Wasted Natural Gas Royalties Cost Albertans 420 Playgrounds

Albertans’ money is literally floating away into thin air.

A new briefing note from the Pembina Institute shows that Albertans are missing out on significant revenue that could pay for new schools, playgrounds or nurses because oil and gas companies are wasting natural gas.

Up to $21 million a year in in provincial natural gas royalties are lost because oil and gas companies let natural gas escape either through undetected leaks or intentional venting. It’s not insignificant — $21 million here, $21 million there, eventually you’re talking about real money. After five years, that’s $105 million that’s disappeared forever instead of funding:

• 25 new schools or school modernizations

• 420 new playgrounds across Alberta

• 181 new nurses

Let’s be clear about what’s happening here: private interests are being allowed to dump a valuable resource, a resource owned by the public, into the atmosphere just so they can shave a few tenths of percentages from their operating costs.

Without regulations, there’s little incentive for companies to restrict the venting and leaking of natural gas, and money that could be going to schools, playgrounds and nurses is instead floating away into the atmosphere making climate change even worse.

Albertans only get paid for this resource when oil and gas companies pull this stuff out of the ground, sell it and then pay royalties to the provincial government. When companies just dump it into the air, the public gets nothing.

Well, that’s not entirely true — they do get a more polluted atmosphere.

The primary component of natural gas is methane, an extremely potent greenhouse gas that’s dozens of times worse than carbon dioxide for the climate. Alberta’s oil and gas facilities are Alberta’s largest source of methane pollution making up 70 per cent of all provincial methane pollution and 25 per cent of all greenhouse gas pollution from the upstream oil and gas industry. And there’s new research to suggest that those numbers are drastically under-reported.

As part of Alberta’s climate plan government, industry and environmental groups are in the process of developing regulations that would reduce methane pollution 45 per cent by 2025. But those negotiations have stalled.

To make matters worse, while regular Albertans pay a carbon tax on natural gas, gasoline and diesel oil, gas companies were given an exemption from the carbon tax on their wasted natural gas in exchange for these promised regulations. It’s worked out well for them — still no regulations — and if they were paying the carbon tax on their wasted natural gas, they’d be on the hook for $1.4 billion to the Alberta treasury.

Talk about a market signal. I imagine the oil and gas companies would have plugged those leaks pretty fast if they were paying the true cost of their wasted natural gas.

Albertans are losing money, and the oil companies continue to put what is convenient to them ahead of what is good for Alberta. It’s so frustrating because this was supposed to be the easy part of Alberta’s climate plan. This was the low-hanging fruit.

Methane is a real climate problem, but it is one that is solvable. Research by David Tyner of Carleton University finds that Canada’s oilpatch could be reducing wasted natural gas for “near-zero” cost. When you talk about reducing emissions from big oilsands projects, you’re talking about hard, expensive projects. For stopping wasted natural gas, you’re talking about pointing an infrared camera at oil and gas infrastructure twice a year, fixing leaky valves, seals and compressors and installing cheap sensors that can tell you when your money is floating away.

There are many Alberta companies chomping at the bit to get started in this space, but they can’t until the regulations are in place and being enforced. Questor Technology, a Calgary-based company that specializes in this field, just announced record revenue in the last quarter. The reason for their success is not because of working in their home province but because of work they’re doing in Colorado — a state with strong regulations to stop wasted natural gas.

Enough is enough. The Alberta government needs to bring in effective regulations to stop oil and gas companies from frittering away our precious natural resources. We only get one crack at collecting this money, and it’s irresponsible to just let it disappear into thin air. Let’s stop wasting natural gas and instead start building more schools and hiring more nurses.