Alberta power generator fined for operating without regulatory approval


Investigators found Avex had not applied for a permit to build the plant

CP, The Canadian Press
Published Feb 12, 2024

An Alberta power generator has been fined for running a plant for months without regulatory approval.

The Alberta Utilities Commission has fined Avex Energy nearly a quarter-million dollars for running a natural gas-fired generator while bypassing regulatory tests for safe and unobtrusive operation.

“They have not been approved to operate,” said commission spokesman Geoff Scotton.

According to an agreed statement of facts, officials from what was then Avila Energy approached the commission with plans to build a generating station in the County of Stettler in the summer of 2019. Avila already held permits for operating a natural gas field in that area of central Alberta and planned to use that gas to fuel the plant.

“On the basis of those discussions, Avila believed that no additional approval was required and proceeded on that basis,” the statement says.

The generator was built and fired up on April 23, 2021.

The electricity, eventually reaching 3.5 megawatts, was sold to a bitcoin miner. Avila, which eventually turned into Avex Energy, planned to generate up to 10 megawatts.

By December, the commission began to receive noise complaints from residents, some as far as nearly three kilometres away.

“The complainants stated that they first noticed the noise in May 2021 and that the noise became increasingly problematic in October 2021, when the additional generating capacity was added,” the agreed statement of facts says.

The utilities commission investigated the noise complaints and found Avex was unlicensed.

Investigators found Avex had not applied for a permit to build the plant. The company had not conducted a noise assessment as required, nor did it receive required environmental approvals.

The Red Willow power plant was shut Dec. 22, 2021. It remains closed.

Avex was “co-operative, forthright and responsive,” during the investigation, the commission said in a summary of the settlement.

The total fine was $241,477. It was reduced 30 per cent because of the company’s response to the investigation.

Scotton says such infractions are unusual but do occasionally occur.

“From time to time these situations are brought to our attention.”

This report by The Canadian Press was first published Feb. 12, 2024.


Internal documents suggest Alberta Energy Regulator underestimated oil well liability

By Bob Weber, The Canadian Press on January 19, 2024.
A pumpjack draws out oil from a well head near Calgary on Saturday, Sept. 17, 2022. Internal documents from Alberta's energy regulator suggest the province's environmental liability for oil and gas wells could be nearly triple the figure the agency announced earlier this week. THE CANADIAN PRESS/Jeff McIntosh

EDMONTON – Internal documents from Alberta’s energy regulator suggest the province’s environmental liability for hundreds of thousands of oil and gas wells could be nearly triple the figure the agency announced earlier this week.

In a report released Wednesday, the Alberta Energy Regulator said the cost of cleaning up the province’s 466,000 wells would be $33.3 billion. That figure is derived partly from estimates of what it would cost to remediate individual wells in different areas of the province, contained in a 2015 document called Directive 11.

But in 2018, the agency produced discussion papers on something called the Closure Liability Assessment Model, designed to create “greater understanding and transparency of liabilities,” one of the papers indicates.

Those documents were obtained under Freedom of Information legislation by University of Calgary researcher Drew Yewchuk and provided to The Canadian Press. They provide a different estimate of the costs faced by industry and, potentially, Alberta taxpayers.

For almost every region of the province, the documents suggest Directive 11’s estimates of what it would cost to clean up a well are too low.

The documents suggest that for the boreal region, Directive 11’s estimates are 65 per cent too low. In the parkland, they’re 173 per cent short. Costs for the foothills region were underestimated by 334 per cent, and the figure for the alpine was 675 per cent shy.

In total, the documents suggest the liability estimates derived from Directive 11 that inform Wednesday’s report were low by 263 per cent.

The documents suggest the total cost of well cleanup to be about $88 billion.

The documents also estimate liabilities not included in Wednesday’s report.

They point out the province has 59,000 abandoned and inactive oil and gas facilities that need remediation. They could add an extra $1.4 billion for pipeline closures – although that figure seemed in doubt.

“True status of ‘operating’ pipelines not known,” the documents say.

As well, the documents say Directive 11’s determinations of where the wells were located were also inaccurate, affecting its estimate.

“Large differences existed in the distribution of sites,” they say. “(It’s) necessary to project costs to the population of sites to account for true distribution of wells within reclamation regions and enable accurate estimation.”

Those documents never saw the light of day.

“The “¦ Leadership Committee decided to delay public implementation “¦ due to implications of recognized higher liabilities from investors and public (too much change too soon),” the documents say.

Regulator spokesman Renato Gandia said in an email the documents relied on “limited data inputs and used many assumptions resulting in a hypothetical scenario.”

Gandia said the regulator is moving toward using data collected from industry on closure spending for specific activities and pieces of infrastructure.

“This approach is now collecting specific information to eventually replace the current methodology in Directive 11. When we have sufficient data reported (actual spend values for different types of closure work), the new methodology will provide a much more accurate figure.”

But Yewchuk said the 2018 estimates are still the most up-to-date figures the regulator has.

“There’s always going to be a possibility of getting better information. You have to act on what you have,” Yewchuk said. “The information they’re still relying on is worse than this stuff.”

Eight energy companies were involved in the 2018 program, which analyzed data from 4,302 reclamation sites – although the documentsnote complete information only existed for 23 per cent of those sites.

In a Wednesday interview with The Canadian Press after the report was released, the regulator’s manager of liability management, David Hardie, said the watchdog couldn’t say if the number was an underestimate or an overestimate.

