https://www.cbc.ca/news/business/supreme-court-redwater-decision-orphan-wells-1.4998995
[I think the lesson here is that if you want to protect the environment
in Canada, you need a big fund for lawyers and a lot of lead time to
work your way through the courts. Where regulators are captured, and in
the cases of Alberta and Canada the governments are as well, you will
likely have to get to the Canadian Supreme Court to have a common sense
outcome prevail as the official rule.]
Supreme Court rules energy companies cannot abandon old wells
Supreme Court of Canada has overturned Redwater Energy lower court decision
Tracy Johnson · CBC News · Posted: Jan 31, 2019 9:50 AM ET
The Supreme Court of Canada has ruled that energy companies cannot
abandon their responsibility to clean up old oil and natural gas wells
in the case of bankruptcy.
This overturns two lower court decisions that ruled bankruptcy law has
paramountcy over provincial environmental responsibilities in the case
of Redwater Energy, which became insolvent in 2015.
The court ruled 5-2 to overturn the earlier ruling. In doing that, it
said that bankruptcy is not a license to ignore environmental regulations.
Redwater Energy owned a stake in 17 producing oil and natural gas wells,
as well as many more inactive wells. At the time of its insolvency, the
company owed its bank, ATB Financial, just over $5 million.
When Redwater became insolvent in 2015, its bankruptcy trustee wanted to
sell the firm's valuable wells to repay debt to its bankers and walk
away from the non-producing wells — leaving them to Alberta's Orphan
Well Association (OWA) to clean-up.
The OWA is funded by the energy industry.
The Alberta Energy Regulator (AER) argued that Redwater must sell the
producing wells and use the funds to clean up the inactive wells.
In 2016, Alberta's Court of Queen's Bench ruled that creditors came
first in line before environmental obligations, a decision that was
upheld by the Alberta Court of Appeals.
The Redwater case has been watched closely across the country. Ontario,
British Columbia and Saskatchewan all intervened in the case, supporting
the Alberta Energy Regulator's position that the polluter must pay for
clean-up before creditors are paid back their loans.
Alberta has been dealing with a tsunami of orphaned oil and gas wells in
the past five years. In 2014, the Orphan Well Association listed fewer
than 200 wells to be reclaimed. The most recent numbers show there are
3,127 wells that need to be plugged or abandoned, and a further 1,553
sites that have been abandoned but still need to be reclaimed.
