Parasitic Capitalism (Oilpatch Edition)

I have little love for the oil & gas industry in Alberta.  Having grown up here, worked in and adjacent to the industry for years, I have become increasingly disillusioned, and then angry with both the industry and the government.  At this point in our history (2025), I'm pretty much at the point of saying that not only has the industry captured the UCP government, but it has become a parasite on the Alberta and Canadian economies.  

"Oh, but what about the billions it brings in?" proponents say.  Those billions mean nothing if they leave the people holding the bag with billions more in costs after projects are shut down.  We have a massive problem with oil companies leaving their industrial wastelands lying about and simply doing nothing to clean up after they are done with production on a site. 

Further, they refuse to pay municipal taxes to municipalities because they know they can ignore it and the government will do nothing, and they can tie any legal actions up in courts until the municipality runs out of money to pursue the matter with.  Landowners are supposed to be paid money for access to the surface area where they put wells down, and companies ignore those obligations too - often for the same reasons. 

All of this makes me quite furious - both with the government and with industry - however, my ire is focused much more on industry because they are the ones making profits off the resources, and ignoring their responsibilities beyond those profits. 

To be sure, the government has dropped the ball on enforcement, and today, the Alberta Energy Regulator (AER) can be characterized as having been "captured" by industry interests.  But this didn't start in 2013 when the AER was created.  No, it was well underway when I was child. 

I remember sitting at the dinner table, and listening to my father (who at the time worked as an accountant for one of the medium-large oil patch companies) discuss how oil companies played games with oil wells so that they didn't have to carry the costs of cleanup when a well finally ceased production.  He described how "big players" would spend the money to drill a well, install and operate it for most of its productive life, and then once it hit 80% or so its expected production, they would sell it on to a medium size player that could afford to pay the "amortized value" of the equipment, and they would operate it until there was very little left ... selling it on to a smaller player who would knowingly buy the well and operate it until it ran dry and the small company would declare bankruptcy.  Presto! One orphan well that has to be cleaned up at taxpayer expense, while the companies and their shareholders all make off with the profits of production.  

I was young when I heard this, and it sat wrong with me then.  It was such a clear scam, and nobody really was doing anything about it.  Governments would turn a blind eye, or when challenged say "well, that's just kind of the way business works, right?".

Fast forward into the late 1980s and the 1990s, and not only does the oil patch expand production in Alberta enormously, it receives huge subsidies, tax breaks, royalty holidays etc to do so.  Fair enough - to a point.  However, it has been what has happened since then that really makes me incredibly angry with the oil patch (and the government, but as we will see later my ire is correctly focused on the industry itself).

First on my list of concerns was the Royalty Review that Stelmach commissioned.  The minute that got underway, the industry was up in the government's business screaming about how any increase in royalties would bankrupt them.  What came out later was a watered down, limp review where the government basically acceded to the industry instead of representing the people whose interests they are supposedly beholden to.  This was a serious sign of trouble - the government was so addicted to oil revenues, and so scared of levying taxes of any sort that they basically caved to the industry. 

It would come out shortly after this time that many companies in the industry were refusing to pay municipalities taxes owed on property they held in the various municipalities of Alberta.  That's a significant problem, as is the broad refusal to pay landowners the lease costs for accessing their properties.  Instead, they have decided that it's far cheaper to hire lawyers to slow walk these cases in the courts, until the other party runs out of financial resources.  

Cleanup and emissions management are two areas where I perceive that industry has chosen to ignore their obligations.  The "Orphan Well Fund" is chronically underfunded, and as a result there is a multi-billion dollar liability hanging out there for conventional wells - the cleanup of the strip mines used to extract bitumen in the oil sands has yet to begin in any meaningful capacity, so we have no idea what that will cost - _IF_ it ever does happen.  Add to that the literal lakes of tailings which are so toxic that it's necessary to have automated cannon on them to discourage birds from landing on them.  As far as I know decades after Syncrude went online, scientists still haven't figured out how to reprocess that water - at best there are a few laboratory-scale processes but they are a long ways from complete solutions, or even adequate solutions that can be scaled up to process the lakes that have been generated.

The industry waves a few dollars in that general direction, but the sense of urgency simply isn't there.  In the 70s and 80s, there was an optimistic "well, by the time some of these projects wind down, we'll have that figured out".  Winding down those projects is on the foreseeable horizon, and we seem no closer to having a cleanup process than we were 45 years ago. 

Industry loves to make a big fuss about Carbon Capture (CCS) as a "solution" to emissions.  CCS has been rattling around since the 1980s (earlier in some respects), but it has a very problematic history, with supposedly large scale facilities being sold long before they have been run at anything close to design capacity.  The industry comes out demanding huge government subsidies to develop this technology (not unlike how they demanded the public purse subsidize (de-risk) the development of oil sands extraction technology.

I refer to this as "socialize the risk, privatize the profits" capitalism.  Those subsidies disappear into the company's bottom line, directly or indirectly bolstering profits while companies make a big show of developing new technology.  When the results don't meet the needs, they shrug and walk away.  Having worked in commercial R&D in the past, corporations view "R&D" as "r&D" - if it can be easily turned into a money making venture, they will squash it very quickly in the name of "being efficient with money".  Hard problems - the "Big R" stuff - they don't want to fund because the bigger the unknowns, the bigger the risk - and risk is the antithesis of profit. 

I understand the rationale of business - it exists to make money, and generally speaking, will do anything it can to maximize profits.  My problem with the current situation is that it has now done so at the expense of the obligations it signed up to at the outset.  The social contract around developing oil & gas resources always included an obligation to "play well with others" - clean up the mess as best as possible, pay their bills to government and others affected by its activities.  

What we see today is an industry desperately seeking to maximize its profits in the remaining years before electrification renders much of their activities economically unviable.  They refuse to pay their bills, they demand the government give them tax and royalty breaks.  If they were sticking around and actually supporting families with jobs, that would be a credit on their balance sheet.  But they aren't doing that either.  Head offices are being liquidated and the roles moved south of the border, automation is steadily eating up field jobs.  Sure, there will always be some of that work - there are things a human can do that we haven't figured out how to automate - but the number of jobs overall is shrinking, and will continue to shrink.  

In Alberta, the industry has spent the last several decades capturing both the conservative governing party and the regulator.  It operates to their benefit now, and conflates "the interests of the industry" with the "public interest" on a regular basis.  Proponents of the industry constantly tell us that the industry is a "good thing", and yet increasingly as it moves from growth to sunset, it has become the most cynical of businesses - the kind that does everything it can to maximize profits, while studiously avoiding its obligations. 

In short, the Oil & Gas industry has not merely broken the social contract which they entered into, they have done so deliberately.  

How does this turn them into being "parasitic"?  The definition of a parasite is an organism that takes far more from its host than it gives back, sometimes to the point of killing the host.  A symbiotic relationship is one where there is a give-and-take.  As I have argued here, the oil & gas industry has morphed from a reasonable symbiosis to one where the industry is lining up to leave Canadians on the hook for a very expensive cleanup, as well as leaving major unpaid bills that will never be recovered - much more devastating for smaller municipalities and landowners impacted by the activities of these entities.  Between that, and the constant demands for public funds to subsidize their business and its expansion, I cannot think of a better metaphor.  The oil & gas industry has truly become the parasite that sucks up more and more of its host's resources, while returning ever less to it.  Canadians, and Albertans in particular, deserve far better than they are getting from this business.