Alberta targets oil executives who dumped cleanup costs on taxpayers

Alberta regulators will scrutinize oil and gas executives more closely to try to stop a rising number of energy companies from dumping their environmental cleanup costs on the province and its taxpayers.

The Alberta Energy Regulator announced Wednesday that it would conduct background checks on directors and executives to see if they’ve been involved with companies that have unpaid taxes, owe money to regulators or haven’t complied with existing rules. For those directors or executives with questionable backgrounds, the AER may refuse to issue new oil and gas licences in the province.

Previously, all that was needed to obtain an oil and gas licence in Alberta was a $10,000 down payment, an address within the province and a nominal amount of insurance. However, changes to the rules come after 12 insolvent oil and gas firms handed off responsibility for cleaning up over 1,600 properties to the province over the last year-and-a-half, which saddled a cleanup agency called the Orphan Well Association with over $100 million in new costs.

“As it stands now, there is a loophole that allows directors and officials from oil and gas companies to use bankruptcy as an excuse to walk away from the wells that they are responsible for cleaning up,” Alberta Energy Minister Marg McCuaig-Boyd said during a news conference.

She said the changes announced Wednesday are designed to close that loophole and make it more difficult for companies to dump responsibility for their unprofitable properties on the OWA in bankruptcy proceedings.

In certain cases recently, executives and directors from bankrupt oil producers started new companies in an attempt to buy profitable assets out of receivership but leave the unprofitable ones for provincial agencies to remediate.

“We recognize that there was a gap in the directive and we need to close it,” said AER president and CEO Jim Ellis. “From my perspective, operators shouldn’t profit from bad behaviour.”

More changes are expected as the province is reviewing how orphaned oil and gas wells, for which there is no financially solvent owner, are regulated in the province.

The AER has also taken bolder actions in recent months in an attempt to prevent firms from walking away from cleanup costs by implementing new rules for buying assets and intervening more frequently in bankruptcy proceedings.