Alberta energy regulator turns to top court on wells

CALGARY — Alberta’s energy regulator has asked the Supreme Court of Canada to review a ruling that could allow energy companies to walk away from cleaning up abandoned oil wells and affect industrial sites across the country.

In documents filed Tuesday, the regulator formally applied to the top court for leave to appeal the so-called Redwater decision.

In May 2016, an Alberta Queen’s Bench judge ruled in favour of the bankruptcy trustee of Redwater Energy Corp. The court ruled the sale of assets from bankrupt energy companies should go first to creditors, not to cleaning up the mess from the company’s operations.

“The decision’s resulted in unacceptable risks to Albertans and it presents an environmental risk across Canada to all industrial sectors,” said Ryan Bartlett, spokesman for the Alberta Energy Regulator.

The Redwater Energy Corp trustee and its lender, ATB Financial, wanted to sell off the company’s remaining producing wells to pay creditors. They argued a bankruptcy trustee is free to pick and choose from among the company’s assets and disclaim unproductive oil and gas wells.

Disclaimed wells would be abandoned and left to the Orphan Well Association, an industry-funded and government-backed group, to clean up.

The regulator argued money from the sale of the productive wells must be used to cover cleanup expenses for the unproductive wells.

But in a 2-1 decision released in April, Alberta’s Appeal Court backed the original judge, saying federal bankruptcy law takes precedence over provincial environmental rules.

Bartlett said that position creates an incentive for producers to offload the costs of cleaning up old, declining wells — especially since the drop in oil prices over the last couple years has increased the number of bankruptcies in the oilpatch.

“Disclaiming unprofitable sites allows companies to reap the benefits of natural resources while avoiding the costs to repair the land,” he said. “It can permanently impair the environment, the economy and safety of Albertans.”

Legal experts have also pointed out the case exposes a conflict between federal and provincial law.

“The practical effect of this decision is that the (regulator’s) authority to enforce abandonment orders at the cost of the licensee is unenforceable at precisely the time when the (regulator) most needs to be able to exercise that power — i.e. when the licensee is insolvent,” Nigel Bankes, chairman of resource law at the University of Calgary, wrote in an Alberta law blog.

“The entire provincial scheme for protecting Albertans from the abandonment costs in relation to non-productive wells is seriously compromised.”

The case is being watched across Canada. Both British Columbia and Saskatchewan have backed the regulator’s request for an appeal. The Farmers’ Advocate Office and Dene Tha’ First Nation also support it.

The regulator said that since the Redwater decision came down, about 1,000 sites have been disclaimed with estimated liabilities of more than $56 million. The Orphan Well Association’s inventory has more than doubled from almost 1,200 to more than 3,200.

In May, the growing backlog of abandoned wells prompted the Alberta government to loan the association $235 million to hasten their clean-up.

Just Posted

WATCH: Red Deer’s 2017-2021 council sworn in

Mayor and council ready to serve for the next four years

Red Deer’s Salvation Army vehicles vandalized twice in six weeks

Police investigating Sept. 10 and Oct. 21 incidents

Update: More details released of fatal police-involved shooting near Alix

ASIRT says man rammed police car, injured officer

Influenza vaccine clinics get started across Red Deer, Central Alberta

Clutching stuffed animals they got from the Calgary Zoo, Owen and Alton… Continue reading

Replay: Red Deer

Watch the highlights from this week

Montreal prepares for “Cohen Week” as first anniversary of singer’s death looms

Three sets of crumbling concrete steps have just been fixed heading into… Continue reading

Montreal prepares for “Cohen Week” as first anniversary of singer’s death looms

His soulful poetry, distinctive baritone and knack for writing runaway hit songs… Continue reading

Sylvan’s talent on display for fundraising show

Sylvan Lake Refugee Project is hosting Sylvan’s Got Talent Nov. 3

B.C. ice rink where 3 people died remains closed due to safety concerns

FERNIE, B.C. — Residents who were forced from their homes because of… Continue reading

Trudeau condemns appointment of Mugabe as WHO ambassador

EDMONTON — Prime Minister Justin Trudeau called the appointment of Zimbabwe President… Continue reading

Friday Oct. 21: Winning Lotto Numbers

Friday, October 20, 2017 LOTTO MAX Winning Numbers 1 4 12 27… Continue reading

New northbound Hwy 2 lanes at Gaetz Avenue to open this Sunday

Drivers heading north through Red Deer on Hwy 2 will have a… Continue reading

Canadian planet hunter seeking alien life

‘The shifting line of what is crazy’ says Toronto-born astrophysicist

Most Read

Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month