Yewchuk said the regulator has to level with Albertans about the costs of cleaning up after the industry that has floated their economy for generations.

“This is internal evidence saying costs are going up. And the (regulator) has known they were going up,” Yewchuk said.

This report by The Canadian Press was first published Jan. 19, 2024.


Alberta releases first report on well cleanup; $33B liability estimate called too low

By Bob Weber, The Canadian Press on January 17, 2024.
A pumpjack draws out oil from a well head near Calgary on Saturday, Sept. 17, 2022. Alberta's Energy Regulator has released its first report on efforts to clean up thousands of old oil and gas wells that dot the province. THE CANADIAN PRESS/Jeff McIntosh

Alberta’s oil and gas producers spent nearly $700 million in 2022 on cleaning up the hundreds of thousands of old wells that dot the province, the regulator’s first report on the extent of those liabilities indicates.

That’s 65 per cent more than they were required to spend under provincial rules and they took 8,000 inactive wells off the books, the report says.

“Industry is moving infrastructure toward closure,” said Chad Newton, the regulator’s manager of planning. “Industry did a good job.”

But the report also says the industry faces a $33-billion environmental liability from the remaining wells – a figure that critics say is far too low and based on old cost estimates the auditor general has already criticized.

“They’re using a system that they’ve admitted underestimates liabilities,” said Martin Olszynski, a University of Calgary resource lawyer and frequent critic of Alberta’s remediation policies.

Alberta has 466,000 oil and gas wells. The report says only about a third of them are active and only about one-tenth produce more than 10 barrels a day. About a fifth have been reclaimed.

The report says more than $1.2 billion was spent on well closure in 2022. That reduced the number of inactive wells in Alberta by nine per cent in a single year.

It found that 90 per cent of licence holders complied with closure spending requirements. Those that didn’t make up only one per cent of the total spending requirement.

Previous well closure programs allowed companies to focus on groups of wells that were relatively easy to clean up. The fact $145 million was spent in 2022 on remediation suggests that’s no longer the case, said liability adviser Anita Lewis.

“The remediation ones typically are the more difficult sites because they have contamination associated with that,” she said.

The report found financially shaky companies accounted for seven per cent of the province’s well liabilities. It also concluded that the regulator has no information on the remediation status of nearly a quarter of oil and gas facilities other than wells – although that information is being gathered, it said.

Final remediation spending figures from 2023 aren’t yet available.

But much of the 2022 money – $383 million – came from the Ottawa-funded Site Rehabilitation Program. Less than half that was budgeted for that program in 2023, so despite requirements for industry to spend $700 million on cleanup, total spending is likely to have significantly fallen last year.

“It would appear the spending has already peaked,” said Olszynski.

Olszynski said the report’s liability figure was derived at least partly from estimates of well cleanup costs that were first published in 2015. That was pointed out in March by Alberta’s auditor general, but they’re still being used, Olszynski said.

“How are they still publishing numbers that they know are incorrect?” he asked.

David Hardie, the regulator’s manager of liability management, acknowledged the liability estimate is wobbly.

“We can’t say it’s an underestimate (or) an overestimate,” he said.

Hardie said the regulator will calculate liability in the future based on actual industry-reported costs of remediation. That data isn’t in yet.

“We are going to replace that methodology once we receive this information,” Hardie said.

This report by The Canadian Press was first published Jan. 17, 2024.


Gas well sites to be reclaimed to allow development west of city

Al Beeber – [email protected]

Updated by Lethbridge Herald on October 31, 2023.

A Calgary-based energy company is soon starting a reclamation project of four sweet natural gas wells west of the Copperwood subdivision.

The project will enable the continued growth of residential development in west Lethbridge.

Tamarack Valley Energy Ltd. is publicizing the work so residents don’t misinterpret the project and assume it’s a well drilling operation.

Sweet gas is natural gas that contains little or no hydrogen sulfide.

Mike Anderson, manager of Surface Land for Tamarack, said Tuesday service rigs and drilling rigs look similar. After an uproar over a West Lethbridge Tamarack project several years ago, the company is taking pro-active measures so the public is well informed of its work.

While work was to begin today, company is waiting for the ground to dry up a bit before starting it, Anderson said.

Tamarack has a number of assets in the Lethbridge and also operates on the Blood Reserve. It also has assets in northern Alberta.

The company is abandoning four gas wells and the associated pipelines west of Copperwood “to make way for the further expansion of housing in Lethbridge,” said Anderson.

Tamarack will be putting a service rig on the wells and will be going down to the producing formation about 1,000 metres deep to plug off the formation that produced gas by putting in a cement plug.

The wells are abandoned right to surface and the surface casing is cut off about three metres below ground and a steel cap is welded on. Then the land is reclaimed and put back “to the equivalent land use capability of the surrounding land,” said Anderson.

The wells have all been operational since the mid 1990s, said Anderson.

“One of the parcels of land has been recently purchased by a developer and it’s my understanding they’re working on a housing development plan and there’s a couple others that are kind of similar in nature. They’re not impacted by development but it’s my understanding the City wants to put basically a ring road through the area and high-voltage power. So ultimately at the end of the day we’ll be in the way of those if we don’t remove this stuff and all of our assets there are sort of nearing end of life.

“We’ve got pretty much all the resource we’re going to get out of the ground and it’s time to get them out of the way before we’ve got a whole bunch of other construction equipment and whatnot going out there because that just makes things a little more challenging,” added Anderson.

