Trudeau announces aid for struggling energy sector, including $1.7B to clean up orphan wells

Prime Minister Justin Trudeau has announced $1.7 billion to clean up orphan wells in Alberta, Saskatchewan and British Columbia, as well as supports for rural employers and those working in the arts and culture sector.

Measures announced this morning also include help for cultural sector and rural employers

Prime Minister Justin Trudeau addresses Canadians on the COVID-19 pandemic from Rideau Cottage in Ottawa on Friday, April 17, 2020. (Sean Kilpatrick/The Canadian Press)

Prime Minister Justin Trudeau has announced $1.7 billion to clean up orphan wells in Alberta, Saskatchewan and British Columbia, as well as aid for rural businesses and people working in the arts and culture sectors.

The money for cleaning up orphan and inactive wells is expected to help maintain 5,200 jobs in Alberta, which will receive about $1 billion of the funding.

"Our goal is to create immediate jobs in these provinces while helping companies avoid bankruptcy, and supporting our environmental targets," Trudeau said.

Orphan oil and gas wells are those abandoned by developers who can't be located, have gone bankrupt or don't have the financial means to pay for proper decommissioning. According to Finance Canada, there are about 4,700 orphan wells in Alberta, 600 in Saskatchewan and 350 in British Columbia.

There are another 91,000 inactive wells (ones that are no longer productive) in Alberta, 36,000 in Saskatchewan and 12,000 in B.C.

The federal government estimates cleanup costs for individual wells can range from $100,000 to several million dollars, depending on the size and complexity of the well.

During today's daily briefing outside his residence at Rideau Cottage, Trudeau also announced the government will establish a $750 million emissions reduction fund, with a focus on methane, to create jobs through efforts to cut pollution. The fund includes $75 million to help the offshore industry cut emissions in Newfoundland and Labrador.

"Just because we're in a health crisis doesn't mean we can neglect the environmental crisis," Trudeau said.

Watch: Prime Minister Justin Trudeau questioned about energy industry support plan:

Trudeau questioned about Energy industry support plan

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Featured VideoPrime Minister Justin Trudeau spoke with reporters on Friday

Trudeau said the government is also working to expand credit for medium-sized energy companies so they can maintain operations and keep their employees. Support will be provided through the Business Development Bank of Canada and Export Development Canada to provide "rapid access" to financing required to maintain operations and keep employees working.

He also announced $962 million for regional development agencies to help smaller employers in rural areas that do not have access to traditional financial institutions like banks and credit unions.

Another $500 million will go to support Canadians who work in the arts, culture and sports sectors.

That funding aims to help organizations that have lost revenue due to cancelled events but can't access other support measures like the wage subsidy program because of seasonal revenues and costs.

Trudeau also announced $270 million for a program to help entrepreneurs, innovators and startup companies — including $20 million for Futurpreneur Canada, a non-profit organization that finances and mentors entrepreneurs aged 18 to 39. The Industrial Research Assistance Program, which helps small and medium-sized businesses enhance innovation, will get $250 million.

Alberta Premier Jason Kenney was quick to praise the move, thanking the federal government for helping to fund the cleanup of orphaned and abandoned wells.

"This is critical to getting thousands of people in the energy sector back to work immediately," he tweeted.

Speaking at his own news conference before the government's announcement, Conservative Leader Andrew Scheer said Conservatives have long supported the idea of providing assistance to clean up orphaned oil wells, but urged the government to deliver the help fast.

"I remind you that (Finance Minister) Bill Morneau said that help for the energy sector would be hours or days away, certainly not weeks. He said that over three weeks ago. People suffering from this pandemic and the other hurdles that are in place in the energy sector are suffering in real time," he said.

"They were promised help almost a month ago. So we'll see what happens today or in the coming days. But we're very disappointed at the pace that this program is being rolled out."

Watch: Scheer says the government has been slow to help oil sector workers

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Featured VideoConservative Leader Andrew Scheer takes questions from the CBC’s Julie Van Dusen about the government's moves to get the economy on track and to help the energy sector during COVID-19.

NDP natural resources critic Richard Cannings said it's encouraging that the government "listened to the NDP and to oil and gas workers" and is funding orphan well cleanup.

"These projects could quickly create jobs for workers affected by the price of oil and the COVID-19 crisis. They should, however, be seen as the first step in building the next generation of good jobs in Alberta, Saskatchewan, B.C. and Newfoundland and Labrador," he said in a statement.

More help needed for energy sector: Stubbs

Conservative natural resources critic Shannon Stubbs said Conservatives support increased liquidity and orphan well remediation, but more is needed to help the struggling oil sector.

"The measures announced today are a first step, but there is much more to be done to protect Canadian energy jobs and the entire Canadian economy," she said.

"Conservatives released a package of measures two weeks ago calling for action to support energy workers – especially when the future health of Canada's economy rests on the government implementing emergency measures to ensure the sector's short-term survival and its long-term recovery."

She repeated Conservative calls to cancel the carbon tax and to scrap measures the party says are delaying pipeline infrastructure.

'Win-win' for environment, employment

Merran Smith, executive director of Clean Energy Canada, said matching oil and gas aid with environmental cleanup is the right approach and represents a "win-win" for both employment and the environment.

"It sends an important signal that the federal government doesn't intend to back away from its climate plan, but rather is inclined to orient relief and, we hope, subsequent stimulus efforts towards activities that are aligned with their climate commitments and will reduce pollution," she said in a statement.

The new measures announced today are in addition to previously announced programs to support struggling businesses, including a 75 per cent wage subsidy for businesses of all sizes, charities and non-profits.

The federal government is also backing loans of up to $40,000 for businesses that have a payroll between $20,000 and $1.5 million a year. Up to $10,000 of the interest-free loan is non-repayable.

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Trudeau announces support for the Energy industry

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Featured VideoPrime Minister Justin Trudeau spoke with reporters on Friday

To date, 220,000 loans worth $8.8 billion have been approved.

Morneau said today all the measures the government has announced are intended to get people working, and signalled that more supports are on the way.

"It's about jobs in places where we don't have access to jobs. So I think this is critically important for people in those places where they're seeing extreme challenges, and we need to recognize we will have other measures talking about how we provide credit across medium-sized businesses and larger businesses," he said. "And there's more for us to talk about in that regard in the coming days."

Forestry sector seeks supports

Derek Nighbor, president and CEO of the Forest Products Association of Canada, said the forestry sector is also struggling.

He's appearing before the House of Commons finance committee today to tell MPs that lumber markets have seen a 40 per cent price drop recently and many sawmills have temporarily shut down, putting thousands of people out of work.

He said the ripple effects are now being felt by pulp mill workers and their communities.

"We are a highly integrated sector. Our sawmills are our industry's heartbeat. We need to find a way now to keep our sawmills operating so chips can continue to feed our pulp and paper mills. If we don't have chips flowing, our industry's biggest artery is cut off and thousands more will be out of work," Nighbor said.

The business model for many companies in the forestry sector makes them unable to access the wage subsidy program. He called for adjustments to the eligibility criteria to allow more companies to qualify, as well as measures to help companies with liquidity through the critical next few months.

"Our industry is not looking for a bailout, but rather bolstered cash flow supports to keep our businesses operating through these difficult next two to three quarters," he said.

Finance Canada said additional credit programs will be made available for small and medium-sized firms in other sectors, including forestry and retail, whose financing needs are not met through programs announced to date.

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