Jump to Content
A gas well sits in the middle of a flat field. White clouds are in the sky.

Photo by Richard Peat, via Flickr


Upholding the polluter-pays principle when bankrupt companies leave oil and gas wells behind

Orphan Well Association v. Grant Thornton Ltd.

February 14, 2019

In 2018, Ecojustice intervened in a Supreme Court of Canada hearing on who should be responsible for cleaning up abandoned oil and gas wells after a company has gone bankrupt.

The case, Orphan Well Association V. Grant Thornton Ltd., 2019, centred on Redwater Energy, an Alberta oil and gas company that went belly-up in 2015.

When Redwater went bankrupt, it left behind abandoned oil and gas wells that needed to be cleaned up and decommissioned. However, Redwater’s bankruptcy trustee wanted to prioritize paying back creditors and ignore the problem of the abandoned wells.

The Alberta Energy Regulator and Orphan Well Association filed a case in the Supreme Court of Canada, challenging a lower court ruling that determined Redwater’s trustee  was  free to pick and choose from among the company’s assets and could  ignore an Alberta Energy Regulator order to decommission the unproductive oil and gas wells.

Ecojustice intervened in the case and argued that bankrupt energy companies should not be permitted to walk away from unprofitable oil and gas wells without cleaning them up first.

The Supreme Court issued its decision in January 2019.

In a win for the environment, landowners, regulators and the public, the court determined that, when a company goes bankrupt and leaves abandoned oil and gas wells behind, trustees must put the environment first.

Unfortunately, the fact remains that, by the time oil and gas companies go bankrupt, they are often worth little to nothing. This means that even if the court says bankruptcy trustees must make cleaning up orphaned well sites a priority, there might not be enough money left over to cover those costs.

That’s why, while Ecojustice celebrates this victory, we continue to call on the province of Alberta to introduce laws that would require companies to make a security deposit to cover the potential costs of abandoning oil and gas wells — before they start drilling.

Making sure polluters pay for the messes they make is a key pillar of Ecojustice’s fight to secure clean air, water and a healthy environment for all.

That’s why Ecojustice applied to intervene in this case under its own name.

For almost a decade, Ecojustice has worked towards better regulation of Alberta’s abandoned wells problem. In this time, we’ve seen how the issues impacts landowners like Tony and Lorraine Bruder, Alberta cattle ranchers who we worked with to pressure the Alberta Energy Regulator (AER) to take action on abandoned sour gas wells on their land.

In Alberta alone, there are more than 89,000 inactive oil and gas wells that have yet to be properly cleaned up and de-commissioned. Almost 29,000 of those wells have been inactive for more than 10 years.

The longer these abandoned wells are left to sit, the greater the risk of environmental contamination and harm to the Albertans who own the land where the wells are located.

Photo of a gas well by Richard Peat, via Flickr. Image obtained under Creative Commons.

The Bruders’ case is only one example of a much broader and systemic problem that has led to more than 89,000 inactive oil and gas wells across Alberta. So when the opportunity came up to intervene under Ecojustice’s own name and help set a nation-wide precedent, we knew we had to take on the Redwater case.

Feb 2019
A close up of a salmon's head under shallow water.

A week of wins for the environment

In the span of a few days, Ecojustice scored three consecutive wins for the environment — including victories for the health of wild salmon, for Albertans plagued by abandoned oil and gas wells, and for the climate and human health.
Jan 2019
press release

SCC decision on abandoned oil wells a victory for environment and public but problems remain, Ecojustice says

CALGARY – The Supreme Court of Canada ruled today that cleaning up abandoned oil and gas wells must come before the interests of creditors after a company has gone bankrupt.
Feb 2018
press release

SCC to hear abandoned oil wells case tomorrow

Bankrupt companies should not get a free pass on cleaning up contaminated sites, say Ecojustice lawyers OTTAWA – An Ecojustice lawyer will be at the Supreme Court of Canada tomorrow to argue bankrupt energy companies cannot be permitted to walk away from unprofitable oil and gas wells without cleaning them up first.
Feb 2018
an illustration of an oil well in a field.

We’re heading to the Supreme Court of Canada today to ensure polluters pay

Most of us learn at a young age that we are responsible for tidying up the messes we make.
Jan 2018
black and white oil pumps stand in a wide field.

BREAKING: Ecojustice headed to the Supreme Court of Canada!

Great news! We’ll be at the Supreme Court of Canada next month to ensure that polluters pay to clean up their messes.