Archives for October 2019

When well sites are abandoned, the rent cheques 
often stop while the noxious weeds flourish

By Jeff Melchior
Published: October 9, 2019
Alberta Farmer Express

 “Kochia six feet tall and completely covering the whole leases. We have many that look like this. When I phone, no one even answers the phones.”

This tweet from Lethbridge-area farmer Kevin Serfas in August likely could have been written by any one of hundreds of Alberta producers with abandoned well sites on their farms.

At last count, there were 150,000 energy leases in the province considered “orphaned” or inactive with no solid plans to reclaim them — some abandoned decades ago.

And those numbers from the Orphan Well Association inventory are on the low side, said Daryl Bennett, a farmer and director with the Alberta Surface Rights Federation.

“There are far more orphans than there are in the Orphan Well Association inventory and there’s a lot more coming,” said Bennett, citing Trident Exploration (a Calgary-based junior oil and gas company which ceased operation in May) as an example.

“Trident alone has 4,600 wells that haven’t hit the orphan well inventory yet.”

That leaves farmers such as Serfas not only dealing with unpaid rent but also having to figure out what to do with weeds. Kochia is a particularly bad one — not only a prolific seed producer but adept at developing herbicide resistance.

And even though he’s one of the biggest farm operators in the province (he and his family farm more than 50,000 acres), attempting to cut the kochia himself would be a logistical nightmare.

“I could manage them but with 50 or 60 leases on my property I would have to hire a full-time guy,” Serfas said.

The option of doing the work and billing the companies for the expense isn’t realistic either. Several unsuccessful attempts to reach some of the companies by phone and email have led him to wonder if they even still exist.

Nevertheless, several dry years in a row in southern Alberta have forged the perfect breeding conditions for kochia, which produces tumbleweeds that can spread its seeds far and wide. For producers with infected leases, it will likely fall on them to cut and spray it.

Kochia is difficult to manage and spreads quickly but has to be dealt with, said Charles Geddes, an Agriculture Canada researcher in Lethbridge.

“Everybody should take responsibility for (kochia),” he said. “If the plant is growing into the fall and has that tumbleweed structure, it should be cut off to stop it from tumbling away, which contributes to the expansion of this problem from field to field.”

A worsening situation

Aside from maintenance, the big question on the minds of many producers with abandoned wells on their properties is, “How am I going to be compensated?”

In January, the Supreme Court of Canada ruled in a landmark case dealing with failed oil and gas company Redwater Energy that bankrupt or insolvent energy companies must fulfil their environmental obligations before paying back creditors, including landowners.

But reclamation takes money, and lenders are not in a rush to come to the rescue of bankrupt companies, said Bennett. And the ruling has compounded the problems for ones struggling to survive, he added.

“It’s definitely made it harder for the smaller companies especially to get financing,” he said. “A lot of these companies are the ones neglecting to do proper weed control and maintain things.

“I talked to the vice-president of one company and he just said, ‘Look, we just don’t have the money.’”

Many companies are in that position, he added.

“It paints a pretty grim picture but that’s not the farmer’s issue. Farmers are entitled to have those leases taken care of in a timely manner and to receive their annual compensation.”

So what can producers do? Not much, said Bennett.

They can write to the Alberta Surface Rights Board and ask for help getting unpaid rent money for leases, but they will likely have to be patient.

“The surface rights board is at a crisis point,” he said. “It has a huge backlog, it doesn’t have enough staff and it probably has a limited budget. In some cases you can expect two years to have your annual compensation paid to you.”

As for getting companies to come out and cut kochia and other weeds, don’t hold your breath. “You can’t force anybody to take care of the weeds. The Orphan Well Association generally does not take care of weeds.”

High-maintenance weed

Southern Alberta continues to battle a growing population of kochia, having faced its third consecutive year of the dry conditions in which the tumbleweed thrives, said Geddes.

Kochia is usually managed throughout the growing season. However, Geddes said there are still things producers can do to manage it post-harvest and pre-seeding. For example, farmers who harvested around patches of kochia need to cut those patches as soon as possible.

 “Our recent research is beginning to show that kochia seed becomes viable throughout or closer to the end of August. After that you start to see more and more viable seed on the plant, so the earlier you can get in there, the earlier you can cut the plant off and limit the production of viable seed.”

Cutting may not be enough, however.

Kochia is quite resilient and can regrow after harvest under the right environmental conditions, said Geddes. A post-harvest burn-down may be necessary. However, kochia is notoriously herbicide evasive and some populations are resistant to Groups 2, 4 and 9 herbicides.

