Making lemonade. Why Canada should invest forfeited oil security deposits into sustainable economies
Imperial Oil, BP and ExxonMobile obtained exploration licenses northwest of Tuktoyaktuk in Canada’s Beaufort Sea by agreeing to spend more than $1.7B on offshore exploration. They paid one quarter, $441M, upfront into a security deposit which is refunded to the companies at a prorated 25% as they claim allowable exploration expenses. The full security deposit would have been refunded to the companies by the end of their license terms had they spent what they agreed to. But the companies have not spent that money and now stand to forfeit the greater portion of their deposit – some $400M.
I was recently quoted on behalf of WWF, saying that the Canadian government should keep the $400 million. Some might wonder why WWF would have any opinion on this matter and think we were simply being mean-spirited. After all, we find ourselves opposing petroleum interests more often than we would like. But, let’s be clear: When we find it necessary to oppose a project such as the Northern Gateway pipeline or industry attempts to weaken Canada’s environmental regulations such as the industry-wide push to dispense with a critical environmental safety net, we do so to prevent these companies from exposing our rivers, lakes and oceans to dangerous risks. We only oppose activities that are potentially so harmful to our natural heritage that they simply must be stopped.
The context for our opinion is this. Many residents of northern Canada have long believed in the promise of oil. Why? Because they need a future that holds better opportunities based on a stronger economy. But consider this: People buy gasoline not because they want gasoline, but because they need to get around. People buy the promise of oil not because they want oil, but because they need prosperity.
The promise of oil in the north is a broken promise. It isn’t happening now because the industry doesn’t have a safe way to drill in deep water – other than complying with current regulations. The industry walked away from their end of the bargain and now it lobbies the government to change the rules.
The promise of oil in Canada’s north is a lemon. We’re urging the government to make lemonade. Retain the $400 million that is the legacy of the industry’s broken promises. Invest it in real, sustainable alternative economic development in the north. The people there need prosperity, not more broken promises.