CADOGAN, Alta. – The mess in a farmers’ field left by an oil company may be nothing compared to the legal mess the family goes through to get compensation.
For four years the Todd Ranch at Hughenden has fought with Inverness, a Calgary oil company, and taken the case to a Surface Rights Board hearing and a Court of Queen’s Bench judicial review to settle the dispute.The ranch is still without a settlement, said Darryl Butt, co-owner of the ranch in eastern Alberta.
“I was initially annoyed with the oil company…, but I’m really frustrated with the Surface Rights Board and their action,” said Butt.
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The problem started four years ago when the oil company missed two $2,000 lease payments to the ranch.
The company said it had a policy not to make payments when it was surrendering the well site and waiting for a reclamation certificate.
As well, Victor Almond, construction, reclamation and environment supervisor with Inverness, said there is a policy not to pay when the company feels land reclamation is complete.
“We feel it’s restored,” said Almond. Inverness has since been taken over by Rigel Oil and Gas Ltd.
No reclamation certificate
Alberta’s environment department issues reclamation certificates after well sites have been returned to original condition. The Todd Ranch site has failed inspection five times.
“It’s politics that’s stopping it from passing inspection,” said Almond.
So Butt took the case to the Surface Rights Board, a government agency set up to look after disputes between farmers and oil companies or other agencies.
Under Section 39 of its mandate, the board can use funds from the provincial treasury to pay farmers what they’re owed by an oil company.
Butt said he thought it was a simple case. He had documents saying the company must pay annual rent until a reclamation certificate is issued. The well site on the land is still fenced and he is not able to farm it.
But the Surface Rights Board turned down the Todd Ranch application.
In its ruling, the board said several similar cases have arisen in the past few years primarily because a reclamation certificate is not issued until an area is 100 percent reclaimed and oil well operators must wait lengthy periods for follow-up inspections, even when minor remedial action is required.
The board denied compensation because it wasn’t the intent of the act to “reward the likes of people who have apparently become entrenched in an unreasonable position on the assumption that provincial treasuries will automatically be directed to pay.”
In the Todd Ranch case it said the owners were unreasonable by not agreeing to a lower lease payment from Inverness when the site was almost cleaned up.
After that decision, Butt took the case to the Court of Queen’s Bench for a judicial review.
In her ruling, justice Adele Kent said the Surface Rights Board had erred in its decision and the board was biased in favor of the oil companies.
She also said the issue of whether reclamation was up to standard was between Inverness and provincial environmental authorities, and should not involve Butt.
The Surface Rights Board appealed the decision, but last month dropped the appeal. Some court costs have been repaid to the family, but no lease payments have been made. Butt is waiting for another hearing with the Surface Rights Board.
Most were compensated
Surface Rights Board chair Cec Purves said he couldn’t comment on the Todd case, but last year the board looked at about 400 applications asking it to pay farmers money owed them by oil companies. The board refused to pay about six of the applicants.
“All got financial compensation from the government or the operator,” Purves said.
As of Jan. 27 the board had received 387 similar applications.
Most cases involve bankrupt companies. If the companies are operating, the board will pay the bill and try to collect the debt from the oil company.
Sheri Meyerhoffer, manager of industrial relations with the Canadian Association of Petroleum Producers, said it may take a company years to get a reclamation certificate. If the area is producing some crops, farmers shouldn’t get the entire lease payment.
She said rules should be enforced when a “fly-by-night oil company” goes bankrupt, but not when there’s a dispute over reclamation.