“Once we see resistance in the Group 4s, that starts to drastically limit the options we have for effective herbicides in small-grain cereal crops like spring wheat,” he said. “But we still need to determine whether Group 4 resistance in kochia covers a single or multiple active ingredients within this site of action.”

There are chemical options available to manage triple-resistant populations. Geddes cites Infinity — a Group 6 and Group 27 combination herbicide — as one example.

The difficulty with Infinity and several other kochia-effective herbicides is they can leave behind residue in the soil, possibly limiting crop options in the following year. This is where longer-term thinking comes in.

“Planning out your rotation in advance can really help you get ahead of these kochia populations,” he said. “You can use these more effective herbicides if you plan to seed a crop next year that is not as sensitive to the residual impact of the herbicide.”

However, chemical solutions are just one part of an overall kochia-killing strategy, said Geddes. Crop competition is another.

“The weak point of the life cycle of kochia is that the seed has very little dormancy and persists only one or two years in the soil seed bank. Planning out your rotation to plant two competitive crops in a row could go a long way towards limiting seed production and eliminating that population.”

Another management practice is to plant winter wheat to compete with kochia. There’s not a lot of research data available in this specific area, said Geddes, but it’s something that “just makes sense.”

“If you seed a winter crop you have an established crop in the spring while kochia is trying to emerge.”

Energy association wants review process streamlined, which could limit the ability to raise concerns

By Jeff Melchior
Published: October 9, 2019
Alberta Farmer Express

A growing number of abandoned energy leases in Alberta might make farmers wonder if it’s worth allowing an energy company to come onto their land in the first place.

However, a “pro-oil and gas regulatory environment” may make it more difficult to express concern over proposed energy projects, says Daryl Bennett, a director with the Alberta Surface Rights Federation.

According to a document provided by Bennett, the Canadian Association of Petroleum Producers has been lobbying the Alberta Energy Regulator (AER) to “expedite” energy project approvals whenever possible. The association specifically suggests that the energy regulator be given increased authority to decide which projects are worthy of the full 30-day review window in which the public can voice concerns.

If such “streamlining” was to take place, it could partially or completely bypass landowner and public input, said Bennett.

“Today, when industry wants to come on your land, you can file a statement of concern to the AER and then ask it to address your concerns,” he said. “But industry and government are now looking like they are trying to restrict that play.

“I think last year there were probably 400 statements of concern filed and I think it only resulted in 14 or 15 hearings.”

Bennett said he is also concerned that the provincial government’s environmental policies will give energy companies carte blanche to ignore or minimize their maintenance and reclamation responsibilities.

“Once again it’s the old Conservative party attitude that industry is far more important than the environment,” he said.

Bennett emphasized that he’s not talking about the environment in a “tree hugger” sense but rather landowners’ rights to enjoy their property without being left with a mess.

“Landowners are getting very upset,” he said. “The groups representing landowners and their legal counsel are surprised what this new government is doing. We are very concerned that property rights are going to be trampled so industry can get on doing what it’s always done and create a bigger mess.”

Former CEO displayed ‘reckless and wilful disregard’ for the proper management of public funds, report says.

Tony Seskus · CBC News · Posted: Oct 04, 2019 1:03 PM ET | Last Updated: October 4

Jim Ellis, shown in an old promotional photo, grossly mismanaged public funds while president of the Alberta Energy Regulator and the now-defunct International Centre for Regulatory Excellence, according to the Office of the Public Interest Commissioner. (Alberta Energy Regulator)

Alberta’s energy regulator wrongfully used its resources to establish an international centre outside its mandate, while its former CEO displayed “reckless and wilful disregard” for the proper management of public funds, according to investigations by three different provincial government watchdogs.

The damning reports by Alberta’s auditor general, public interest commissioner and ethics commissioner centred on the creation and operation of the now-defunct International Centre for Regulatory Excellence, or ICORE.

The Alberta Energy Regulator (AER), which is funded by a levy charged to the energy sector, oversees the province’s massive energy sector and is expected to ensure the safe and environmentally responsible development of the industry.

It established ICORE in 2017 as a separate, external entity that would offer training to regulators around the world.

In findings released Friday, both the auditor general and public interest commissioner found this was outside the AER’s mandate and that public money was spent inappropriately on ICORE activities.

