{"id":339520,"date":"2025-12-12T02:51:07","date_gmt":"2025-12-12T02:51:07","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/339520\/"},"modified":"2025-12-12T02:51:07","modified_gmt":"2025-12-12T02:51:07","slug":"albertans-at-risk-of-paying-oil-sands-reclamation-costs-auditor-general-says","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/339520\/","title":{"rendered":"Albertans at risk of paying oil sands reclamation costs, Auditor-General says"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

Oil processing waste goes into a tailings pond at an oil sands operation near Fort McMurray, Alberta, September, 2014.Todd Korol\/Reuters<\/p>\n

Albertans risk being on the hook for billions of dollars\u2019 worth of cleanup of the oil sands <\/a>under current rules that govern security payments for the massive mining operations, according to a new report from the province\u2019s Auditor-General. <\/p>\n

The funds held through the Mine Financial Security Program amounted to just $1.8-billion as of September. Meanwhile there is an estimated reclamation liability of $51.9-billion, the Office of the Auditor-General found in a report released Thursday. That amount represents the potential cost to clean up mines at the ends of their lives. <\/p>\n

But the province said it won\u2019t pursue what it called a \u201cflawed recommendation\u201d by Auditor-General Doug Wylie to revisit how asset values are calculated under the MFSP. Instead, a statement from the office of Environment Minister Rebecca Schulz said that the program is \u201cstronger than ever.\u201d <\/p>\n

The MFSP is administered by the Alberta Energy Regulator<\/a> using policy guidance from the Environment Ministry. The AER collects funds from oil sands and coal mine owners as security to ensure that the companies can cover the cost of cleaning up their messes, rather than foisting the bill onto taxpayers.<\/p>\n

Insufficient disclosure obscuring billions in Alberta oil sands liabilities, advocates say<\/a><\/p>\n

But in his latest report, Mr. Wylie said that the way that the program calculates the value of assets risks overstating their economic worth, and therefore the companies\u2019 ability to cover cleanup costs. <\/p>\n

\u201cIf MFSP assets are overstated, operators might not pay the necessary security, leaving Albertans at risk of bearing the financial costs of oil sands mine reclamation or the mines being unreclaimed,\u201d he wrote. <\/p>\n

The government rejigged the MFSP last year in response to earlier investigations by the Auditor-General\u2019s office. Under the changes, companies will no longer be able to use off-site mine reserves as collateral to backstop reclamation responsibilities and the valuation of some oil reserves was adjusted to better ensure companies can cover future cleanup costs.<\/p>\n

But critics argue the MFSP remains flawed for various reasons, including that it doesn\u2019t require operators to post full security until six years before the end of mine life, even when assets risk losing value. <\/p>\n

Where mines in other jurisdictions often require full security to cover a project\u2019s eventual cleanup costs, that\u2019s not the case for the oil sands under the MFSP, Eric Leonty, assistant auditor-general, said in an interview Thursday. <\/p>\n

The calculation under the MFSP should ensure the fund\u2019s assets are sufficient to cover the liabilities over the long term and are \u201cas reflective of reality as possible,\u201d he said. But as it stands, \u201cthere\u2019s a greater risk that you might need more security; that if those asset values are overstated, it\u2019s less likely that you\u2019re collecting and getting security when you need it.\u201d<\/p>\n

In his Thursday report, Mr. Wylie repeated an earlier recommendation that the Environment Ministry make changes to asset calculations used by the program. <\/p>\n

\u201cThe risk of overstatement remains high,\u201d Mr. Wiley wrote. While the ministry argues that formulas used by the MFSP \u201care reasonable and that the MFSP is functioning as intended,\u201d he added, \u201cwe found no evidence to support these claims.\u201d <\/p>\n

Ms. Schulz\u2019s office responded that the program\u2019s calculations \u201cmake sure that Albertans are protected at all times.\u201d<\/p>\n

\u201cThe OAG is recommending an approach that is different from how assets are calculated in any other industry. It would make the program less effective and more volatile, without increasing protection for taxpayers.\u201d <\/p>\n

Alberta vows to implement new standards for releasing treated oil sands mine water<\/a><\/p>\n

Andrew Leach, an energy and environmental economist at the University of Alberta, said the problems with the MFSP run far deeper than just how the value of mining assets are calculated. <\/p>\n

\u201cIt allows companies to use the value of Crown resources as security against a future liability to the Crown. That\u2019s completely backwards,\u201d Prof. Leach said.<\/p>\n

The way the MFSP is set up means that the government will come asking companies for a security deposit well into the future, he said, \u201cwhen they get much closer to bankruptcy.\u201d <\/p>\n

\u201cThat should raise red flags,\u201d he said.<\/p>\n

The MFSP was at the heart of a lawsuit launched<\/a> by the Athabasca Chipewyan First Nation in April. The community argued that the province had failed to address a host of fundamental flaws in the program, thus undermining the eventual cleanup of oil sands sites and putting the environment at risk.<\/p>\n

Athabasca Chipewyan argued in its lawsuit that the MFSP is \u201cgrossly inadequate for achieving its intended purpose.\u201d The claims have not been proven in court.<\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: Oil processing waste goes into a tailings pond at an oil sands operation…\n","protected":false},"author":2,"featured_media":339521,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[901,888,902,879,877,903,49,48,876,895,896,891,878,875,46,549,295,894,887,914,880,881,893,889,890,884,904,885,909,910,912,907,911,905,908,882,898,899,714,897,906,66,865,61,900,892,886,883,913],"class_list":["post-339520","post","type-post","status-publish","format-standard","has-post-thumbnail","category-environment","tag-alberta","tag-arts-news","tag-bc","tag-breaking-news","tag-breaking-news-video","tag-british-columbia","tag-ca","tag-canada","tag-canada-news","tag-canada-sports","tag-canada-sports-news","tag-canada-trafficcanada-weather","tag-canadian-breaking-news","tag-canadian-news","tag-economy","tag-education","tag-environment","tag-federal-government","tag-foreign-news","tag-globe-and-mail","tag-globe-and-mail-breaking-news","tag-globe-and-mail-canada-news","tag-government","tag-life-news","tag-lifestyle","tag-local-news","tag-manitoba","tag-national-news","tag-new-brunswick","tag-newfoundland-and-labrador","tag-northwest-territories","tag-nova-scotia","tag-nunavut","tag-ontario","tag-pei","tag-photos","tag-political-news","tag-political-opinion","tag-politics","tag-politics-news","tag-quebec","tag-science","tag-sports-news","tag-technology","tag-travel","tag-trudeau","tag-us-news","tag-world-news","tag-yukon"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/339520","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=339520"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/339520\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/339521"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=339520"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=339520"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=339520"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}