. But the numbers themselves, they didn't actually really dispute. And in fact, we've done some more foing.

And so I've done, you know, freedom of access information, uh, freedom information requests. And actually my co uh, co-author with me and our former student, he's currently doing his PhD at UBC, Drew Yewchuck, sort of does a ton of this FOIPing. You know, and, and we found for instance, that in the conventional space, the regulator did actually have this sort of.

Working group called the clam. It was the Closure Liability Assessment Model. And, and they had looked at, you know, the way that the, the regulator currently still estimates costs, it's called Directive 11. And so there are numbers in Directive 11 that they just assigned. Right. And basically they had looked at something like 4,000 wells and it turned out that when they did that analysis, abandonment costs were off.

Right. Just that simple question of plugging, they were off by a couple billion dollars, I think. Nothing radical, but some kind of, you know, some difference there. And the regulators actually since adjusted that. But then in remediation and reclamation the analysis, they did suggest that they were off by 250%.

So when you do that and you apply that 250% in the numbers and it's all there, like they had presentations for this. And in fact on the slide deck that we got our hands on, it sort of said, we are not going to share this with the public yet because we don't want to spook everyone. So anyway, so when you do the math and you apply all that, it rounded out to about 90, $90 billion for just the conventional stuff, right?

And so then, so that I think gets us pretty close to that, you know, a hundred billion that Wadsworth was talking about in the oil sands space. I've done a lot of work as a consultant for some First Nations, for instance, when the government did its mind financial security program review, that's the regime that that governs oil sands mines.

And we'll talk about in a second. And, and I guess what I'll just say is that I've spent like three or four years in this space and nothing anyone has ever said to me leads me to doubt that that is a conservative estimate. And not, not actually a ceiling, but rather really the floor. And a lot of it comes down to the fact that we still actually don't know how to deal with tailings in a long term kind of way.

[00:12:04] Ed Whittingham: And I was just talking to a safety specialist specialist about how to deal with tailings, uh, over the long term. And you're right, we don't know apart from them just sitting there in the landscape and doing everything we can to contain them so that they don't leak into local waterways. I do, by the way, just a little point of personal history.

I was on the board of the AER for about a hot minute in 2019, and it wasn't that long after Rob wa wad, uh, Wadsworth gave that presentation that went public. It was very much a topic of conversation in all my interactions for that hot minute, uh, that I was there. Sir, last upfront question and then love to bring Sara into the picture.

So. Let's say 320 billion unfunded liabilities right now, what does the government and industry combined have set aside? Like what money do we have in the bank who are earmarked to deal with these liabilities?

[00:12:59] Martin Olszynski: Yeah, so it would be roughly $2 billion.

[00:13:02] Ed Whittingham: Okay. So you've got 2,000,000,320 in unfunded. Okay. Yeah.

Well, uh, yeah. Uh, basically an order of magnitude, two orders of magnitude more,

[00:13:14] Martin Olszynski: two orders of magnitude. And, you know, one of the things about this, like, I wonder sometimes why this, how, why it's hard to sometimes communicate this problem, you know, and, and, and maybe we'll get into this later. I mean, we know that like, when it comes down to it, when you're looking at the books of a company, you know, there's discounting, right?

The idea that some of these costs are future costs. And so the time value, the money of value at that time is lesser than it is now. But I think the thing that I keep coming back to is like, there's a trajectory here. There's a trajectory that we're on, and there's no doubt in my mind that nothing about our current approach to this problem is moving us away from that trajectory.

And that trajectory is for this to all fall on the public's lap. And so I think that's, that really also brings home, it's not just, it's like the size of the problem, of course, but then just also the trajectory of the policy that we're, that we're, that we've been, that we have and, and that we continue to be going down.

[00:14:04] Ed Whittingham: Okay. Uh, this, uh, and now I wanna talk about how did we get here? So a couple things spring to mind. Is this a consequence of a governance failure? And did someone just fail to see this coming at a critical time? Or was it playing for everyone who was paying attention that we're going to get into this quagmire?

Or is just this an inevitable result of being sort of, in effect, a petro state, uh, a, a very resource dependent economy? I open that up to Sara or Martin, whichever one of you wants to, to jump in next.

[00:14:37] Sara Hastings-Simon: I can jump in with sort of a piece of that. I think I'll let Martin speak more to the regulatory part of it, but I think what, what we haven't talked about, so, I mean, the size of the challenge is really frightening.

The other part to, I'm just gonna make it worse here, but, but to make it worse, we are under, I think it's fair to say, increasing time pressure to deal with this problem. So, you know, there's an issue in, in resource extraction of, you know, how are you gonna clean up at the end. And part of, sort of the way that, that these things are designed for, I was gonna say for better or for worse, but really for worse, is that, you know, you kind of kick the can down the road and you plan on these future profits cleaning up the, the current liabilities.

And of course now we're also facing this. You know, un uncertain and, and increasingly more certain future decline in demand for oil. And so I think a part of how we got here is the challenge that we are only, and, and we talk about, you know, what people really believe, but we're only really sort of acknowledging in various groups now that there is going to be some kind of peak in demand for oil.

And so I actually went back just before, uh, we jumped on the, the recording to, to remind myself what though, international energy agencies, world energy outlook looked like, um, going back, you know, to kind of 20 16, 20 17, 20 18 and playing that forward. But it's only really coming out of that period, 2021 or so that you actually see scenarios that aren't the sort of very, very aggressive sustainable development net zero scenario from the IEA showing a peak in oil demand.

And so, you know, we can quibble about maybe, you know, I would argue that, that people probably should have been aware that this was going to happen before, you know, 2020. And on the other side you have, you know, definitely I, I hear from folks in Alberta saying, well, the IEA, you know, you can't trust them anymore.

