JFC
Here’s a striking trivia factoid: the biggest dam in the world is in northern Alberta. If you rank dams by the amount of construction material piled into them, the winner is the Syncrude Tailings Dam in the oilsands. Much less trivial is the astonishing amount of toxic waste and looming cleanup costs swelling behind it and the many thousands of other fossil fuel operations spread across the land.
Canada’s oil and gas industry is steadily building an environmental time bomb. It’s one that communities, particularly First Nations downstream, have been struggling to highlight for many years. But now that it’s become a fiscal time bomb as well, maybe the money managers will get more traction. Most of these liabilities have been downplayed to investors and kept off the books but, last week, an investor advocacy group warned that Canadian oil and gas companies have a gaping blind spot in their accounting — one that could already exceed half the companies’ value, measured in market capitalization.
Investors for Paris Compliance wrote to the audit committee chairs at 14 big oil and gas companies ahead of their annual general meetings, putting them on notice about “material gaps” in their financial disclosures that amount to billions of dollars in decommissioning costs.
At the heart of the problem is a staggering liabilities gap between what companies disclose and what independent estimates suggest they truly owe to clean up old wells, oilsands operations and other industrial scars on the land. It’s hard to say how big the gap really is but a recent analysis by Investors for Paris Compliance arrived at a “conservative” estimate of about $113 billion.