Current Problems


Redwater Energy avoids liability for orphaned wells

July 4, 2017

Alberta Energy Regulator (AER) – The May 19, 2016, decision by the Court of Queen’s Bench of Alberta in the matter of Redwater Energy Corp. allows receivers and trustees to disclaim Alberta Energy Regulator licensed assets and avoid their abandonment and reclamation obligations. Disclaiming unprofitable sites allows a company to reap the benefits of producing Alberta’s natural resources while avoiding the costs to repair the land, permanently impacting the environment, the economy, and the safety of Albertans.

The majority decision of the Court of Appeal of Alberta upheld this decision. In the 13 months since the decision, about 1 000 AER-licensed sites have been disclaimed with estimated liabilities of more than $56 million, and the Orphan Well Association’s inventory has more than doubled from almost 1 200 to more than 3 200. The decision has resulted in an unacceptable risk to Albertans, presents an environmental risk across Canada and all industry sectors, and undermines the foundation with which oil and gas licenses are issued.
The Court of Appeal decision is being appealed to the Supreme Court.