If the wells were brand new and were producing a significant cash flow “it becomes a more challenging conversation but it’s not the City that’s driving this. We’re looking at wells that are in proximity to houses and stuff like that and for our own corporate interest, we’re aware of the sensitivities of drilling operations in Lethbridge,” said Anderson.

The company drilled a well on farm land within city limits in 2018. The company had been granted a licence by the Alberta Energy Regulator that year to drill a production well within city limits.

After learning of the well city council in February, 2019 passed a resolution to make their opposition and concerns known to the company and province.

“There was quite an uproar,” Anderson recalled.

“A service rig looks very much like a drilling rig and when it’s lit up at night on pretty flat Prairie out there it will be seen by people and if people don’t know in advance it’s a service rig doing abandonment work, and they make the assumption it’s a drilling rig drilling a new well we’ll probably have the same kind of kerfuffle as last time,” said Anderson.

“That’s why we’ve been in touch with the City administration and giving them the heads up of what our plans are,” Anderson added.

The company is monitoring weather and ground conditions before starting the reclamation project. Tamarack has field employees based here who are apprising the company of conditions.

“These are we call minimal disturbance locations, in other words there’s no built-up access road to the well. Because these were sweet shallow gas wells, operators would typically only go to these things once a month. So they could wait until the ground conditions were good to just drive on the top soil of the field and check the well and come out,” said Anderson.

“We’re being very cognizant of ground conditions to make sure that we’re going in under the right conditions.”

The work will take three to four days to complete per well, he said.

“We need to make sure we’ve got a good three to four day weather window for each well to get in there and get out without causing any damage.”


Rural Albertans Say Federally Backed Wind Project Is Fraught With Problems

Locals speak of difficulties on front line of renewable energy push

The federal government has chosen as its renewable energy partner in Alberta a project that residents of Paintearth County have wrangled over for years.

By Tara MacIsaac

The Epoch Times

9/14/2023

Rural Alberta’s acreage owners, such as those in Paintearth County, are among those who could lose the most in the nation's rapid push toward renewable energy.

Paintearth County already hosts two wind farms, with another under construction. But a fourth project has had locals wrangling for several years with both the power company behind it and provincial and county officials, as well as with each other.

And it is this contentious project, called Halkirk 2 Wind, that the federal government is partnering with to power its buildings in the province. The project, which will be located on approximately 17,000 acres of privately owned land, was approved by the Alberta Utilities Commission (AUC) in July.

The Halkirk 2 project is emblematic of problems arising in some communities across Alberta, residents say, where renewable energy has been pushed forward with greater speed than anywhere else in the country.

While the province has put a moratorium on large-scale wind and solar projects to review concerns, some Paintearth residents are skeptical the review will address all the issues. They have developed a mistrust of the AUC, which is leading the review.

They also feel defeated by the favour the federal government has shown the project, with a 23-year contract valued up to $500 million awarded to Edmonton-based Capital Power, announced in February. When construction is complete, the project will supply about 50 percent of its energy output to power the federal buildings, the company says.

That’s the “icing on the cake,” Donna Fetaz told The Epoch Times, at the end of several long years' fight against aspects of the project she says are problematic.

Ms. Fetaz and her husband, Gerard Fetaz, have shared out-of-pocket costs with their neighbours totalling more than $400,000 to fight what they say has been underhanded dealings to push the project forward.

The problems they and others have raised include alleged lying by land agents bent on convincing locals to sign onto the project back in 2015. Residents have alleged the agents told each of them that their neighbours had already signed on, so they might as well, too.

Also, at issue is flooding on local properties, fire hazard concerns over difficult-to-maintain transmission lines, and logistical concerns for aerial crop-spraying.

While some in the region support the project, which brings tax revenue to the area and land-use revenue to some landowners, the Fetazes and about 20 other residents who are part of the Paintearth Protection Association continue to voice concerns.

Capital Power did not reply to Epoch Times inquiries as of publication. Some of its arguments are laid out, however, in a July 27 decision by the AUC to approve a revised version of Halkirk 2.

The AUC approved the original project of 74 turbines in 2018. Capital Power chose to revise that plan, opting instead for up to 35 larger turbines, each with greater output. The revised plan gives some ground to the concerns of the Fetazes and others. But it still falls short, they say, and the amount of resources they've had to put into fighting for that ground is too much.

AUC spokesperson Richard Goldberger told The Epoch Times via email that the commission has tried to support residents through information sessions, some funding for legal aid, and other means.

“The AUC’s public interest mandate involves balancing a number of, oftentimes competing interests, to arrive at a decision,” Mr. Goldberger said. “These include assessing a project’s potential adverse effects but also the benefits of a proposed project. The scope of this assessment also takes into account the potential impact on specific individuals or groups of individuals and the public generally.”

Balancing of Public Interest

The July 27 decision discusses the AUC's balancing of public interest. For example, it noted that local farmers complained planned turbines are too close to their fields, which will prevent them from aerial spraying their crops safely.

At AUC hearings on the revised plan, which ran from April 24 to 28, a Capital Power representative said the company would shut down the turbines for spraying with 24 hours' notice. But the farmers said that’s impractical, as the weather can change and sometimes spraying needs to happen immediately.

The AUC said Capital Power's offer was sufficient, but it should try to shut down the turbines more quickly. The commission said the farmers’ testimony, along with written testimony from an aerial sprayer, was not strong enough evidence to prove the turbines would be a problem. It said live testimony from an expert would have been better.