They're, uh, they're. Their scenarios aren't reliable. So I don't think that everybody has even agreed with that. But to, to wrap up my point, basically, we're also facing this increasing pressure where there are more and more voices that are basically saying, you're going to this end of potential resource, um, revenues to, to help pay for this.

And certainly higher levels of those. So, you know, as demand for oil and gas declines, the prices will, will similarly decline as well too. That's kind of coming at us fast in the last few years and, and I would argue unfortunately in, in some circles in Alberta, not even really yet as an accepted part of the conversation.

So, so that's the, the backend that's, that's the challenge for, you know, what has. Been set up until now, which I'll turn back over to Martin to, to walk through.

[00:17:27] Ed Whittingham: Uh, well turn to Martin, but I just want to add to that sort of plus one. And it is a challenge to orthodoxy that we find, particularly in downtown Calgary.

But I just saw a report from the Eurasia group that came out this morning that, uh, is suggesting price of oil is gonna fall by the end of the year. And they're predicting about 55 bucks a barrel range of 55 to 65. But they also, and they've been saying this for a while, that we're, we're entering a low energy price cycle.

Part of it is China just doesn't need the amount of oil that it needed in the past. It's, uh, stockpiling support prices. Uh, it's not gonna be enough to, to stave off that demand. And part of it is China's economy is rapidly electrifying lease transportation with 50% of vehicles. Now rolling off the assembly line, there are electric.

But, uh, just to give our listeners, uh, a, uh, a sneak preview, uh, David, Sara and I just had a, a conversation with an Indian energy expert named Ja Sundi. We're gonna release that the next couple weeks, but you're finding that other brick countries and, and India, first and foremost, they're not picking up that supply that is being, you know, shed by China because the, the structure of their economies are quite different.

So for an oil and gas producing jurisdiction like Alberta. It's not great news because we might have persistent low, uh, oil prices, uh, for the foreseeable future. Now, Martin, sorry that was a long tangent from me. Maybe you could get us back to like, who saw this coming and can we blame this on like just a lack of good planning by governments?

Uh, or is it, do you think it's just a reality of us being in this you know, this, some of the traps that are set when you're such a, an economy dependent on oil and gas.

[00:19:18] Martin Olszynski: You know, I think it's the latter first, and then that leads into the se into the former, right. In a sense they're related. And, and why I say that in particular is we actually just had a big conference here at University of Calgary, uh, where we brought in people from the United States and from the UK and from Australia and we were talking about exactly this issue, energy, uh, closure liabilities in energy sector.

And it's the same thing in every oil and gas jurisdiction. And so what I wanna say about that is that, you know, in this case, actually, you know, the regulator, whether it's the AER before that ERCB, and before that the energy utility board, like they've had awareness of this problem since the eighties.

Uh, has where we knew that there were starting to be these wells on the landscape, you know, and, and, and basically over the next two decades, you had sort of like various efforts made to sort of get a handle on it. The idea of paying a fee, and in fact there was like some nominal fee that was paid, uh, at the beginning that was supposed to be set aside for closure.

Later in 1997, actually a very pretty robust program instituted called the Long-Term Inactive Well Program. And it basically required operators, if there was a, well, that had been inactive for more than 10 years, that you either plug it, bring it back into production or post security. And that was actually working very effectively, apparently for a couple years.

But in 2000, it gets canceled. And what we know from our freedom of information requests is that basically industry comes in very strongly, very forcefully, and basically says, we're not on, like, that's not on, we're not doing that. We're not doing this other thing anymore. Um, at the time the regulator was starting to play with this idea of like maybe an economic limit that they would calculate for each of these assets and sort of say, okay, at what point do we say it's no longer gonna be really profitable and we can move towards requiring some kind of bonding or remediation, but you know.

But essentially at that point, we introduce, Alberta introduces the system that five years ago, the province technologist basically was a total, uh, piece of garbage, like the total failure. Right. You know, and fundamentally we can get into the details and, you know, like it's essentially, it's this like asset to liability approach, which, you know, under which the idea basically was like, as long as the company had more assets than liabilities, you could do whatever it wants, right?

But it was clear that those rules were being circumvented. It's also a very weird and counterproductive system if you think about it, because essentially what it meant was that the regulator was never gonna call on security. Until a company was already in financial distress, right? Like the basic design is to say, when you're in bad shape, we're then gonna try to squeeze money out of you.

And, and that can, that goes about as well as you would expect it to, you know, so, so essentially what happens, starting in 2000 all the way to 2020 is just lockstep increase in the inactive well inventory and it rockets up from, or I, I can't remember exactly where it's at, 30 or 40,000 up to 90 or close to a hundred thousand basically by the time we get to 2020, um, you know, oil prices can be high, oil prices can be low, it doesn't matter, you know, and, and actually it's really refreshing in the most recent sort of policy document where the government announced, it's sort of like the direction here.

This is what's called the mature asset strategy, which is what you were referring to in your introduction that folks are trying to push back against. I mean, there's actually a very refreshing and candid acknowledgement. In that document where they basically say, we didn't impose any timelines on abandonment, uh, and on rate run enclosure, and we didn't require any security.

And so the good thing was that that allowed producers to focus on production. The bad thing is that it allowed some to defer their cleanup costs, but in fact it allowed all of them, for the most part to defer their cleanup costs. And so the inventories just grew and grew and grew, and there was nothing that can be done about it.

And it seems like in, in every situation when there was a discussion about maybe we need to do something different, something bad would happen. And of course, oil and gas are volatile commodities, right? They're probably the most volatile oil and gas commodity, or most volatile commodities.

And so we never, we've never had a moment where we could course correct, um, because either things are bad. Everyone's like, you can't insist on us to post or to do this work because we're already barely treading water like we may be entering into here again. Or when times are good, it's like, ah, well it's not a problem.

