The Energy Mix

Top Menu

  • About
  • Latest Digest/Archive
  • Partners
  • Which Energy Mix is this?
  • Contact

Main Menu

  • News Archive by Category
    • Climate & Society
      • Carbon Levels & Measurement
      • Carbon-Free Transition
      • Climate Action/”Blockadia”
      • Climate Denial & Greenwashing
      • Climate Policy/Meetings/Negotiations
      • Culture, Curiosities, & Humour
      • Demographics
      • Energy Politics
      • Energy Subsidies
      • Energy/Carbon Pricing & Economics
      • Finance & Investment
      • First Peoples
      • Insurance & Liability
      • International Agencies & Studies
      • Jobs & Training
      • Legal & Regulatory
      • Media, Messaging, & Public Opinion
      • Methane
      • Travel, Leisure & Recreation
    • Climate Impacts & Adaptation
      • Biodiversity & Habitat
      • Drought, Famine & Wildfires
      • Food Security
      • Forests & Deforestation
      • Health & Safety
      • Heat & Temperature
      • Human Rights & Migration
      • Ice Loss & Sea Level Rise
      • International Security & War
      • Severe Storms & Flooding
      • Soil & Natural Sequestration
      • Water
    • Demand & Distribution
      • Air & Marine
      • Auto & Alternative Vehicles
      • Batteries/Storage
      • Buildings
      • Cities
      • Electricity Grid
      • Energy Access & Equity
      • Off-Grid
      • Petrochemicals & Plastics
      • Supply Chains & Consumption
      • Transit
      • Walking & Biking
    • Jurisdictions
      • Africa
      • Arctic & Antarctica
      • Asia
      • Australia
      • Brazil
      • Canada
      • China
      • Europe
      • India
      • International
      • Mexico, Caribbean & Latin America
      • Middle East
      • Oceans
      • Small Island States
      • South & Central America
      • Sub-National Governments
      • United States
    • Non-Renewable Energy
      • CCS & Negative Emissions
      • Coal
      • Nuclear
      • Oil & Gas
      • Pipelines/Rail Transport
      • Shale & Fracking
      • Tar Sands/Oil Sands
    • Opinion & Analysis
    • Renewable Energy
      • Bioenergy
      • Demand & Efficiency
      • General Renewables
      • Geothermal
      • Hydrogen
      • Hydropower
      • Research & Development
      • Solar
      • Wave & Tidal
      • Wind
  • Special Reports
    • Alberta’s Bitumen Pipe Dream
    • Canada’s Drive to Net Zero
    • Carbon Farming
    • City and Sub-National Action
    • Drawdown
    • Drive to 1.5
    • 26-Week Climate Transition Program for Canada
    • America’s Electoral Climate 2020
    • Canada’s Climate Change Election 2019
    • The Energy Mix Yearbook 2018
      • Climate Extremes
      • Fossils Go For Broke
      • Renewables (R)Evolution
      • Electric Vehicles
      • Canada’s Contradiction
      • COP24
      • Pipeline Politics
      • Jobs and Just Transition
      • Cities and Sub-Nationals
      • Finance and Divestment
      • Climate Litigation
  • Webinars & Podcasts
  • About
  • Latest Digest/Archive
  • Partners
  • Which Energy Mix is this?
  • Contact
  • Subscribe
  • Donate

logo

  • News Archive by Category
    • Climate & Society
      • Carbon Levels & Measurement
      • Carbon-Free Transition
      • Climate Action/”Blockadia”
      • Climate Denial & Greenwashing
      • Climate Policy/Meetings/Negotiations
      • Culture, Curiosities, & Humour
      • Demographics
      • Energy Politics
      • Energy Subsidies
      • Energy/Carbon Pricing & Economics
      • Finance & Investment
      • First Peoples
      • Insurance & Liability
      • International Agencies & Studies
      • Jobs & Training
      • Legal & Regulatory
      • Media, Messaging, & Public Opinion
      • Methane
      • Travel, Leisure & Recreation
    • Climate Impacts & Adaptation
      • Biodiversity & Habitat
      • Drought, Famine & Wildfires
      • Food Security
      • Forests & Deforestation
      • Health & Safety
      • Heat & Temperature
      • Human Rights & Migration
      • Ice Loss & Sea Level Rise
      • International Security & War
      • Severe Storms & Flooding
      • Soil & Natural Sequestration
      • Water
    • Demand & Distribution
      • Air & Marine
      • Auto & Alternative Vehicles
      • Batteries/Storage
      • Buildings
      • Cities
      • Electricity Grid
      • Energy Access & Equity
      • Off-Grid
      • Petrochemicals & Plastics
      • Supply Chains & Consumption
      • Transit
      • Walking & Biking
    • Jurisdictions
      • Africa
      • Arctic & Antarctica
      • Asia
      • Australia
      • Brazil
      • Canada
      • China
      • Europe
      • India
      • International
      • Mexico, Caribbean & Latin America
      • Middle East
      • Oceans
      • Small Island States
      • South & Central America
      • Sub-National Governments
      • United States
    • Non-Renewable Energy
      • CCS & Negative Emissions
      • Coal
      • Nuclear
      • Oil & Gas
      • Pipelines/Rail Transport
      • Shale & Fracking
      • Tar Sands/Oil Sands
    • Opinion & Analysis
    • Renewable Energy
      • Bioenergy
      • Demand & Efficiency
      • General Renewables
      • Geothermal
      • Hydrogen
      • Hydropower
      • Research & Development
      • Solar
      • Wave & Tidal
      • Wind
  • Special Reports
    • Alberta’s Bitumen Pipe Dream
    • Canada’s Drive to Net Zero
    • Carbon Farming
    • City and Sub-National Action
    • Drawdown
    • Drive to 1.5
    • 26-Week Climate Transition Program for Canada
    • America’s Electoral Climate 2020
    • Canada’s Climate Change Election 2019
    • The Energy Mix Yearbook 2018
      • Climate Extremes
      • Fossils Go For Broke
      • Renewables (R)Evolution
      • Electric Vehicles
      • Canada’s Contradiction
      • COP24
      • Pipeline Politics
      • Jobs and Just Transition
      • Cities and Sub-Nationals
      • Finance and Divestment
      • Climate Litigation
  • Webinars & Podcasts
Advanced Search
CanadaFinance & InvestmentLegal & RegulatoryOil & GasPipelines/Rail TransportShale & FrackingSub-National GovernmentsTar Sands/Oil Sands
Home›Jurisdictions›Canada›Supreme Court Holds Bankrupt Fossils Responsible for Cleaning Abandoned Sites