The AUC provides some compensation for expert testimony, but the Fetazes said they still shared a $50,000 bill with one of their neighbours for one expert whose costs were beyond what the commission would cover.

"Based on what we've seen, the AUC is very hesitant to take any kind of a position that might impede development," resident Carmen Felzien told The Epoch Times. "If you make the right argument, if you use the right lawyers, if you invest enough money, then perhaps you can have them put a condition on that may or may not answer what you're asking for."

A Capital Power representative said at the hearing that the company would find a solution for Ms. Felzien's concerns that her mother's land would be flooded when one of the turbines is built over a nearby drainage ditch. However, the AUC did not put in a requirement.

"The ongoing feeling on the ground here is that the developers promise all kinds of pretty things—the AUC says, 'Oh, good, isn't that nice'—and then they proceed to do whatever they want," Ms. Felzien said. "And the only recourse we have is to go back to the AUC ... and they may or may not take us seriously."

Experiences With AUC

Resident Brian Perreault has experienced costly flooding from a substation that services Capital Power's Halkirk 1, already in operation for 11 years, and will service Halkirk 2. It was built over a drainage ditch and the water was diverted toward his land. The AUC delayed addressing his concerns, which he brought forth in 2019, the Fetazes said.

The AUC told him he would have to attend proceedings regarding the station, for which he hired a lawyer and engineer. After that, the commission told him it was a ministry of environment issue. Finally, in July this year a ministry representative met with Mr. Perreault to look at the damage.

A ministry spokesperson confirmed to The Epoch Times that the matter is currently being evaluated.

This back-and-forth is characteristic of the Fetazes' experience with the AUC as well, they said.

In response to Mr. Perreault's and the Fetazes' complaints about AUC communication, AUC's Mr. Goldberger noted the information the commission makes available to stakeholders, including having staff available throughout the proceedings to answer questions.

Mr. Fetaz recalled that when he asked at an AUC hearing in 2017 what the safe distance was for a turbine from an aerodrome, that information wasn't forthcoming. "Dead air," he said. "It was just dead air." It took independent research to find the answer, and much money to pay a lawyer to present it on their behalf.

The Fetazes have had some hard-won victories over some eight years of going to the AUC, and even above the AUC, to the ombudsman who oversees it. For example, the number of turbines close to their aerodrome has been reduced.

The version of Halkirk 2 that the AUC approved in 2018 had 17 turbines closer to their aerodrome than the 4,000-metre buffer recommended by Transport Canada. The revised version has only one closer than that, at about 2,800 metres, and the AUC has asked Capital Power to submit further safety information on that turbine and two others of concern.

‘The Little Guy’

"Landowners go into it so blindsided," Ms. Fetaz said. "They don't even know what they don't know, and you trust the system to do things right."

She said that before this started, she had never written a letter to the government. She didn't have internet. But she's had to learn the ins and outs of regulations, procedures, appeals, and more.

Ms. Felzien said she's not against wind power "when it’s done carefully and thoughtfully.” But she and others say they've felt a lack of respect from Capital Power representatives from the start.

They “belittle and demean” residents and have been "mocking" and “running roughshod” over them, Ms. Felzien said. Another resident, Steve Maier, said Capital Power has “strong-armed and bullied their way through it” and “they always want to run over the little guy.”

Mr. Maier has an airstrip, which he uses recreationally, and the AUC determined it has a lower public-interest priority than two planned turbines that will interfere with his flying.

He said he acknowledges his neighbours' rights to lease their land to Capital Power, and he's not against the project on the whole. But he feels there were other viable locations for the two turbines that wouldn't have interfered with the use of his land.

He invested in the land a little over a decade ago because he wanted space for an airstrip and wanted the open, beautiful landscape, he said.

Mr. Maier was never directly informed that turbines would be close to his land, aside from a general notice sent to everyone in the area about the project.

"Basically, they're saying it's in your court to fight it."

He said he is a working man with a family and doesn't have time to fight it. "I'm just trying to pay my mortgage. I don't have the time, and they probably know that."

Daryl Bennett, director of landowner advocacy group Action Surface Rights, has worked with the residents of Paintearth on their appeals over the years. He told The Epoch Times of similar experiences with dozens of other wind and solar projects he has helped negotiate across the province.

“We've been raising these issues for 10 years,” he said. “There's always bad actors. We need to try to figure out a way that resolves a bunch of those concerns and allow renewable energy to go ahead.”

Landowner update re Fulton Judicial Review & Notice of Additional Legal Challenges

Well-intentioned? Danielle Smith’s new plan hits a nerve in Alberta


Pilot project to clean up oil wells taps into province’s cherished energy royalties.

By Alex Boyd
Staff Reporter
Monday, February 20, 2023

SHOULDICE, Alta.—The section of pipe jutting out of the field has begun to decay, a small patch of gravel the only evidence of where a pumpjack once bobbed like a giant metal bird, drawing more crude oil from the ground with each dip of its head.

Every day it produced, every day a truck would take the products of its labour away.

That was, until the day its owner could no longer pay the bills — and so took the equipment they could and walked away.

“This particular well is in Never Neverland,” says Kelly Nelson, the farmer in whose field the well languishes, occupying a fenced patch of land about the size of two city lots. Besides the well itself, there’s a section of piping and a towering storage container that’s turned to rust.

“That’s a well that is abandoned. Nobody’s looking after it,” she says, sounding resigned. As far as she knows, it’s not on the radar of the provincial regulator or the association designed to deal with so-called orphan wells.