Alberta Ethics Commissioner Marguerite Trussler, left, Public Interest Commissioner Marianne Ryan and Auditor General Doug Wylie, shown at a Friday news conference in Edmonton, shared findings from their respective independent investigations into the activities related to the AER and ICORE. All found the Alberta Energy Regulator wrongfully used its own resources to establish an international centre outside its mandate. (Jason Franson/The Canadian Press)

“AER engaged in activities outside of its mandate and public money was spent inappropriately on ICORE activities,” read the report from Alberta Auditor General Doug Wylie.

He estimated the total financial impact of ICORE activities on the AER totalled $5.4 million, though $3.1 million was recouped. The AER is still out of pocket $2.3 million, according to the audit.

Wylie also concluded that ICORE activities lacked a credible benefit to the AER.

‘Gross mismanagement’ by former CEO

The Office of the Public Interest Commissioner report levelled some of its strongest criticism at Jim Ellis, who was president and CEO of the AER and president of ICORE.

“His actions demonstrated a reckless and wilful disregard for the proper management of public funds, public assets and the delivery of a public service, which … constitutes gross mismanagement,” the report said.

Ethics Commissioner Marguerite Trussler’s report also found that Ellis had a conflict of interest “in that he furthered his own interest and improperly furthered the private interest of three other employees.”

“The primary motivation behind ICORE not-for-profit was to provide future employment for Mr. Ellis and others.”

However, Public Interest Commissioner Marianne Ryan told reporters during a news conference that there was no evidence to suggest Ellis benefited personally from a financial perspective.

The matters did not reach the threshold to refer them to the solicitor general for potential criminal charges, she said.

Ryan added that her report  is not a condemnation of the AER as a whole. “It was employees of the AER that brought this matter to my attention and assisted with the investigation,” she said.

Controls to monitor expenses at first ‘non-existent’

The auditor general’s report also found that controls and processes to protect against potential conflicts of interest failed and that oversight from the AER’s board was ineffective.

Alberta Auditor General Doug Wylie’s report also found that controls and processes to protect against potential conflicts of interest failed and that oversight from the AER’s board was ineffective. (CBC)

“Controls to track and monitor expenses related to ICORE activities were at first non-existent and then poorly implemented,” the report states. “The tone at the top at AER did not support a strong control environment or compliance with policies.”

Wylie’s report said a “culture of fear” at the AER stifled concerns regarding ICORE activities, with a number of staff interviewed by his office saying that employees who expressed complaints felt at risk of losing their jobs.

The culture at the AER stifled concerns regarding ICORE activities, Wylie said. A number of staff interviewed by his office used the phrase a “culture of fear” and said employees who were vocal about expressing complaints were at risk of losing their jobs.

AER sued ICORE in 2019

A recent CBC News investigation found a close and complicated relationship between the AER and ICORE, including the involvement of Ellis.

Several key figures who were involved with ICORE, including Ellis, are no longer associated with either organization. Ellis resigned from his post at the beginning of 2019. Ellis could not immediately be reached for comment Friday.

Also earlier this year, the AER sued ICORE and received a default judgment in its favour for $2.6 million for money it said it was owed for the development and delivery of training materials.

    Alberta Energy Regulator CEO Jim Ellis to resign in January

The results of the provincial investigations come at a time when the energy regulator is under scrutiny from the provincial government.

In September, Energy Minister Sonya Savage announced her department was launching a review of the AER and appointed an interim board of directors to set its future direction.

Savage and Environment Minister Jason Nixon issued a joint statement Friday on the results of the investigations, saying they “cannot condemn the practices noted in these reports strongly enough.”

“Our government was elected on a promise to reform the AER, which is precisely why we have already taken action, launching a review of the AER in August and replaced the board in the same month,” the statement said.

The recommendations contained within these reports will inform the Alberta government’s review of the AER, they said, noting that they expect the agency’s interim board to implement the reports’ recommendations.

Among the recommendations outlined in the three reports:

    Corporate governance throughout Alberta agencies, boards and commissions needs to be strengthened.

    AER staff need to be made aware of and sufficiently trained on the whistleblowing process.

    The AER should evaluate whether any additional funds expended on ICORE activities are recoverable.

In statement, the interim board of the AER said it will take the recommendations seriously and implement any required actions “in order to enhance public confidence” in the regulator.

“While ICORE was originally established to provide training to AER employees and support information-sharing across jurisdictions, it is clear now that a small group of senior leaders used AER resources in a way that is unacceptable,” the regulator said in a statement. “These individuals are no longer employed at the AER.”