http://www.cbc.ca/news/canada/calgary/aer-abandoned-wells-1.3640695
Alberta looks at different ways of making sure companies clean up old wells
The AER warns that it could go after directors and executives to ensure
proper reclamation
By Tracy Johnson, CBC News Posted: Jun 20, 2016 3:00 AM MT Last Updated:
Jun 21, 2016 6:11 AM MT
As Alberta struggles with its abandoned well problem, the province's
energy regulator is looking at different ways to ensure the inventory of
old wells doesn't get much larger.
Earlier this spring, the Alberta Energy Regulator released a bulletin
reminding the directors and most senior executives of energy companies
they can be personally responsible for well clean-up if their company
goes bankrupt.
The timing of that release probably wasn't a coincidence. There are
nearly 150,000 scattered across the province, some that have been
dormant for 60 years or more. While the problem has been going on for as
long as there has been energy development in Alberta, a recent court
decision changed the game.
In the case of Redwater Energy, the Alberta Court of Queen's Bench ruled
that when an energy company goes bankrupt, lenders need to be paid back
before wells are cleaned up. With more companies facing insolvency,
there's concern on the part of landowners and regulators that the
abandoned well problem in Alberta is about to get worse.
The AER bulletin in April was was not a new rule, but rather a
well-timed prompt, said David Bish, a partner with law firm Torys.
"There's that reminder to everyone that it can still look to directors
and officers," said Bish. "And it has a variety of tools that it can
deploy to do that."
Directors and officers includes the board of directors of a company, as
well as the top executives, such as the chief executive officer and
chief financial officer.
The AER has long had the ability to formally name, or blacklist an
officer or director of an energy company, under the Oil and Gas
Conservation Act, but it has only done so in cases of malfeasance, said
Ryan Zahara, a partner with Blakes, Cassels and Graydon in Calgary.
"Certain of the parties they've taken that step against have been viewed
as egregious offenders," said Zahara.
Environmental protection orders are an option
The AER also has the ability to use an environmental protection order to
impose personal liability.
EPOs have been used in Ontario. In the case of Northstar Aerospace, a
court found that directors and officers were personally responsible for
the clean-up of a contaminated site because the contamination happened
under their watch. Those directors were told to pay $15 million.
The question being asked in the energy industry is whether that will
happen here, given that the recent run of insolvent companies is
connected to the two-year long drop in energy prices.
"How do you punish someone for basically a market downturn? A specific
individual, when they may have been compliant with the rules," said Zahara.
