Supreme Court rules energy companies must clean up old wells — even in bankruptcy

An orphan well site near Carstairs, Alta., awaiting proper abandonment and reclamation. (Government of Alberta) Energy companies must fulfil their environmental obligations before paying back creditors in the case of insolvency or bankruptcy, Canada’s Supreme Court has ruled. The top court’s ruling released Thursday overturns two lower court decisions that said bankruptcy law has paramountcy over provincial environmental responsibilities in the case of Redwater Energy, which became insolvent in 2015. That meant energy companies could first pay back creditors before cleaning up old wells. In practical terms, that means energy companies could walk away from old oil and gas wells, leaving them someone else’s responsibility. The top court ruled 5-2 to overturn the earlier ruling. In doing that, it said bankruptcy is not a licence to ignore environmental regulations, and there is no inherent conflict between federal bankruptcy laws and provincial environmental regulations. Okotoks, Alta.-based Redwater Energy owned a stake in 17 producing oil and natural gas wells, as well as many more inactive wells. At the time of its insolvency, the company owed its bank, ATB Financial, just over $5 million. After Redwater became insolvent in 2015, its bankruptcy trustee wanted to sell the firm’s valuable wells to […]

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