Supreme Court Holds Bankrupt Fossils Responsible for Cleaning Abandoned Sites

February 3, 2019
February 3, 2019
 
98
0
Share:
  •  
  • 18
  •  
  •  
  •  
  •  
  •  
    18
    Shares
  Print This Story
Peregrine981/Wikimedia Commons

A Supreme Court of Canada ruling that holds bankrupt fossils responsible for cleaning up their abandoned oil and gas wells will produce lasting impacts across western Canada, but may not completely address the massive environmental liabilities the companies leave behind, according to initial reporting and analysis of the decision.

The court ruling on the Redwater Energy case means companies must prioritize cleaning up their work sites over repaying their creditors if they go out of business. “Bankruptcy is not a licence to ignore rules,” wrote Chief Justice Richard Wagner.

“Though centred in Alberta, the 5-2 decision sets a precedent across Canada, empowering provincial governments to stop defunct companies from offloading their messes onto other companies or the public,” The Star Calgary reports. “The judgment is expected to resonate across the western provinces, where the number of companies walking away from old wells has skyrocketed amid low oil prices.”

Like this story? Subscribe to The Energy Mix and never miss an edition of our free e-digest.

SUBSCRIBE

But while the decision “reinforces the growing understanding that polluters are responsible for their cleanup obligations,” said Pembina Institute analyst Jodi McNeill, it “does not alleviate broader challenges posed by insolvent operations. While the Supreme Court’s decision ensures bankrupt companies’ remaining assets first go to clean up, those assets are often insufficient to cover full costs.”

McNeill added that “Canadian taxpayers are already paying billions to clean up former operations, including the Faro Mine in the Yukon, the Giant Mine in the Northwest Territories, and numerous mines in B.C.” Late last year, a senior executive with the Alberta Energy Regulator placed the cost of the province’s unfunded fossil liabilities as high as C$260 billion.

“Over the last five decades Alberta’s clean up obligations have steadily grown, and now include over 80,000 inactive oil and gas wells, facilities, and pipelines as well as 1.4 trillion litres in fluid oilsands tailings,” McNeill stated. “The Government of Alberta officially estimates it will cost $57 billion to clean up these sites, though there are ongoing concerns about the accuracy of this figure. Conversely, only $1.2 billion is currently held in securities to protect the public.”

Action Surface Rights, a group that helps farmers with inactive wells on their land, expressed similar concerns about the issues left unresolved by the court decision. “The fact of the matter is that when these companies go bankrupt, they have very little resources left,” said ASR Director Daryl Bennett. “We still have a huge problem…with the energy regulator not holding companies to account, not requiring companies to post security deposits.”

Meanwhile, Nigel Bankes, chair of natural resources law at the University of Calgary, said the decision might affect fossils’ ability to obtain loans. “Creditors should be a little more risk-averse,” he told The Star Calgary. “It will have some implications in the future for how much money a company will be able to borrow.”

Alberta Energy Minister Margaret McCuaig-Boyd blamed the previous Progressive Conservative political dynasty for failing to address the problem sooner. “The vast majority of companies are responsible…they as well need to be protected from the bad actors in the system,” she said. “Working families across this province, as well as all of Canada, should not have to pay for the financial and environmental liabilities left behind when companies walk away from their obligations.”

But while the province had accelerated its cleanup schedule for orphan wells, McCuaig-Boyd wouldn’t say whether the new deadlines would be set before the provincial election this spring.

