In a remote corner of Alberta, the oilpatch tells a tale of doom

Canada's main oil and gas lobby group is making some dramatic warnings about government efforts to reduce dangerous pollution.

The Canadian Association of Petroleum Producers (CAPP) rolled into the rural Alberta town of Bonnyville on Dec. 6, sounding the alarm about federal and provincial efforts to crack down on methane, a powerful greenhouse gas. The proposed rules are designed to significantly reduce pollution and to require more transparency from industry.

The association says it agrees with the federal and provincial governments' goal of slashing methane pollution by nearly 50 per cent. But it's also lobbying for Alberta to weaken the rules currently being finalized to achieve that target, saying it wants a more "flexible" approach for industry. It says that thousands of jobs are at risk if governments don't adopt the industry's solution.

"Our argument is not about the [methane] target. We can get there. The question is how, and it's important that we get it right for business, because it will have a negative economic impact if we don’t get it right," Chris Montgomery, CAPP's manager of exploration and production communications, told a business crowd gathered in Bonnyville, about a three-hour drive from Edmonton. The event was hosted by the local chamber of commerce.

Trying to 'figure out' oilpatch group's numbers

While the industry group warns tough regulations could cost the province thousands of jobs, environmental policy research groups are skeptical of these gloomy estimates, pointing to other research that shows the opposite — thousands of anticipated job gains.

"From our analysis, we actually can’t figure out how they get the numbers they get,” said Duncan Kenyon, director of the Pembina Institute's responsible fuels program, after CAPP's presentation.

In a follow-up interview Dec. 13, he said additional information CAPP provided to National Observer about its methane plan still didn't clarify how the group derived its numbers.

CAPP’s analysis also seems to contrast with calculations done by the federal environment and health departments, which projected a surplus of billions of dollars due to avoided climate change costs.

While this federal analysis did acknowledge that the approach embraced by CAPP provided flexibility for industry, the government said the high degree of participation required would render it insufficient for enforcing targets. The government concluded it was therefore "not likely” to achieve the pollution reductions needed.

Job losses?...

Methane, which makes up 95 per cent of natural gas, is 86 times as powerful as carbon dioxide in trapping heat in the atmosphere over a 20-year period, which makes cutting it an effective way to cut carbon pollution quickly.

The energy sector in Canada was responsible for the largest portion of Canada's methane emissions in 2015, according to the country's national emissions profile. Energy firms put methane gas into the air in several ways: by deliberately venting or flaring it off, by using it in pumps or controllers, and by accidentally releasing it from faulty equipment.

Alberta, where the oil and gas sector accounts for 70 per cent of provincial methane emissions, is currently hammering out draft regulations for how the province will cut its methane pollution. It has convened industry and government together under a Methane Reduction Oversight Committee, which CAPP recently joined.

The lobby group says it has done its own “economic modeling” and has determined that its plan to cut methane gas will avoid “the cumulative loss of nearly 7,000 jobs" and $700 million over eight years.

That's compared to a hypothetical scenario it developed by drawing from the statements of "several environmental non-governmental organizations" and the federal government, according to media relations manager Chelsie Klassen.

CAPP says those job losses will occur if the province decides to regulate methane pollution facility-by-facility. CAPP's plan would allow fossil fuel firms to come up with their own way to reach proposed targets.

But in Bonnyville, Montgomery couldn't show the data or methodology behind the numbers. He said CAPP hasn't released those, he didn’t have the numbers with him and didn't work on the data himself.

National Observer asked the CAPP head office to disclose its data and methodology. In response, Klassen outlined more details of the plan.

She said it was based on two cases: "estimates of compliance costs based on recommendations developed by industry to achieve the goal at least cost," and "estimates of compliance costs associated with an alternative option."

She said the difference between those two estimates comes from money it assumes "could be otherwise spent on capital investment in oil and natural gas production in Alberta."

"We used a typical well that could be the target of this investment to generate some of the financial and taxation information — royalties and corporate income tax," added Klassen. "The financial information was used to estimate some of the other socioeconomic impacts" like jobs and personal income taxes, she said, using Statistics Canada data.

...Or job gains?

Nothing in that response "provides any more clarity on how they derived their [job loss] numbers," argued Kenyon.

"For example, the typical well assessment is based on numerous assumptions." he said. "There is no clarity on what those assumptions are and as a result no one can actually understand their numbers.