We don't have to worry about it. Money's flowing. The oil price is good. So it's fine. You know? And I do wanna circle back though, to Sara's point, because I do think it's really important and it's that distinction also between the way, what people say and what people do, you know? And, and one of the things that I find.

What the dynamic that I'm observing right, is, you know, the folks downtown might disagree in, in terms of like, in a discussion about whether they think climate change and climate change policy is gonna have an effect on oil demand, but they're sure as heck acting like they gotta get all the barrels outta the ground as soon as possible.

And, and so that's another big part of this, is that all the effort is being put in right now into production. And, you know, speaking about why I think this isn't gonna get better or worse, like in this space, if prices do go down, you know, it's the, the question's gonna be competitiveness and everyone's gonna talk about being a price competitive jurisdiction.

And, and what are the things that go when you're trying to ensure competitiveness. Environmental standards, right? And so I think we're in a really bad and like I can already sort of see how the next discussion during this glut in oil supply and the subsequent depression of prices, it's gonna be very hard to have this conversation about how do we then fix right? The ship on these liabilities.

[00:24:33] Ed Whittingham: Yeah, it's funny. It's called a mature strategy, and yet we see just through and through so many immature approaches as we pursue Alberta's traditional approach to resource extraction, which always feels like, throw the shovels in the back of the truck, drive out to the resource and, uh, tap it or unearth it as fast as humanly possible.

So, and, and what you said just now, that was a pretty, sort of clear condemnation of the Alberta approach and in that mature strategy with those acknowledgements, it even has hints of, of self-condemnation by admitting, you know, this is what we do. And, you know, I, I, I think the oil sands and the way it grew and working on it in the very early days as the explosive growth was taking off the line was always, well, listen, we're gonna take advantage of what we have now while prices are strong, and then we'll build in those environmental management systems after the fact.

And then by the time, you know, they said, okay, well it's slowing down. Well, no, we can't afford the environmental management systems now because in the boom bust cycle, we've hit a bust and now we're gonna save petties. And so the environmental management systems are always, always playing catch up. But compare Alberta, is it any worse than other oil and gas producing jurisdictions, or is this really a condemnation of the entire industry across the world?

[00:25:51] Martin Olszynski: So I think you know, the costs in Alberta. Are significant. They are, you know, they don't just blend in with the rest. If you think about subnational jurisdictions, like call, like New Mexico, Colorado, Texas, uh, Louisiana, Pennsylvania, California. Right. So we did have folks come in and, and I won't pretend to have a, my grasp on all that, although that's what we're, that's part of what we're trying to kick off.

I think why we had this conference and, and the work that we're gonna do going forward is to really get a handle on this in Alberta. Part of the kicker is the oil sands mines, you know, that really does sort of like take things to that next level, you know? And, and it's to your point exactly like, you know, we, while, while I was in this review in 2020 that the government was running on the, on this mine financial security program, which is what governs the mine side of things, right.

And again, it's an asset to liability approach. And, and so, so long as mines have more assets than they have an estimated liabilities, no security is drawn. But of course. First of all, uh, we don't have any kind of like independent verification of those liabilities. Those estimates are made by those companies.

And what we've seen in the last four years actually is that when the a r aggregates them and publishes them, they're swinging wildly every year. You know, so they're supposed to be, you know, these are supposed to be asset retirement obligations plus other liabilities. They're signed off by A CEO or A CFO, and yet, you know, 60% increase over two years, and then a 10% decrease this year.

And, and so, uh, when we were in that review of the financial security program, one of the things we said was like, can we get some transparency around this? And the regulator refused and the companies refused to sort of, um, to disclose their estimates and, and one, but one of the things that came out was like, well, what's included and what's not included?

And so one of the examples was like tailings, you know, at one point we had the answer from the government was tailings are not included in the liability estimate. Of the MFSP, which we were like, what is going on? How is that possible? And then another, and then, and then they come back to say, well, they're sometimes included as operating costs because there is some kind of treatment being done at, in operation.

And so those go in a different part. But like, it was just very clear that nobody understood really what was going on, and there was no real rigor in and in the scrutiny. And so these are the kinds of issues that, and the concerns that we have is that, you know, like, what are we talking about here? Um, how are we gonna move in this direction?

How are we gonna get to the point that these, these things are gonna be on the landscape? And, you know, and, and to your point, and to Sara's point earlier, you know, some of these reclamation plans, they don't kick in until after 2050. You know, like it's, it's 20 50, 20 55, you know, into the next century.

The planned remediation reclamation for some of these sites is into the next century. And so, yeah, I have a lot of concerns about, um, whether or not we can really take that to the bank in terms of, you know, the money being there for those.

[00:28:34] Sara Hastings-Simon: I wanna shift us to, you know, I am not so naive to think, oh well we get solve it on this call.

But, but hopefully in some direction of, you know, what we're seeing that might be a little bit different. Picking up on Martin, what you were saying. You know, maybe there's the first, uh, signs of government saying, Hey, you know, maybe we didn't quite do the right thing here. Um, I did wanna clarify 'cause I think we jumped right in, but just to, just to be clear, for folks that are listening, we're talking about a liability that is supposed to be 100% paid for by the oil and gas companies.

And this is not some sort of extra charge that goes to them, but this is really part of the negotiated cleanup costs that are part of the royalty regime and, and what companies were on the hook for upfront. So I think sometimes we, I think we jumped in so fast because. To, to ask. That's so clearly part of it.

But, um, but I think that is important to clarify and really the concern is that, you know, these companies may go bankrupt or may cease to exist or, you know, other, other things can happen to them before they're quote unquote able to, to do that cleanup. And so, you know, while they are completely responsible for it, it's the potential that they don't, that's the issue that we're talking about.

