Alberta Refers Abandoned Wells Ruling to Supreme Court
The Alberta Energy Regulator wants the Supreme Court of Canada to hear its appeal of a lower court ruling that companies in bankruptcy can leave abandoned and leaking oil and gas wells to the public to clean up.
A split decision by a panel of the Alberta Court of Queen’s Bench in the May, 2016 Redwater case allowed trustees in bankruptcy to direct money from the sale of assets owned by failed energy companies first to creditors, rather than to cleaning up polluted well sites. Those sites would be “disclaimed and left to the [Alberta] Orphan Well Association, an industry-funded and government-backed group, to clean up,” the Canadian Press reports via CBC News.
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The Orphan Well Association is short of funds to clean up the growing number of wells being disclaimed, however. That number doubled during 2016, with companies abandoning some 1,000 wells after the Redwater decision, and has now reached 3,200, the news agency reports. The abandonments stick Alberta taxpayers with at least $56 million in clean-up liabilities.
The risk is not only financial. About one in 10 abandoned wells in Alberta leaks methane at levels that pose risks to the public, ranging from neurological damage to explosions, the AER found in a report disclosed last week in The Tyee.
On Tuesday, the regulator asked Canada’s top court to review the Redwater ruling, with AER spokesman Ryan Bartlett arguing the lower court gave operators an incentive to “offload” the cost of cleaning up old wells onto the public.
“Disclaiming unprofitable sites allows companies to reap the benefits of natural resources while avoiding the costs to repair the land. It can permanently impair the environment, the economy, and the safety of Albertans,” Bartlett said. “The decision resulted in unacceptable risks to Albertans, and it presents an environmental risk across Canada to all industrial sectors.”
Should the Supreme Court hear the case, its decision could have implications for resource extraction companies and their abandoned properties across Canada.