Redwater ruling hands well clean-up bill to oil sector

Today’s Supreme Court of Canada decision indicating polluters must pay for oil and gas well cleanup is being heralded as good news for rural landowners and all other Alberta taxpayers.

In a 5-2 decision, the court ruled that bankruptcy is not a licence for companies to ignore requirements to clean up energy well sites they created or took over from other companies.

“We were pleasantly surprised that they ruled in that way,” said Daryl Bennett of the Action Surface Rights group based in southern Alberta.

“We were worried about industry’s influence. We thought that (the court) would have some common sense and entrench that polluter pay model, and that’s what they ended up doing, but there were a lot of people, including a lot of lawyers, that didn’t think they would rule in that way.”

Dubbed the Redwater decision, the case was initiated in 2015 when an Okotoks, Alta.-based energy company went bankrupt with only a few of its approximately 80 wells still productive. Redwater Energy’s lender, ATB Financial, wanted to sell the remaining assets to pay down the company’s debt, leaving no funds for reclamation of the unproductive assets.

Today’s Supreme Court decision overturns two lower court decisions that gave bankruptcy laws priority over environmental obligations.

Alberta Energy Minister Margaret McCuaig-Boyd said today that the province is happy with the ruling.

“We’re pleased and encouraged this morning that the Supreme Court ruled in favour of the polluter pay principle, which is critical to Alberta’s role as a responsible energy producer,” she said.

“The court’s decision means Albertans are better protected from the few irresponsible producers and operators in the system.”

The ruling gives the province clear direction to continue its plans to set timelines for cleanup when wells are abandoned, she added.

The Alberta Energy Regulator also expressed satisfaction with the ruling.

“The AER is steadfast in our belief that the public should not be on the hook for the closure and reclamation costs of insolvent licencees,” it said in a news release.

“It has been clear to us since we embarked on this journey that we must manage liability differently in order to continue protecting Albertans, our environment, and our province’s many responsible operators.”

Bennett echoed much the same sentiment, though he said the AER shoulders some of the blame for the current situation.

“The message was that Alberta needs to get its affairs in order,” Bennett said.

“Who should fund the environmental cleanup? The Supreme Court is saying industry. So what is the provincial government going to do to hold industry accountable?”

Contact barb.glen@producer.com

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