But coming back to, to Martin, what you were saying, um, I think you've, you've been following this closely around how this report has been received. How, um, maybe you can talk a little bit more about how that, yeah. How, how it's being received. You know, is there a significance to government sort of admitting that there's a, a change here?

I think I, we were talking earlier about some, other examples of. Similar industries. Maybe they'll all jump in with afterwards, but maybe first to you on that.

[00:30:11] Martin Olszynski: Yeah. Like, it's like a bedrock environmental law principle. Uh, polluter pays, right? And, and to be clear that this isn't charity, it's, it's part of the deal.

You know, like companies go in, they get to profit. Massively from the extraction of these resources, there's certain things that they're supposed to pay for. They pay royalties, uh, they pay taxes. They can pay surface lease, re surface lease payments, and then of course, that they're gonna come up and clean these things up after the fact.

So the mature asset strategy was released in April of this year, and it was preceded by a bunch of, um, working group discussions apparently. And, and so this is all done by the special advisor to Premier Smith here in Alberta, David Yeager. And so he gets together a bunch of government folks and mostly industry folks.

He does include the Rural Municipalities Association of Alberta. And that's an, I think, an important point, and I'll circle back to that in a second. When you look at the six working groups, you know, they, they fall into different sort of headings. And so one of them, the first one actually, is about dealing with rural Albertans, right?

Recognizing that, like, especially in the conventional space this has become a problem. And one of the things that it says in the strategy Frank's, like that the trust is broken between rural landowners and, and the industry. And then that, that's a recurring theme. And that I think is in that story that, that, uh, ed quoted at the beginning.

And, and it's something that is continuing to, uh, I think build. And then there were a bunch of working groups sort of talking about like, okay, how do we do this? There's discussions about, you know, essentially the province encouraging industries to use more oil and gas, and especially gas, uh, whether that's for artificial intelligence or other kinds of data centers, or the idea that we need to just use more of this stuff and that that'll make it more profitable.

And then there are conversations about special corporations harvest cos uh, that would go in and, and again, there's some ambiguity That's part of the trick with this document actually, is like, there are some parts that are really detailed, but other parts that aren't. But in any event, it seems to be like someone's gonna step in, presumably, you know, if this was, if there was a private interest here that wanted to create these.

Specialized companies that just go in and only make as much money as required to clean themselves up. Presumably that would've happened, but, but this is something they wanna explore. And then you know, deregulation, essentially, you know, what they call at the last, at the end there, what's called a risk-based closure.

You know, uh, the idea that somehow the a DR is too rigorous and has been too onerous with, uh, oil and gas companies. And that really we need to downgrade our expectations when it comes to closure that, you know, the costs of remediation reclamation. You know, this is actually a really interesting point, the idea that, you know, because we waited so long, because companies have waited 20, 30, 40 years to deal with this stuff that, well, the standards have risen since then, and now it's more expensive, and then that's unfair for them, and therefore we need to sort of bring them down.

And now, uh, the one thing I just wanna say there is that of course there have also been massive advancements in it and in ai, which apparently I'm, I'm told reliably are, are creating real efficiencies and cost savings. So in some respects, maybe these standards have gone up. But again, I think that there's, it's a funny dynamic there to complain about.

But on the other hand, there are real tangible cost savings just in terms of like doing this work. But, you know, the overall, the general idea here is. We're rewarding neglect, you know, like it is essentially the government putting up a white flag and saying, we're not gonna hold the industry accountable.

We're not gonna require them to fulfill their legal obligations. We're going to essentially. And some of them did. Let's be clear. There are operators who take these responsibilities really seriously and have done good work, but then there's a whole bunch who haven't. And it, and, and it's really interesting 'cause it treats them sort of, it, it kind of tries to suggest that this mature asset problem is really just for like the mom and pop shops, um, who have just been hard done by, in part, by climate activists or something like that.

But when we look at the inventories and we look who owns them, we know that actually the largest holders of inactive assets, for instance, are the most profitable ones in Alberta right now. So it's a, it's a real. Tricky document and like I, I think we tried to be actually fair about it in our criticism or our analysis and, and it took us a long time and, and like I said, there are some useful admissions there.

Um, but on the whole, it really does in some respects actually. It also tries to sort of, I think, rewrite the origin story. It really tries to say that this was like unforeseeable, when in fact it's probably just the most foreseeable result of a policy decision made two decades ago.

[00:34:23] Sara Hastings-Simon: I mean, there's a lot. I think there's a lot in there.

The, the Harvest Co idea is interesting. I've seen proposals. It's probably very different than I imagine what, um, might be imagined here. I've seen proposals from folks like, um, Emily Gruber and colleagues looking at the US and the coal, you know, slightly different context, but, but similarities that talk about, you know, more like nationalization.

Um, but it sounds like that is more of a harvest Co from a, from a private sector, although, you know, in some ways the, the fundamental ideas not so far. So it might be interesting to see what could, uh, evolve there. You mentioned also the, the trust being broken. Um, and you know, I think it's, I think it's fair to say that there's definitely a kind of.

Political pressure element to all of this and, you know, what could counteract or, or get government maybe to act more quickly on this and, and what are some of the things that they could do? I know, ed, you had a couple, uh, things you wanted to raise there, but I just wanted to raise a, a parallel to a story that I've been interested in.

It comes from the tobacco industry, but it doesn't actually even require thinking about. Tobacco Exactly. In the same way as as oil. That's not the, the main point here. But it's rather looking at how coalitions of support from different industry groups actually can work to, um, kind of prevent action from being taken.