It’s an example of what might be the biggest problem looming over the oil industry in Alberta that most non-Albertans have never heard of.

As this province’s oil industry grew, it became quite common for an oil company to show up and announce it would be putting equipment in someone’s field, their yard or their town.

Saying no wasn’t an option. That’s not hyperbole. In Alberta, about 80 per cent of the mineral rights in the province are owned by the Crown, so when an oil company is granted the rights to explore, there isn’t much a landowner can do.

The boom and bust nature of the oil industry has left this province littered with aging equipment. It’s been left behind by companies that went bankrupt, judged it cheaper to just keep paying the rent required for wells or that simply abandoned it. It’s detritus that gets in the way of farmers and risks contaminating the ground and the air.

The cost of cleaning up 10,000 orphan wells in Alberta and Saskatchewan will, by 2025, reach $1 billion, according to a parliamentary budget report released last year.

It’s a number that critics have criticized for being too low — and for not including the 7,400 wells that are abandoned but not fully orphaned, or the 225,000 wells in the two provinces that are inactive, but whose future is uncertain.

Now, Alberta Premier Danielle Smith is championing a new program to speed cleanup of the equipment left behind.

The new provincial $100 million pilot project, called the Liability Management Incentive Program, would reward companies who clean up wells that are at least 20 years old by giving them a future royalty credit, which would mean they’d have to give less of their future profits back to the province. It’s drawing fire for essentially paying companies to do what they’re already legally obligated to, and for using royalties, the financial bounty meant to compensate all Albertans for the exploitation of their natural resources.

There is a social contract upon which modern Alberta is built.

It’s an understanding that stretches back to a farm outside Leduc in 1947, when the province’s first major oil discovery took place with an unexpected gush of oil and a fireball that shot 15 metres into the air. (A museum in Leduc devoted to that moment still opens its doors most days from 9 a.m. to 4 p.m.)

Yes, oil can be hard on the environment in general and tough on landowners specifically, but in return for the imposition of equipment on private land and tailings ponds in the boreal forest, the industry agrees to clean up its own messes and has gushed billions of dollars into government coffers in the form of royalties, money that helps fuel low taxes, high social spending and a quality of life that many Albertans would argue is the envy of the country.

Oil makes up a huge part of the Alberta budget, from the oilsands in particular. Right now, the war in Ukraine and fears of an oil shortage have the industry booming — thanks to a combination of those higher prices and projects reaching maturity, at which point they pay a higher rate. The Alberta government said last fall that oilsands royalties this year are expected to reach north of $20 billion, a number that is almost double what was initially forecast, and would set a new record. When you consider that total revenue for the year was initially predicted to be almost $63 billion, the outsized importance of oil is clear.

Yet, there’s a saying in Alberta that goes something like this: God grant me another boom, and we promise not to piss it away again. But with a tsunami of new royalty revenue on the way, some are worried Alberta is about to do just that.

Landowners are often quick to point out that they’re not anti-oil. Indeed, it can be hard for many to speak out, given how ubiquitous the industry is here. Grinding one’s teeth about well cleanup can be taken as criticism of your sister or your neighbour’s livelihood.

At Nelson’s farm, the orphan well is just a short drive from her house. It’s been about five years since the company that owned it went bankrupt and walked away. Now, it’s a chunk of land that grows nothing but weeds that threaten nearby crops, an obstacle around which Nelson’s son must maneuver hulking farm equipment, and a potential risk to a creek nearby.

But if you were to go downwards, beneath the gravel and the crop stubble and the layer of soil, you would enter the domain of the Alberta government, and by extension, the world of oil and gas.

For a long time, Nelson says, many wells were welcomed, when oil companies maintained their equipment, sprayed for weeds and paid their annual rent — usually a few thousand dollars — on time. There was a time, she says, when some of her fields were dotted with the red lights of pump jackets at nighttime.

And most of the almost 20 wells on her land now are operational or in line for cleanup — but not all.

“It’s for the ‘greater good,’” says Nelson, who’s a councillor of the county of Vulcan, making air quotes with her hands. “But you know, they’re not going to go into city and drill next to your house.”
Kelly Nelson pictured at her farm near Shouldice, Alberta.

Environmental law in Alberta is based on the idea of what’s known as polluter pay, which means that whoever makes a mess has to clean it up. Oil companies are legally obligated to clean up their own wells, but don’t always do it.

There is the Land and Property Rights Tribunal, which hears disputes between operators and landowners, and a body called the Orphan Well Association, funded by oil companies, which is working to clean up wells with no other owner.

Still, landowners are often left holding the bag. Sometimes the well gets passed from company to company, sometimes paying rent on the site is cheaper than reclaiming it, and sometimes the producer goes out of business.

It’s a problem that has infuriated many landowners.

“Society put the rules in place, that industry could take our land, force their way on, exploit the resources for the benefit of all society,” says Daryl Bennett, a farmer near Taber, Alta., and director of a landowner group called Action Surface Rights.

“On condition that they would pay for the annual income inconvenience, and then pay to clean it up.”

Oil companies are granted a lot of leeway. Landowners aren’t able to say no to an operator looking to put a well on their land. You can try to negotiate nicely. One surface rights advocate says he’s seen people ask for a drill to be put in the corner of their field, or even across the road, away from water or specialty crops such as potatoes or canola.

