Alberta's energy regulator is boosting the size and scope of a program meant to ensure future generations aren't left footing the cleanup bill when an oil and gas producer goes bust.
The Energy Resources Conservative Board (ERCB) announced Tuesday that as of May, it will require 248 small, medium and large-sized energy companies to post a financial security totalling $297-million over three years for the Licensee Liability Rating (LLR) program, meant to ensure oil and gas facilities are properly abandoned and reclaimed no matter what happens to the operator. That's up from the 88 companies required to pay $13-million a year since 2006.
The LLR program requires an operator to post a security when its liabilities exceed its assets – an issue that might be more pertinent as producers struggle with pipeline constraints and price instability.
"The world has changed significantly over the last seven years," ERCB spokesman Darin Barter said. He said the Canadian Association of Petroleum Producers and other producers "recognized it was time to be more accurate with this liability program."
Mr. Barter said industry has known changes were in the works for months, but heard final confirmation of the numbers on Tuesday.
"The public should never be on the hook to pay for an abandoned well or pipeline, or any type of facility."
As of March 1, the ERCB regulated 875 licensees, meaning about 28 per cent of the companies the regulator oversees will now be asked to pay the required security deposit. If they don't, the ERCB has the power to take enforcement measuring including ordering a facility shutdown.
In recent years, environmentalists, landowners and the province's auditor general have criticized the ERCB for its commitment to such issues, saying it needs to better monitor timelines for well cleanup to ensure the costs never fall on the shoulders of future oil and gas producers, or Albertans.