Alberta energy regulator turns to top court on wells

Alberta’s energy regulator has asked the Supreme Court of Canada to review a ruling that could allow energy companies to walk away from cleaning up abandoned oil wells and affect industrial sites across the country.

In documents filed Tuesday, the regulator formally applied to the top court for leave to appeal the so-called Redwater decision.

In May 2016, an Alberta Queen’s Bench judge ruled in favour of the bankruptcy trustee of Redwater Energy Corp. The court ruled the sale of assets from bankrupt energy companies should go first to creditors, not to cleaning up the mess from the company’s operations.

“The decision’s resulted in unacceptable risks to Albertans and it presents an environmental risk across Canada to all industrial sectors,” said Ryan Bartlett, spokesman for the Alberta Energy Regulator.

The Redwater Energy Corp trustee and its lender, ATB Financial, wanted to sell off the company’s remaining producing wells to pay creditors. They argued a bankruptcy trustee is free to pick and choose from among the company’s assets and disclaim unproductive oil and gas wells.

Disclaimed wells would be abandoned and left to the Orphan Well Association, an industry-funded and government-backed group, to clean up.

The regulator argued money from the sale of the productive wells must be used to cover cleanup expenses for the unproductive wells.

But in a 2-1 decision released in April, Alberta’s Appeal Court backed the original judge, saying federal bankruptcy law takes precedence over provincial environmental rules.