The Supreme Court of Canada’s ruling that bankrupt oil companies are responsible for cleaning up their messes is “extremely important” for farmers, says Red Deer County Mayor Jim Wood.
The ruling by the nation’s highest court says creditors do not come before a company’s environmental obligations, which are considered a responsibility to all Albertans.
“Definitely as a farmer, I think that it was a good move to help us as farmers and people who own land that the courts have deemed that the environment is important and that the people who created the mess will be responsible for cleaning it up,” said Wood on Tuesday.
“It will help the farmers to have some sort of (assurance) that at least their land will be cleaned up some day,” he said.
“It places the onus on oil companies, that if they do have trouble, they can’t walk away from their environmental obligations.”
“Not in every case, but in some cases an oil and gas company could sell off their crappy assets that have large liabilities to another company and shed themselves of that obligation.
“What happens is the farmers are the ones who were getting caught in this,” he said. “If there’s a huge environmental mess on their property it should have been cleaned up by the company that created it.”
Too often, farmers saw little action from whichever company now owned the well or other oilfield infrastructure.
The industry-led Orphan Well Association is supposed to clean up orphan wells but thousands of wells have been added to its inventory in recent years. Some have predicted it will take decades to get to all the wells that need reclaiming, or at the very least, made safe.
Wood said there could be a down side to the court’s reinforcement of environmental responisibilities. Banks may be less willing to lend money to companies given their potential cleanup lialilities.
That could slow growth in the province’s oilpatch.
Lacombe County manager Tim Timmons said the ruling puts the environment and health and safety first, which will benefit many.
The outcome should see more orphan wells cleaned up than would have happened under the existing program, which cannot keep up.
One of the biggest frustrations of rural landowners with orphan wells on their property is that productive farmland is taken away, often for many years.
And when bankrupt oil companies walk away, farmers not only lose the lease income they were getting but are saddled with an environmental mess with little certainty it will ever get cleaned up.