And then how the breakdown of those coalitions can lead to action. And so in the tobaccos case, um, for a number of years in the mid to to mid late part of the 20th century, the tobacco farmers and growers in the us. Were one of the largest and really most important groups that was opposed to rules to limit smoking and regulate smoking.

So, you know, not allowing smoking in restaurants or, you know, sort of where, where we find ourselves today. There was a big battle to get those rules in place. And it was actually not the cigarette manufacturers themselves that had most of the power, but it was really these, um, tobacco farmers and growers in some of these regions, like North Carolina and others.

So what happened though was that there was a rift that really formed in the latter part of the 20th century when you had the cigarette manufacturers, um, for I think a number of reasons, probably price and including moving, um, in a big way to imported tobacco. So they were sort of going around the, uh, tobacco farmers.

And, you know, unsurprisingly, maybe as a result of that, lost the support of this, um, you know, key constituency. And, you know, it's always, these aren't perfect models, right? Like, as a scientist, I wanna, I wanna say like, okay, well that, you know, you can't prove that that one falls the other. But certainly people have written a lot about this idea that the breakdown of that coalition was really important in actually allowing, ultimately then these non sm no, um, kind of smoking limitation rules and the many things that have happened that, that have limited the use of cigarettes, um, by people in the us.

And so I do see parallels, again, I don't wanna overstate what's happening here, but, but I do wonder, you know, Martin, and maybe also add as you, as, as you jump in of sort of, is this something that we might see happening, um, in the case here? You know, could, could there be a breakdown of support from what has historically been a very supportive region?

[00:37:40] Ed Whittingham: If I could add to that, Martin, I'd love to turn to you. So possibility of breakdown of support. And I, I really would love to get your commentary on the role of the federal government here as well. So I know, you know, as Alberta is want to remind us on a constant basis, reclamation bond and cleanup, it's all tied to land use and provinces are the ones who regulate this.

But then of course, from time to time, and most recently in COVID, uh, as part of a, uh, you know, a, a COVID spending measure, then we see all sorts of, uh, money, federal coffers being opened to help with cleanup. And it's trumpeted as a good news story. But what traditionally, and, and of course this is against the backdrop of just never ending tension between the federal government and particularly Alberta, also Saskatchewan, on anything to do with energy.

What is the role, the feds here? Where have they been strong? Where have they been weak?

[00:38:36] Martin Olszynski: Okay. So on the first, uh, to Sara's point, yeah, so I mean, I think we are seeing, we are starting to see, you know, and it's been, it's been a, I don't wanna say it's new, uh, in some respects there are folks who have been punching away at this, I think of Mark Doran.

They've had different names as coalitions over, over the last little while. But it does seem that in the last maybe year or so, things are maybe hitting a, a new level. Like, and, and, and there seems to be a sort of a critical mass. And you know, and, and what's interesting about that is that it's folks who, you know, they're not, and, and I think this is really important to say in this space, they're not opposed to oil and gas development.

In fact, they would probably welcome more oil and gas development, but they don't, they want it done. Right? Right. And so we're starting to see them really advocating and really saying, you know, like the, the industry is not a monolith. And, and there are good players and good actors. And then there are are folks who are sort of like a.

Lagging and, and that it's maybe time to start calling those out and that it's time to start distinguishing and differentiating between them. And so I think that that's going to be, that's the interesting thing that's starting to happen, you know, and, and again, I'm, I'm, I know I, I, I don't think I'm entirely within the ivory tower here, but I, I recognize that I have a limited perspective sometimes, but I do try to talk to folks both rural folks, but also downtown.

And I, and I get the sense that at least like in the middle, you know, the, the folks who are working every day. They get it and, and they see it's a problem and they don't like it. And so it really is a question of leadership. I do think that we have just like a, uh, at the top level, whether you wanna call it the C-suite and then the political class, our political leadership, they've sort of decided that we're gonna go down a certain road.

And it's very hard for everyone below that to sort of like change course and to, to adjust. And so that's, that's what we're gonna have to see. And we're gonna have to see whether or not rule out, like rule Albertans in particular are prepared to sort of like zone in on this issue or whether they're gonna get distracted, you know?

And, and you know, I think that that's frankly maybe part of the strategy from the government sometimes is to, you know, like, let's talk about. Pronouns and stuff like that, instead of worrying about what's going on in your land. Right. So if I think if rule out burdens sort of keep their eye on the prize and, and really focus on their land, um, then I think we might see movement here.

To your point, ed, you know, it's, it is interesting. Yeah. So, you know, like the feds did drop over a billion dollars to, to deal with, and a lot of that went to very profitable companies, right. To clean up their assets. Uh, interestingly enough, right? A hundred and roughly one and a 150 million or so was left on the table.

And I think that goes back to the point, you know, I was just making before, is that even with that money on the table being given to you, like every company was like, we're focusing on production, we're focusing on growing production. We don't want to even like divert our. People and our resources to do this cleanup that's being paid for by somebody else, which I really think tells you something about the dynamic downtown, I think, and about what people think is gonna happen in this space.

Um, so that was that, you know, and, but I, you know, my own view, you know, in the past exact, you know, there's been tax breaks, there's been, you know, like we know that the oil sands, for instance, that was in large part facilitated due to changes to the federal income tax code. Um, so I think that clearly the feds do have a role here, but it's not that traditional kind of environmental one, right?

It's not about, you know, like in the oil sands context is different because we're talking about transboundary water pollution. Like the folks in the Northwest Territories are very nervous about what happens with oil sands and with tailings. Um, we have fisheries interests, federal fisheries interests like indigenous peoples and lands reserv for them.

All that falls within the federal wheelhouse. And so there are. There are direct, sort of regulatory levers that I think we could see. In fact, if you think about the, in the summer there was some discussion about a First Nations, uh, clean Water Act. Uh, some of, I think provincial, the provincial sort of unease with that proposal is around the idea that that might find application in the context of the oil stands, for instance, where First Nations are talking about their source water and, and act and source water protections.