Often companies accommodate, but sometimes they don’t, dotting fields with equipment and putting up fences that, in one case, separated cow from calves, or, in another, herds from water. Roads built to access wells can track in invasive weeds or chemicals can seep into land long after they stop producing.

There have been other recent efforts to speed the cleanup. During the pandemic, when oil prices had sunk, the federal government announced a billion dollars to help with cleanup, in a move that was partially billed as a job generator at a time of economic uncertainty.

But the premier has argued a fresh approach is needed.

“I suppose we could keep on doing things the way we’ve always done them and get the same result,” she told reporters earlier this month.

“I’ve been following the case of abandonments and suspended wells and the long-term liability of sites going back to the ’50s and ’60s and ’70s that have not been in active service that are still not cleaned up. So that’s just not tolerable to me. I think that we owe it to the landowners to make sure that those sites get cleaned up.”

The new provincial program has a relatively narrow focus — it doesn’t tackle orphan wells such as the one on Nelson’s land. Furthermore, given the fact that credits are applied to future activity, it will only be appealing to companies that are currently producing and therefore, critics say, arguably already able to pay for their own cleanup, particularly as oil prices spike to a generational high.

The proposal has sparked serious criticism, and not just from the freshman premier’s expected political opponents. Scotiabank has warned that the plan could give the whole industry a black eye. In a report, the bank pointed out that major oilsands players would financially benefit, and that the program goes against a core capitalist principle — that companies pay for their own messes.

The backdrop to the debate is the fact that, thanks to factors such as the war in Ukraine, Alberta has never produced more oil.

“It’s corporate socialism,” says Duane Bratt, a professor of politics at Calgary’s Mount Royal. “The profits go to private companies, and the costs go to the taxpayers. That’s great for industry.”

“If I was an oil company, why would I do any cleaning up right now? I would just ignore that and wait for more money to flow through,” he adds. “There’s a real moral hazard to what the government is doing.”

The use of provincial royalties to fund the program has also hit a nerve. While the appropriate level royalties has been debated for decades, what’s clear is that they’re seen as belonging to Albertans. “This is a sale of a depleting resource that’s owned by the people. Once a barrel of oil goes down the pipeline, it’s gone forever. It’s like a farmer selling off his topsoil,” storied Alberta premier Peter Loughheed said, decades ago.

“We get our pound of flesh,” then premier Ralph Klein countered in 2006.

Muddying the waters is the fact that before Smith was premier, she was a lobbyist for this exact program, then called RStar, raising uncomfortable questions for some about her motivations.

“I mean, if she was premier of Alberta, and was being paid by these companies to bring in our RStar, that is corruption, and she would have to resign,” Bratt says.

“But what happens when she was paid prior to becoming premier, and is now implementing it?”

Paul McLauchlin, the president of the Rural Municipalities of Alberta and reeve of Ponoka, Alta., spent much of the pandemic raising the alarm about what he estimates is the quarter billion dollars in unpaid taxes the oil industry owes towns and villages across the province — and arguing for policy changes to address those debts, changes that have largely not come to pass.

He marvels at the speed at which this new policy was enacted in comparison. His organization sent representatives to a recent meeting with the energy minister at which the program, which is technically still a pilot, was presented as “pretty much a done deal.”

“A lot of this is frustration on … is this the best way to address the issue?”

He points out that the province has the Alberta Energy Regulator, a body he argues has dropped the ball in not dealing with these issues sooner. An environmental scientist by trade with several wells on his own land, he points out that this question has hung over the province for decades, and it’s time for Alberta, if not the rest of the country, to have a real reckoning with the cost of an industry that has contributed so much.

“It’s a crucially important conversation, because this is really about the future of Alberta. I don’t see oil and gas going away in Alberta, but I definitely see it changing, and this is the time to make good decisions,” he says.

Looking out over the fields where, once the last crusts of snow finally melt, her family will begin planting crops such as peas and canola, Nelson gestures with frustration at the patch of land where, technically, she’s not even allowed to mow the grass or control the weeds.

“I don’t think most people realize that, as farmers, we care so much for the land,” she says. “We have to have them on here and we can deal with that. You know, whatever. When the company is running, it’s fine.

“But when this happens, then we become concerned, because how can we clean this up? We’re not allowed to touch anything, we don’t get a say.”

Alex Boyd is a Calgary-based reporter for the Star. Follow her on Twitter: @alex_n_boyd


Confusion, lack of clarity dog Alberta plans to clean up old well sites

Story by Joel Dryden • February 14, 2023 5:00 a.m.

CBC News

With the Alberta government facing pushback to its plan to give oil and gas companies a royalty break to clean up old well sites, questions are mounting about how the program will function and who, ultimately, will pay for it.

The proposed pilot project dubbed the Liability Management Incentive Program, previously known as RStar, has in recent days garnered criticism from economists, landowners, analysts and the Opposition NDP.

Late last week, it also drew a warning from analysts with Scotiabank, who wrote in a report that though the program could benefit some producers, it had the potential to generate "negative public sentiment toward the sector."

"Moreover, we also believe the program goes against the core capitalist principle that private companies should take full responsibility for the liabilities they willingly accept," the report reads.

The province has said that the program, which would involve $100 million in royalty breaks, is still in development and no final decisions have been made. Producers pay royalties to the province for extracting resources that the province owns on behalf of all Albertans.

Oil companies largely appear to be reserving comment on the proposed plan. On Monday, a spokesperson with Cenovus said the company was assessing the program.

