Energy regulator seeks court appeal

Watchdog wants Redwater to clean up abandoned wells

Alberta’s energy watchdog wants to thrust a small, bankrupt energy company into the national spotlight and set a precedent for Canada’s oil and gas industry.

The Alberta Energy Regulator said Friday it would ask the Supreme Court of Canada for permission to appeal a recent Alberta ruling that industry officials fear will lead to an influx of abandoned oil and gas wells across the landscape.

Redwater Energy Corp., which had 16 producing wells when it folded in the spring of 2015, has already attracted widespread attention in the industry because of the case’s potentially sweeping implications. The Alberta Court of Appeal upheld an earlier ruling that money raised from the sale of Redwater’s assets should be spent repaying its creditors, instead of cleaning up old wells that are no longer producing oil.

Oil and gas wells abandoned by bankrupt companies land in the lap of the industry-funded Orphan Well Association, which is already dealing with an unprecedented inventory of wells it must clean up.

The energy regulator, the orphan well group and other industry players fear the court decision will only drive up the inventory of abandoned wells as bankrupt oil and gas producers focus on paying their creditors.

Alberta Energy Minister Marg McCuaig-Boyd said she backs the regulator’s attempts to take the case to the country’s highest court and “do all we can to defend Alberta in this.”

The orphan well group had 2,600 abandoned wells slated for cleanup late March after the inventory more than doubled in the previous six months.

The industry spends $30 million annually to clean these sites and return them to a natural state, but the influx of cash has not been enough to keep up with demand. The energy regulator said Friday it’s seeking an appeal at the Supreme Court not only because of the case’s impact on Alberta’s industry, but also because it has “significant ramifications” for the rest of the country.

Lawyers representing the governments of Alberta, Saskatchewan and British Columbia, along with the Canadian Association of Petroleum Producers had appeared before the appeal court to back the energy regulator’s position.

“Appealing to the Supreme Court of Canada will be an important step to continue protecting the public from paying abandonment and reclamation costs of orphaned sites,” Brad Herald, a vice-president at the oil and gas group, said in a statement.

The NDP government has routinely upheld the “polluter-pay” principle, which means that industry — not taxpayers — are responsible for cleaning up old oil and gas wells.