But I, I, I wanna sort of like lead or finish this part with just talking about the Bankruptcy and Insolvency Act. And so Federal, the, the bankruptcy insolvency law in CAD is at the federal level. It's a federal jurisdiction. And it seems clear to me, you know, this is kind of like, I think the joke around some of the water coolers, right?

Is like, the best reclamation plan is bankruptcy. And so it's clear to me, and it's been clear to me probably for about a year now, there's something wrong with our bankruptcy and insolvency legislation. And what's funny about this is that the mature asset strategy also identifies bankruptcy insolvency legislation, although I suspect their ideas about how to fix it are very different from mine.

But I am spending now time and I am committing some resources. I won't, I don't want to give away the beg, but, uh, I think that there are changes to the Bankruptcy Insolvency Act that we could make, that would make, that would force directors of companies to deal with their liabilities in a more diligent way.

And if they don't, that they would be per personally liable for those things. Something, you know, something along those lines. So there's a problem in our bankruptcy legislation, you know, and, and, and that's a whole other conversation. 'cause of course everyone will start thinking about red water and that litigation at the Supreme Court.

But suffice it to say that that fixed, you know, that dealt with some part of the problem, but it didn't really get at the core of the issue, which is that I don't think a lot of companies act as if they don't actually have to plan diligently to deal with these liabilities.

[00:43:38] Sara Hastings-Simon: I think, I mean, it's interesting and, and I think it's a good point to emphasize that this is not, sort of the view that there's something wrong here is really distinct almost from, you know, do you think that there should be more oil and gas extraction or not?

Right? But it, it's really about our, our companies doing what they, you know, said that they were going to do. Be generous. I guess I would say that in the absence of the rules that force them to do that, they, you know, many of them are following a clear incentive and, and perhaps what their shareholders want and others.

So, so maybe it really does come back to kind of those rules, which we probably don't have a time to get into it super deeply, but I mean, we've certainly seen that come into play when it comes to renewables with the requirement to have much more sufficient, a much more, um, strict, uh, kind of upfront bonding, uh, of, of projects.

And, you know, I think there is a question of is that done in a way that's unfairly targeting a single industry? But if, if something like that were to be applied broadly to resource extraction, you know, and certainly future resource extraction, I think that would be very protective of the, um, you know, people and, and something that would be.

A, a step in the right direction to saying, you know, look, we've, as you said, I think this is not just an Alberta problem. This is not just an oil, oil and gas problem. I think there's certainly examples of other types of, uh, industrial or, or resource extraction sites in Canada that have ended up with a public purse.

So, you know, it requires sort of a broader wholesale, different approach to basically making sure that it's not just relying on companies doing the right thing.

[00:45:20] Ed Whittingham: Yeah. And to get rid of these perverse incentives and perverse signals. You know, to, to your point, Martin, about bankruptcy. I've used it on this show before.

The example of the, the, the wildcat driller who hits up tier or three orthodontists in Calgary, goes, sinks a bunch of wells, uh, produces a bit, and then just goes bankrupt and leaves those wells as an ugly insult on the landscape. And we see that actually playing out. In actuality, I'm not sure, it's just orthodontists.

Uh, um, there are other trades.

[00:45:52] Sara Hastings-Simon: We're gonna get angry emails from orthodontists, Ed

[00:45:55] Ed Whittingham: more angry emails from orthodontists, more angry emails. But then as well when you've, when you've got the royalty credits or, or, or you've got, uh, the subsidies, then it does send this perverse signal. It's like you don't have to act right away necessarily or immediately on your cleanup obligations because we've got this assistance or compensation that's available to you.

We'll pick up part of the cost and that really weakens. Ultimately, the p polluter pays regime. Not that I'm opposed to governments setting aside some of this money, but that's only as the backstop. That's only as the worst case scenario. We should really just be getting companies paying their full share.

And that gets us, this is a good segue actually. Or I'm calling it a good segue into, uh, audience q and a. Erwin, uh, Dreesen has a question, and this is the topic du jour. Why would the oil companies who have made billions of dollars in profit recently not be a hundred percent liable and as Alberta in as bad a shape as the other subnational jurisdictions?

We talked about other jurisdictions internationally, but uh, yeah, maybe you could comment on say BC and Saskatchewan as well, or maybe a Newfoundland.

So, yeah, so we do know a bit about some of the other jurisdictions. Fact. There was just a piece in The Narwhal like earlier this month or at the end of last month, saying that Ontario's got a massive problem with natural gas wells, I think it is in particular then, and they just have no money for them.

And so, you know, and, and then again, actually, you know, so 20 17, 20 18 was these big years in this space. And so in addition to the Wadsworth AER report, there was a great, great, I can't say enough how wonderful investigative journalism this was, but Jeff Jones and Jeff Lewis at the Global Mail wrote a piece which was unambiguously titled Hustle in the Oil Patch.

Right. And they had spent months, and they also did, you know, documents, they retrieve documents from the regulator. And basically what they were showing was just this like wild selling of and downgrading of assets between bigger companies and more junior companies. Not uniformly, there were some big companies that ate up some of those, those assets at the time, but it was just, it was just the wild, wild west, you know?

And, and so we know. We know so much about this problem. And at that time they also looked at BC and they also looked at Saskatchewan. And there were very similar problems in both. But certainly in Canada, Alberta's like the standout. It is by far, it is heads and shoulders in a bad way ahead of all the other jurisdictions.

And of course that's not surprising. We are also the, obviously the largest producer, you know, in the states. It's really hard. To get a number because the numbers, the, the estimates vary from like 300,000 wells to 3 million wells. When you look at all the different sort of jurisdictions put together. And, and then what's interesting, the impression I got from my colleagues from down there was, you know, really the focus so far in quantification has been on just abandonment.

