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.
