On January 31, the Supreme Court of Canada released a long-awaited, precedent-setting decision which holds fossil fuel companies responsible for the clean-up costs of their abandoned operations, and gives environmental clean-up costs precedence over other creditors’ claims. The case arose from the 2015 bankruptcy of Redwater Energy, a small, Calgary-based oil and gas company; the agent managing the bankruptcy was proposing to sell the company’s profitable wells to pay off debts, and leave the clean-up costs of the other non-producing wells to the Orphan Well Association (OWA), a provincial, industry-funded agency. The Supreme Court provides its own “Case in Brief” summary of the the case, Orphan Well Association v. Grant Thornton Ltd. here , with links to all the official documents. The full decision is here ; French-language versions of the Case in Brief , and the full decision are also provided. The response by the Orphan Well Association is here .
For a brief reaction: “Redwater decision reassuring, but we aren’t out of the woods” by the Pembina Institute (Jan. 31) or from the National Observer special series Legacy of Liabilities , a summary of the decision and the more detailed, “Alberta lauds court ruling but has no oil well cleanup plan”.
Deeper background and analysis appears in “Alberta’s Mega Oil and Gas Liability Crisis, Explained” in The Tyee , in which Andrew Nikoforuk asks, “Just how will an increasingly indebted industry, hobbled by low energy prices and rising costs, find the up to $260 billion needed to clean up its inactive pipelines, wells, plants and oilsands mines as it enters its sunset years?” He concludes with words from Regan Boychuk, a founder of Reclaim Alberta, an advocacy group which began in 2016 to propose an Alberta Reclamation Trust , which would clean-up inactive wells and provide funding for job creation in the energy sector. Boychuk’s own insider’s view appeared in the National Observer as “Putting the Supreme Court’s Redwater decision in context” (Feb. 1) . (Boychuk also provided a briefer Opinion piece as a guest blogger in David Climenhaga’s Albertapolitics.ca ).
Other detailed articles: An Explainer from The Narwhal: “What the Redwater ruling means for Alberta’s thousands of inactive oil and gas wells” or from a legal point of view, from Osler law firm, “Supreme Court of Canada decision in Redwater: Early Implications “.
It is clear that the implications of this decision are huge and expensive, not only for Alberta, but for all extractive industries across Canada. As the Pembina Institute points out: “obligations have steadily grown, and now include over 80,000 inactive oil and gas wells, facilities, and pipelines as well as 1.4 trillion litres in fluid oilsands tailings. The Government of Alberta officially estimates it will cost CAD$57 billion to cleanup these sites, though there are ongoing concerns about the accuracy of this figure. Conversely, only $1.2 billion is currently held in securities to protect the public. ” (A joint investigation by the National Observer, Global News, the Toronto Star, and StarMetro Calgary in November 2018 estimated that the actual clean-up costs are approximately $260 billion in Alberta alone).