They haven't even bothered to try to like, get their minds around what remediation and reclamation costs would look like. I, I think I heard out of Europe there's a, there are some banks that are starting to look at this issue and they're thinking about offering pension type funds because they think that that's going to be one of the tools and toolbox that we need to do is sort of like move towards pension type funds that, you know, that operates have to invest in and then can draw from, uh, they can accrue interest and, and, and all that kind of stuff.

Um, and they, that would be a benefit to the operator. But, but finally, those, those funds would be for this, I think they estimated it was like $7 trillion. Globally in oil and gas liabilities. So like, this is the issue of a captured regulator. This is the issue of a captured province. You know, like it does seem to me though, to put $300 billion in perspective, you know, in the metro asset strategy.

Actually Mr. Yager refused. He didn't want to quantify. He, he was like, here are all these wells, but I'm not gonna quantify all the costs together. Wouldn't it be appropriate to do so? But he did see fit to quantify the resource revenues that we have made over 50 years from oil and gas, and that was 550 million billion, 550 billion.

So, like, to give you a perspective that these liabilities could wipe out 60% of the resource revenue, the royalties that we've gained over 50 years from oil and gas, right? So there is no answer other than, because that's what the companies want, and the companies are currently. Running the show, you know, like we know from, again, from all the access to information work that we've done, premium information, like, you know, this is a bilateral relationship between the regulator basically and the industry.

And if the industry doesn't like something, the regulator doesn't do it.

Yep. I, just as you were speaking, I did take a peek and saw that hustle in the Oil Sands article by the two Jeffs, Jones and Lewis. I'm big fans of them. Uh, I like that title and I hope, uh, our listeners will appreciate our little cutesy title, drill and dash.

Which, uh, we don't think has been used before. Yeah. But, uh, you can feel free to prove us wrong. So, uh, Rob Tremblay, a a great friend to this podcast has a question and has to do with the oil sands and growth or lack thereof, given that the oil sands have largely moved on from a build phase. Could the royalty regime be tweaked to add on some sort of liability deposit without the specter of investor uncertainty?

And this is the thing, it's like, yeah, we've talked about it again on the show. The oil sands companies, some of them are kind of functioning almost like income trust now, where they're not growing, they're taking their assets and they're gonna milk as much value outta them as they can. And then when they're done, they're done.

What can you do with an asset base, uh, that really isn't growing anymore? It's, it's stasis.

[00:51:24] Martin Olszynski: Yeah. I think you can do a lot. I think you can do that. And so this is like the, one of the fundamental questions that we have a hard time sort of, I think it's like I. Is this just something that industry doesn't want to pay?

'cause it would prefer not to, and it has enough power within the regulator and within the government that it gets away with that. It's just like, we, why would we pay for something We don't want to, we don't wanna do it. Or is it existential? If we've created a, a, a regime that actually works to generate funds to set aside funds for this cleanup in the future, would it be an existential threat to the industry?

And I can't answer that. I, you know, and I, but it is, you know, all I can do is kind of go from, you know, it seems like we get such like forceful pushback anytime we talk about anything reasonable. Then that tends to suggest that this is some kind of like significant threat. And, and then I think it goes back to, you know, like the discussion that we were having earlier about the current glut and, and the issue of competitiveness, right?

Where, where like, you know, think about it, uh, in terms of like what we're talking about, like automation, we know already that the, the miners are moving towards automating trucks, for instance, right? And so, you know, like where the savings, like, I don't know what they are, they're probably in the hundreds of millions or something like that.

But it, but it, you know, you get the impression that like every dollar counts, every dollar per barrel counts and every additional cost is, is going to be under the, under the pretext of competitiveness. I think they will resist it fiercely. Um, and so that, but, and so that's why, you know, actually what we always call for in this context, you know, we can talk, you know, to Sara's point earlier, why don't we just level the playing field tomorrow?

Just impose the same requirements on everybody else that you've just foisted onto the renewable sector. And I would be a happy dude, at least on a go forward basis. Doesn't address the, the old stuff, but it deals on a prospective basis, put everyone on, on, on an equal ground. And yet, like everyone in the industry, I think, or in the regulator anyways, and within government would roll their eyes at that suggestion.

So that's, you know, that gets at part of that problem is that we don't know exactly how bad or how significant a cost pressure this is going to be, but you do get the impression that as time goes on and if the prices stay low. They, they consider any additional cost to be a problem and they resist everything.

And, and again, they're entitled to do that. But the regulator's job and the province's job is to keep an eye out for all of us. And I don't see how, I don't see that bounce happening. And so then the point was we need an inquiry. We need a public inquiry that actually gets at this in a transparent way where the evidence can be like the brought forward and tested and, and, um, and then we get a report like they did for the renewables, right?

The a UC did it in like five, six months. So let's, let's get on with that and, and really to answer, to be able to answer that really difficult question, I think we need to go there.

[00:54:03] Sara Hastings-Simon: Resistance is an interesting one that you bring up. I mean, again, I think that I would argue is not at all unique to the oil and gas industry and there's been some interesting work done looking at, uh, you know, back at the sulfur when we were dealing with sulfur rain, right?

And there was the, um, some of the, the. Pretty strict, I guess, or at least effective, let's call it regulations that were brought in. And the estimates from the companies for the costs of those regulations before they were imposed were much, much higher than the costs were ultimately. Um, there's quite an interesting report, I'm blanking on who, I'll try to put it in the show notes if I can remember where it's from, but they, they really showed that that is pretty consistent across industries as a whole.

