10 LEXPERT
|
2017
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WWW.LEXPERT.CA
PHOTO:
SHUTTERSTOCK
When oil wells are abandoned and environmental remediation work
needs to be conducted, where does this responsibility lie in the case of
an insolvent operator? is question, watched with intense interest by
domestic and international investors, lenders, regulators and politi-
cians, as well as the energy industry at large, achieved more clarity ear-
lier this year.
According to Janice Buckingham, a partner with Osler, Hoskin &
Harcourt LLP in Calgary, the decision of the Alberta Court of Queen's
Bench in regard to bankrupt Redwater Energy (Re), 2016 ABQB 278
"established that a trustee in bankruptcy can disclaim an insolvent
debtor's uneconomic oil and gas properties while retaining and selling
its valuable assets to maximize recovery for secured creditors."
e decision in Redwater, a publicly listed junior oil and gas pro-
ducer in Alberta, says Buckingham, clarified what happens when the
mandate of provincial oil and gas regulators such as the Alberta Energy
Regulator (AER) comes into conflict with principles within the federal
Bankruptcy and Insolvency Act.
As such, says Buckingham, "certain provisions of Alberta's regula-
tory regime that require a trustee to satisfy abandonment and remedia-
tion of an insolvent debtor's oil and gas wells in priority to the claims of
ORPHAN WELLS
The decision in
Redwater shifts
responsibility for
environmental
clean-up away from
insolvent energy
companies and
towards the public
and industry.
But it remains to
be seen who will
ultimately pay
By Bev Cline
Who
Pays?
