Central Alberta landowner activists will be closely watching the Supreme Court of Canada later this month.
On Feb. 15, the country’s highest court will hear from the southern Alberta-based Action Surface Rights Association in an appeal of a decision that allows bankrupt oil and gas companies to abandon wells without having to clean them up.
The appeal of a 2016 Alberta Court of Queen’s Bench decision is being led by Alberta’s energy regulator and the Surface Rights Association is an intervener. In a case involving the bankruptcy trustee of Redwater Energy Group, the Alberta court ruled assets of bankrupt energy companies should first go to creditors not to cleanup costs.
Federal bankruptcy laws take precedence over provincial environmental regulations, the court ruled.
Don Bester, is a long-time landowner rights advocate with the 1,400-member strong Alberta Surface Rights Group. It is a sister organization to the Surface Rights Association and shares its concerns about orphan wells.
“There’s a lot of our members who are owed money now through these bankruptcy companies,” said Bester, who lives in Innisfail.
“What’s happening is all these large corporations are spinning off their weak assets, like wells that are not productive, and they’re registered for abandonment.”
New companies often come in to get what they can out of the weak wells before declaring bankruptcy.
As it stands, landowners cannot become secured creditors for oil and gas wells on their property, said Bester. That means they are well down the list when a bankrupt company’s assets are doled out. Alberta Energy Regulator, which collects money through licence fees, is also in line behind the banks.
“Something’s got to change here, whether it’s the Bankruptcy Act or whatever,” he said.
The Alberta Energy Regulator is involved because it has seen an increasing number of companies going into bankruptcy and avoiding costly clean-up costs during the recent oilpatch downturn. The inventory has soared of the Orphan Well Association, an independent group set up to reclaim abandoned well sites. Last year, the province loaned the association $235 million to help out.
Bester said he has no idea what will happen in Ottawa. The Supreme Court cannot change legislation but can only make recommendations.
Changing bankruptcy law would have to be a political decision.
Even if the appeal is not successful it will be useful to get the issue out into the public eye, he said.
“It’s a really good cause to try to get something changed,” he said.
“Is it going to change? Your guess is as good as mine.”