Supreme Court agrees to hear Alta. producers’ case against abandoned oil wells

Farmers are being left to deal with contaminated land as the number of abandoned wells continues to grow

A group with the backing of farmers is heading to the Supreme Court of Canada to oppose a legal ruling that lets energy companies abandon unprofitable oil wells.

The court announced in late January that it will hear from the Action Surface Rights group, an organization dedicated to helping rural landowners deal with energy companies and the government, in what’s been called the Redwater decision.

The decision, which was ruled by the Alberta Court of Queen’s Bench in 2016, allows bankrupt energy companies to walk away from oil wells that become unprofitable. The companies don’t have to clean up sites, and assets they have when they go bankrupt go to creditors rather than to cleanup.

Since that decision, more than 1,800 wells with more than $100 million in liabilities have been abandoned. Landowners are left with the messes, until the Orphan Well Association cleans them up.

“Private companies make millions and then offload all the liabilities,” said Daryl Bennett, a farmer near Taber, Alta., and a director with the surface rights group. “It’s a very big problem and nothing has been done. Things should have been done when oil was $100 per barrel.”

Companies are let off the hook for oil-well cleanup because of a clause that gives federal bankruptcy law precedent over provincial environmental concerns. The Alberta government has lobbied the federal government to change that.

In an effort to curb the problem, Alberta recently implemented a new rule that bars energy companies from re-entering the Alberta market if they have a history of not cleaning up their abandoned sites.

Still, farmers and ranchers are living with the results of the messes.

Bennet said farmers can’t grow crops on contaminated land due to food safety concerns, and some rural landowners could be denied loans due to existing pollution.

“Companies have come in and said they don’t have to follow the terms of the lease anymore,” he added. “Lands get infested with weeds because they aren’t required to follow the terms. The land is being disrespected.”

The surface rights group is scheduled to address the Supreme Court on Feb. 15.

“I’m hopeful they overturn it,” Bennett said. “But if they don’t, then hopefully they make a suggestion to the federal government to change that bankruptcy law. Should the banks get the monetary reward? We think ethically and morally they shouldn’t.”

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