"We'll determine how it may affect our plans after we've seen more details," the Calgary-based company wrote in a statement to CBC News, adding it's about halfway through its well site reclamation inventory target.

Between 2019 and 2021, Cenovus said it received 1,455 reclamation certificates from the Alberta Energy Regulator.

In a statement sent Tuesday morning, Canadian Association of Petroleum Producers (CAPP) senior special advisor Brad Herald said that there had been a "dramatic acceleration" in well cleanup.

"Industry, orphan well funds, the federal government and provincial governments have all played key roles in updating liability management policies and policy supports to make this happen," Herald wrote.

"We look forward to the consultation process with the Alberta Government on their proposed Liability Management Incentive Program and will work to ensure the momentum built in the reclamation of legacy sites in Alberta continues."

Opposition has suggested lobbying a 'huge concern'

Kathleen Ganley, the NDP's energy critic, has called it a "huge concern" that Smith had lobbied for an oil well cleanup bailout prior to re-entering politics.

Over the weekend, Smith told her audience on a province-wide radio show that governments of the past shared the blame for wells that hadn't been cleaned up effectively.

"Because we're targeting it so closely on the worst wells, we're looking at sites, for instance, that have been inactive for 20 years that were drilled prior to 1990, so these are kind of the worst of the worst sites," Smith said, arguing regulators had failed to require cleanup from companies in the past.

Andrew Leach, an economics professor at the University of Alberta, said Monday the premier's comments suggest industry was prepared to leave liabilities on the landscape indefinitely.

"When the premier comes out and says, 'This is reclamation that would not have otherwise happened,' that's a big shot across the bow to the industry," Leach said.

"Because she's essentially saying, 'You oil and gas producers are not going to meet your legal obligations to Albertans.'"

Though the program has nothing to do with oilsands, Leach added that such an approach had future implications for other liabilities on the landscape, such as massive oilsands tailing ponds and site reclamation.

During a press conference held Monday to discuss Alberta's TIER fund, Sonya Savage was asked about comments she had made during her time as energy minister stating that the RStar program wouldn't fit within Alberta's royalty structure, and would violate the province's polluter-pays principle.

Savage acknowledged those comments, but noted the pilot project was under consultation and directed questions around the pilot project to the current energy ministry.

Energy minister met with landowner groups

Leach added that questions loom about how the program will work and who will be covered.

"Are we talking about wells that are literally, from a regulatory perspective, orphans, or are we talking about wells that are still owned by operating entities?" he said.

In response to a request for comment requiring clarification over which sites could qualify for the pilot, a spokesperson for Energy Minister Peter Guthrie said such details would be made available when development of the pilot program is complete.

"Minister Guthrie was very clear that stakeholders would be engaged as part of this process and that is what we're doing," wrote Gabrielle Symbalisty in an email.

"This pilot program will target some of the oldest sites in the province that have not produced oil and gas for many years. Our goal is to shrink the inventory of inactive and orphaned wells and create jobs across Alberta."

Guthrie was instructed to develop such a targeted program as a part of his mandate letter last fall. On Thursday, Guthrie met with landowner groups to discuss the project.

Daryl Bennett, director of Action Surface Rights Association and the Alberta Surface Rights Federation, said the meeting lasted around two hours, and included staff from the Alberta Energy Regulator.

Bennett said he didn't attend the meeting but two representatives of the group did.

In an interview, Bennett said it was one of the best meetings the organization has had in terms of receiving access to the minister.

"I'll be frank, from a landowner perspective: we want the wells cleaned up," he said.

"And the original social contract was society can take our land, expropriate it, extract resources, with a guarantee you're going to clean up the mess," Bennett added, noting the organization prefers industry pays for it.

"But if they're unable to do it, then the taxpayer does have some responsibility. But at a time of record profits, I think the taxpayer should be insisting that industry pays a little bit more."

In Vulcan County, where hundreds of wells with no owners need to be cleaned up, there is confusion surrounding why taxpayers could be left footing the bill to clean up the messes oil companies made, said Reeve Jason Schneider.

"We're going on about seven years, where we've had companies that have operated without paying their taxes," he said.

"Now, it's a small number of them, but between those companies and companies who walked away from their liabilities, we're over $9 million worth of taxes that haven't been collected.

"So I guess we're a little disappointed to see the province move so quickly on this RStar program to give tax credits, when for seven years, they've been ignoring municipalities like ours."


Premier rejects NDP claim oilwell cleanup help is linked with her leadership campaign

Follow The Lethbridge Herald on Twitter Follow @Leth_Herald on twitter

By The Canadian Press on February 11, 2023.

EDMONTON – Alberta’s premier is rejecting Opposition claims her planned $100-million pilot project for cleaning up old oil wells was influenced by her United Conservative party leadership campaign, arguing that federal money to get the job done missed many of the province’s worst sites.

Speaking on her province-wide radio call-in show Saturday, Danielle Smith noted the worst wells have been inactive for decades and repeated her argument that government shares some of the blame for the fact regulators let companies off without fulfilling their responsibilities.

Smith said many of the companies that left those wells without cleaning them up aren’t around anymore.

“Because we’re targeting it so closely on the worst wells, we’re looking at sites, for instance, that have been inactive for 20 years that were drilled prior to 1990, so these are kind of the worst of the worst sites,” Smith told listeners Saturday after being asked about the NDP’s claims the program is linked with her leadership fundraising.