“The good players don’t want to pay for the bad actors,” she said. “We’re taking the time to do this right.”

Alberta opposition leader Jason Kenney told The Star Calgary he wasn’t aware of the ruling.

With its decision, the Supreme Court overturned two lower court rulings that gave federal bankruptcy laws primacy over provincial environmental protection rules. “The case revolved around the failure of Redwater Energy, a small, Calgary-based oil and gas company that went bankrupt in 2015 amid the global oil price collapse,” The Star Calgary explains. “The dispute was between the Alberta Energy Regulator (AER) and accounting firm Grant Thornton, which is Redwater’s receiver—a bankruptcy trustee appointed to liquidate a failing business.”

When Redwater folded, it had a few wells that were productive and profitable, others that needed expensive, provincially-mandated cleanup work, and a $5-million debt to provincially-owned ATB Financial. “The receiver wanted to sell Redwater’s profitable wells to pay off the company’s debts and leave the non-producing ones to Alberta’s industry-funded Orphan Well Association (OWA), a group which handles the cleanup of sites whose owners have gone bankrupt,” The Star Calgary recalls. “Under Alberta law, the move wouldn’t be allowed — money from the sale of Redwater’s assets should be used to return the company’s well sites to a natural state, the AER argued. However, federal bankruptcy law gives priority in such cases to lenders.”

The court ultimately concluded there was no conflict between the two laws because the AER wasn’t a creditor—and federal law doesn’t allow bankruptcy trustees to walk away from a company’s environmental obligations.

While ATB had warned a decision against Grant Thornton could drive away industry investment, the AER said a decision to dismiss the appeal would load “billions of dollars in environmental costs” onto taxpayers. The Canadian Association of Petroleum Producers, one of several third-party intervenors in the case, had sided with the AER, noting that a free ride for Redwater would place an unfair financial burden on the rest of the industry.

In a release Thursday, the Orphan Well Association said it was encouraged by the decision and reviewing its implications, adding that it planned to decommission more than 700 wells this fiscal year thanks to an increase in provincial funding.

Tags26 WeeksBitumen BubbleBitumen Bubble Collateral Damage
Share:
  •  
  • 18
  •  
  •  
  •  
  •  
  •  
    18
    Shares
  Print This Story

Find more stories about
CanadaFinance & InvestmentLegal & RegulatoryOil & GasPipelines/Rail TransportShale & FrackingSub-National GovernmentsTar Sands/Oil Sands

    Leave a reply Cancel reply

    Recent Posts

    • Ex-Conservative PM’s Message to Trudeau: Put Your House in Order Before Pushing Others
      Ex-Conservative PM’s Message to Trudeau: Put Your House in Order Before Pushing Others
      March 14, 2021
    • Canadian Wind, Solar Boost Market Share Tenfold in a Decade—to 6%
      Canadian Wind, Solar Boost Market Share Tenfold in a Decade—to 6%
      March 14, 2021
    • U.S. Congress Aims to End Tax Exemption for Tar Sands/Oil Sands, Set Price on Methane
      U.S. Congress Aims to End Tax Exemption for Tar Sands/Oil Sands, Set Price on Methane
      March 14, 2021
    • More Systemic Racism than Storm Damage in Jackson, Mississippi Water Crisis
      More Systemic Racism than Storm Damage in Jackson, Mississippi Water Crisis
      March 14, 2021
    • Analysts See ‘Marathon’ Ahead as China’s Five-Year Plan ‘Defers Heavy Lifting on Decarbonization’
      Analysts See ‘Marathon’ Ahead as China’s Five-Year Plan ‘Defers Heavy Lifting on Decarbonization’
      March 14, 2021

    News Feed

    Top News

    • Fossil CEO Says U.S. Oil Output Won’t Exceed Pre-COVID Highs
      March 14, 2021
    • Iberdola Plans 1.2 GW of New Solar in Spain
      March 14, 2021

    Read More

    Carbon-Free Transition

    • BP Sees Offshore Wind at ‘Inflection Point’
      March 14, 2021
    • Battery Maker Plans Big Expansion in U.S. Manufacturing
      March 14, 2021

    Read More

    Canada

    • Shopify Signs Deal with Vancouver Carbon Capture Firm
      March 14, 2021
    • Prince George, B.C. Uses Local Wood Products to Boost Energy Efficiency
      March 14, 2021

    Read More

    U.S.

    • Fossil CEO Says U.S. Oil Output Won’t Exceed Pre-COVID Highs
      March 14, 2021
    • Ratepayers Shouldn’t Pay for Utilities’ Bad Choices, Advocate Says
      March 14, 2021

    Read More

    International

    • Iberdola Plans 1.2 GW of New Solar in Spain
      March 14, 2021
    • NGO Encourages European Hydropower to Emphasize ‘Transformation, Not Development’
      March 14, 2021

    Read More

    • About the Energy Mix
    • Contact
    • Privacy Policy and Copyright
    Copyright 2020 © Smarter Shift Inc. and Energy Mix Productions Inc. All rights reserved.