Al­berta tar­gets oil ex­ec­u­tives who dumped cleanup costs on tax­pay­ers

Ottawa Citizen - - FP - GE­OF­FREY MOR­GAN Fi­nan­cial Post gmor­gan@na­tion­al­post.com

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.

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