Um, and I actually think that it really speaks to the need to have strong capacity within the government and within the regulator, because as you say, Martin, I mean there. There is a need to understand, you know, some things are just hard to do and expensive to do. And so the, I think in order to even be an effective regulator, it's not just that you have to sort of want to have a certain outcome to protect the, the public, but you actually have to have quite a lot of knowledge and information about the, the companies that you're trying to regulate.

And of course that's a very tricky balance because, you know, too, too much crossover and you create, um, kind of the wrong kind of incentives. But at the same time, you know, this goes back to really kind of that fundamental government capacity and the need for the regulator to have that knowledge to be able to independently verify and, and kind of have their own opinion on what's doable and what is too big of an ask.

[00:55:36] Ed Whittingham: Yep. Um, listen, we don't have much time and I'm gonna try to squeeze in a couple more questions. I, I do want to note for the record, mark Doran pointed out that they actually are using, and I'm not sure that we in this case, so well, it's, uh, those behind the Cleanup Your Mess campaign, they are using drill and dash.

So it's good, it's shareware, keep using it, and they're using in the campaign to fight the mature asset strategy. Okay, this is a big question, uh, and I'm gonna paraphrase what Aaron Cosby said. Uh, and my paraphrasing is kind of the, so what issue, so for a lot of people and, and urban Albertans, which is the majority of Albertans these days, these are out of sight outta mind.

So, so what, what if we don't clean them up? What, what are the sort of the downside socially and environmentally? And then ultimately into paraphrase a couple other questions from Amanda Bryant and then also from James Van Lewin. What hooks are really going to move companies? Is it, you know, you have to use a market access hook is competitiveness.

Or, uh, as, um, James, uh, puts in this question here, is there some entry point for the global investment community, big institutionals, or maybe even the reinsurance industry? So, sorry, that's a lot to throw at you, Martin. You'll get the last word. We're gonna run a bit over time, but, uh, over to you.

[00:57:02] Martin Olszynski: Yeah, so I mean, on the first one, uh, yeah.

So like these things, some of them are probably reasonably innocuous, but a lot of them are actually really problematic. So they, they can be groundwater contamination, there can be ground soil contamination in the vicinity of the well. Um, these things leak. Methane, uh, studies suggesting that the methane leakage outta these things is actually seven times higher than officially being reported.

And that varies again, from basin to basin. But, you know, so generally speaking, these things are bad actually. And, and of course there's just like the opportunity cost to the landowner. They have to deal with this thing on their, on their landscape, and it's, we know that it's affecting sometimes potential property transactions and things like that, um, and use, right?

So, no, they're, they're bad and they should be removed. Right. You know, onto the second question. I mean, you know, uh, you know, fundamentally the issue I think has to be one of. We're having this conversation, I guess, in Canada right now, about what kind of a con like, you know, there's this pretext of the Building Canada Act, you know, there's all this demand to like, we need to build more, we need to be an energy superpower.

And I, I guess for me, one goal and why I think the kind of con this kind of conversation is so useful is that it has to be part of the conversation. These liabilities have to become part of the conversation because it changes the arithmetic. I think, you know, like we already know that like TMX costs $30 billion, for instance, right?

And so we're now we're talking about another publicly subsidized pipeline we're talking, you know, and in that when you dig down though, here in Alberta, you start to find out, oh, there's like 250 million in unpaid rural taxes and there's $150 million that the government has paid in, in delinquent surface lease payments.

And so like we gotta add all that up. I think when we start to have this conversation about which wage do we have to go, what is actually good? For Canadians and, and then in Alberta, what's good for Albertans. And so I, I have to think that the, the where, where the conversation starts anyways, you know, the, the tools themselves, I think are there, you know, like we can, we can implement the tools.

It has to be a question of, uh, policy, public debate, and public pressure really to, to drive changes in, in the behavior here.

[00:59:03] Ed Whittingham: Okay, we're at time. Um, we clearly have not exhausted this conversation. I feel like we could have gone an entire extra hour. Uh, but I'm sure people who want to continue, uh, uh, uh, talking about this, Martin, where can people find you?

[00:59:20] Martin Olszynski: You know, I, you know, I spend most of my time, it feels like on LinkedIn lately. Uh, I did leave x um, I do also, every once in a while I'll jump on the blue sky, but then of course, you know, I'm on, I'm a, you know, we have a, university of Calgary has a website. I have a faculty profile page, and all my information's there whether I like it or not.

So, um, yeah, folks can find me on LinkedIn or Blue Sky or, or just on the faculty website there and, and shoot me an email if they're interested in knowing more about this.

[00:59:44] Ed Whittingham: Well, good. I encourage people to seek you out because, uh, yeah. I apologize for all the questions that we just did not have time to get to.

So thank you Martin, very much for, uh, for joining us this afternoon. It was a rich conversation and we look forward to more. Thanks for having me.

[01:00:00] Sara Hastings-Simon: Thanks Martin.

[01:00:02] Ed Whittingham: Thanks for listening to Energy Versus Climate. The show is created by David Keith, Sara Hastings-Simon and me, Ed Whittingham, and produced by Amit Tandon.

Our title in show Music is The Windup by Brian Lips. This season of Energy versus Climate is produced with support from the North Family Foundation, the Consecon Foundation, and you, our generous listeners. Sign up for updates and exclusive webinar access at energyvsclimate.com and review and rate us on your favourite podcast platform. This helps new listeners to find the show.

If you enjoy this episode, check out our show from season five, episode nine, called Energy versus Oil Sands. How did we get to 3.5 million barrels per day and what do we need to do about it? That show is with Dr. Andrew Leach at the University of Alberta.

We'll be back with a new show in November about energy transition in India. It features special guest Jai Asundi of the Center for Study of Science Technology and Policy an Independent Indian Think Tank. See you then.