“Now we’re left with somebody holding the bag that may not have been responsible for the initial liability. We have regulators who allowed for those transfers to occur. We have regulators in the past who didn’t require cleanup.”

“I think we have to take some of the responsibility as government for the fact that we didn’t manage it the way that we should have historically.”

NDP Energy critic Kathleen Ganley said Friday it’s a “huge concern” that before Smith re-entered politics, she lobbied for an oil well cleanup bailout that she made a government priority when she became premier.

The sources of the $1.3 million Smith raised for her leadership campaign last year have not been revealed, and her office has not responded to requests to address questions about how her campaign fundraising has affected her governing priorities.

The Liability Management Incentive Program proposes to give $100 million in royalty breaks to companies that fulfil their legal obligations to restore old oil and gas wells. A royalty is the price Alberta charges a company to develop a resource.

Analysts with Scotiabank said in a report that the proposal “goes against the core capitalist principle that private companies should take full responsibility for the liabilities they willingly accept.”

An Independent legislature member and former member of the UCP caucus, Drew Barnes, has called the plan “corporate welfare.”

Smith on Saturday praised the federal government’s Site Rehabilitation Program which provided $1 billion for well-site recovery, but she noted the program is about to end and that it missed the worst sites.

She said flare pits — which she described as pools of water where waste materials were just thrown in — are the biggest problem and have sat in some cases for 40 to 60 years. She said they’re not being cleaned up because “it’s a huge environmental liability expense companies are worried that they’re not going to be able to get the signoff on it.”

Landowners, she said, are left with the unremediated sites.

“The reason I advocated for this program when I first heard about it was because I feel so passionately about landowner rights. I feel so passionately that this has been a long-term problem. No one’s ever found a way to address it,” Smith told listeners.


Alberta launches talks on proposed tax breaks for oil companies that clean up old wells

Bob Weber
The Canadian Press
Posted: Feb 08, 2023 11:17 AM MST | Last Updated: February 8

The Alberta government is moving ahead with a plan that would give oil and gas companies a tax break for meeting their legal obligations to clean up old well sites, inviting a select group of landowner organizations to a meeting to discuss a pilot project.

On Thursday, Alberta Energy Minister Peter Guthrie is scheduled to host those groups to discuss "a concept for a royalty credit program to incent accelerated oil and gas site closure," indicates a government document that outlines the proposed pilot program, obtained by The Canadian Press.

That pilot program, previously known as RStar and now called the Liability Management Incentive Program, would issue $100 million in credits that qualified companies could use to apply against royalties earned from new production.

Credits would be earned by cleaning up well sites that have been inactive for at least 20 years.

Opposition New Democrat energy critic Kathleen Ganley said there should be a conversation about the pilot project happening with the public.

"They're taking public money and giving it to oil companies to do work they are already legally obligated to do and they're doing it at a time of high oil prices," Ganley said.

The idea has been widely panned by economists, environmentalists, rural municipalities and analysts within Alberta Energy. Critics call the program risky, opaque and a violation of the polluter-pay principle.

"For some reason, we're incentivizing future royalties to eliminate liabilities when profits are high," said Paul McLauchlin of Rural Municipalities Alberta. "It's very confusing to a lot of people."

Alberta landowners dealing with the 170,000 unreclaimed sites on their properties aren't crazy about the idea but need to get those wells cleaned up, said Daryl Bennett of Action Surface Rights, which will attend the meeting.

"It's somewhat regrettable that the taxpayer is left to fund these programs and that royalties will be reduced," Bennett said. "However, landowners are dealing with lots of abandoned wells. It's kind of a catch-22 situation that was never in the social contract."

Not all landowners groups have been invited to the meeting with Guthrie.

Dwight Popowich of the Polluter Pay Federation said his group made repeated requests to attend the session, but have instead been told to meet with department officials.

"If you happen to be a dissenter of any kind, you definitely won't be invited," he said.

Alberta Energy spokesperson Gabrielle Symbalisty said further consultations are planned.

"Indigenous groups, municipalities, industry associations, oil and gas companies, landowners and other groups have been asked to provide feedback on the proposed criteria," she said in an email.

The government document says the program is still in development and no final decisions have been made.

However, some feel the United Conservative Party government has already made up its mind.

"It's moving a lot faster than we expected," said McLauchlin, who has had what he described as "some engagement" on the pilot project.

The proposal has been pushed for years, including by Premier Danielle Smith when she was a business lobbyist. A former RStar lobbyist now works in Smith's Calgary office. The program was part of Guthrie's mandate letter when Smith named him to cabinet.

"I very much get the feeling the fix has been in on this program," said Ganley. "It sounds to me like this (program) was always going to go forward."

Other suggestions to address Alberta's huge abandoned well program exist.

"They could say, 'You're not allowed to drill any more unless you clean up a well,"' Bennett said.

Timelines are another option, said Popowich.

"If a well is shut for 12 months, you've got 18 months to clean it up," he said. "Most jurisdictions have that timeline. Alberta has none."

McLauchlin said other taxes on oilpatch activity have been lifted and wonders why further incentives are needed at a time of record industry profits.

"This is designed by industry," he said. "The engagement with landowners is going to be a day, and then the pilot's going to roll out.

"This (program) hasn't been built from the ground up on what is the big picture liability conversation."

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Through the eyes of ex-engineer, now filmmaker Gillian McKercher, Orphaned explores the huge task of cleaning up thousands of idle oil and gas wells in the prairies before it's too late (Calgary, AB).