"There is a large range of different values that could be picked for each of these assumptions, and what is selected can have dramatic impacts on the outcome of the analysis."

Kenyon also said the debate over jobs numbers should take into account the fact that Alberta methane emissions have been vastly underestimated, as a recent study uncovered.

“Without having a dramatic and drastic improvement to the reporting, no one will be able to know whether or not industry at any individual site or anywhere is actually reducing their emissions,” he said.

Montreal environmental non-profit Équiterre's government relations director Annie Bérubé pointed to a study by Blue Green Canada, an alliance of Canadian labour unions and non-governmental organizations, as showing that a burgeoning methane regulation industry will actually create thousands of jobs a year.

“Our position is that there are huge gains to be made from reducing methane at a very low cost,” said Bérubé in an interview. “The federal government has to step in. They have clear jurisdiction, they don’t need to wait for Alberta, and they certainly don’t need to rely on CAPP’s voluntary approach.”

The U.S.-based version of the group, Blue Green Alliance, estimated in 2016 that tackling methane emissions would create the equivalent of 5,400 jobs per year south of the border.

“Based on our calculation that the Canadian oil-and-gas sector releases about one-quarter of the methane released by the U.S. industry,” Blue Green Canada wrote, “this suggests that there is an opportunity to create more than 1,500 similar jobs in Canada each year.”

Over a decade, that works out to over 15,000 years of employment for the oil-and-gas sector, it said.

The federal government’s impact analysis of its own methane regulations also shows not only that new rules won't cost anything — they will actually result in a net surplus of billions of dollars, on top of saving hundreds of megatonnes of pollution.

That’s because, while it estimates that its regulations will cost $3.3 billion, it also estimates it will help avoid a whopping $13.4 billion worth of damages associated with climate change.

The government says its proposed regulations will also lead to the recovery of $1.6 billion worth of natural gas, an added bonus to the surplus side of the ledger. It projects a net benefit of $11.7 billion altogether.

The cleaner environment that comes with the regulations is significant as well. Canada estimates that between 2018 and 2035, it will save approximately 282 megatonnes of carbon dioxide equivalent with its proposed regulations in place.

To put that in context, that is the equivalent of almost 40 per cent of Canada’s total carbon pollution in all of 2015.

Energy firm touts its own job-loss figure

Bonnyville, some 240 kilometres northeast of Edmonton, sits in the province's Cold Lake region, one of the three main oilsands areas. The region holds vast oil reserves and has seen attention from energy firms.

Canadian Natural Resources Limited (CNRL), a CAPP member, maintains an address in Bonnyville and the firm contributed $1 million to the town's community and recreation centre, according to the Bonnyville Nouvelle.

That venue, which prominently bears CNRL's logo, housed CAPP's presentation last week, and local CNRL staff were in attendance, although they didn't give any presentations, according to spokeswoman Julie Woo.

Woo said the energy firm has come up with its own job-loss number, based on its own analysis. The firm estimates that "4,000 fewer jobs would be created across industry 2018-2025," based on projections that involve oil and gas firms abandoning projects and "lost investment opportunities," she said.

Similar to CAPP, the firm assumes that money that is used to pay for complying with the anti-pollution regulations could have been spent on new oil and gas activity, she added.

Meanwhile, Montgomery's presentation pointed the finger at the Alberta Energy Regulator (AER), which he said hasn’t shared its own data in committee meetings.

“They’re coming to the table in their discussions with industry on premises that we don’t necessarily agree with,” Montgomery said. “We’re finding it very difficult to get an understanding of where they’re coming from in their analysis.”

Regulator spokeswoman Cara Tobin said in an interview that the AER has “shared and discussed inputs and assumption" with the committee but is waiting for policy direction from the provincial government in order to carry out a full economic analysis.

That won't happen until the government compiles the feedback from the committee and provides it to the AER, she said.

At least one member of the audience at the Bonnyville and District Centennial Centre had hoped to hear more about how CAPP had arrived at its figures.

“I don’t think they were really strong with their information,” said Bonnyville City Councillor Edward Duchesne, who said he was particularly interested in the data behind the jobs figure.

But Duchesne and another Bonnyville councillor, Ben Fadeyiew, also expressed just as much skepticism over government figures as those from industry.

“I don’t see anybody in the government that’s worked in an oilfield, so it's hard to believe that they got their numbers right,” said Duchesne. The government is "just coming up with numbers" as it develops its plans, added Fadeyiew.