Thursday, February 16, 2017

--But a close eye must also be kept on the number of orphan wells climbing in the province. This issue isn’t going away anytime soon.----------------Diana Daunheimer “A licensee does not have the right … to select which obligations it’s willing to fulfil.” Not according to Neil Berry, inspector with the AER, who is on record stating it's a companies "prerogative" and "discretion" to follow mandate directives. The AER continually overlooked violations by our home, which included falsified public notices (so that we were unaware of sour gas venting by our home), operation of a well site over the licensed concentration of H2S, unlicensed venting and unreported SCVF/GM. Hundreds of families across the province have similar experiences with the AER's regulatory inaction and enabling of industry. This recent PR stunt, is only because Lexin owes the AER a large sum money. In any other scenario, the AER is agreeable, even co-operative in allowing operators to harm public health, since they operate with no public interest or health mandate. The AER deserves no credit, they doubled the OWF with one order, and have nearly 83,000 more inactive sites.------Julie Ali · University of Alberta I doubt this action by the AER will restore public confidence in its work. What we have in Alberta is a captive GOA, captive political parties and an energy regulator that has been made immune by the captive GOA/political parties. It is ridiculous that we have an energy regulator that has an immunity clause protecting it from any challenge by citizens. Such immunity would work in Russia but in Alberta? As for the orphan well program that the AER is in charge of--this is a major liability that Albertans will end up with. We also have the moonscape of the tailings ponds that have not been remediated and will remain as a public works project. When will the Auditor General of Alberta look at these liabilities and determine the costs for citizens? The oil and gas industry is not being responsible and the GOA simply doesn't work in the public interest.---

http://calgaryherald.com/business/energy/varcoe-aer-enforcement-action-sparks-questions-over-orphan-wells


Varcoe: AER enforcement action sparks questions over orphan wells

Published on: February 16, 2017 | Last Updated: February 16, 2017 7:32 PM MST
Alberta Liberal Leader David Swann says more needs to be done to clean up and reduce orphaned wells in the province.
Alberta Liberal Leader David Swann says more needs to be done to clean up and reduce orphaned wells in the province. KUCERAK, IAN / POSTMEDIA
The operator of 16 sour gas wells located south of Calgary sent a blunt letter to the Alberta Energy Regulator last month that caught the attention of the watchdog agency.
Lexin Resources Ltd. told the AER that because of its dispute with the regulator “and your actions, we are not sure we will be able to continue to provide proper health and safety overview and measures for the sour wells, particularly beyond Feb. 15, 2017,” it stated.
Sour gas, which contains hydrogen sulphide and is potentially lethal, is no trifling matter.
And sour gas wells located close to a large city are of particular concern.
One of the wells is less than two kilometres from the Auburn Bay neighbourhood, while another is just four kilometres from the city’s south hospital.
So the AER took action.
On Wednesday, it announced the suspension of all 1,380 Lexin wells, along with its facilities and pipelines.
“Lexin requested the AER orphan its sour gas well licensed assets and permit it to resume production and operations on its other assets. This is totally unacceptable,” AER vice-president Mark Taylor told reporters.
“A licensee does not have the right … to select which obligations it’s willing to fulfil.”
The case has broad ramifications, not just for the company but also the industry and Alberta’s Orphan Well Association.
Lexin did not return calls from the Herald, but the AER released an environmental protection order issued to the company, as well as other documents detailing its interaction with the producer dating back to last summer.
The regulator cited a number of issues.
On Oct. 25, 2016, for example, it issued an order requiring the company to address a hydrocarbon spill at its Mazeppa sour gas plant south of Calgary, but Lexin hasn’t complied, according to agency documents.
The AER pointed out the company laid off all but six of its employees in June to manage the entire operation.
The company has failed to pay the Orphan Well Association more than $1 million in associated fees and levies. The non-profit association collects money from producers through an annual $30-million levy, using it to plug and seal abandoned wells that don’t have an owner.
Finally, Lexin owes more than $70 million in security deposits for its end-of-life obligations, according to the regulator.
Aside from suspending the licences, the environmental protection order issued to the company and an affiliated entity, LR Processing Ltd., requires them to deal with environmental concerns at its Mazeppa sour gas plant.
Following an order last summer from the regulator, Lexin shut the facility and replaced the sour gas with sweet gas. All of the company’s sour gas wells south of the city are shut in and there are no immediate concerns to the environment or public safety, Taylor added.
Such enforcement action isn’t unprecedented, but the size and complexity of the case certainly is.
For example, the AER says it conducted 276 inspections of the producer’s sites last year.
The steps won applause from past critics of the energy regulator, such as the Pembina Institute and Liberal Leader David Swann, although they had other concerns.
“It’s certainly welcome that they’ve taken a strong stance,” said Swann. “The bigger question is how much more liability will we be facing as a public.”
Swann wonders whether the regulator should have acted faster and what this will mean for Alberta’s orphan well fund.
The Orphan Well Association already has an inventory of more than 1,500 wells and not enough money to remediate them quickly.
He worries at some point, the number of abandoned wells across Alberta will grow so large the province may have to help pick up some of the tab.
As part of the regulator’s action, the Orphan Well Association has taken over “care and custody” of Lexin’s wells and facilities for the time being.
But did the AER move fast enough?
While Andrew Read of the Pembina Institute wants to see quicker enforcement action taken, the chair of the Orphan Well Association disagrees.
Brad Herald, who is also a vice-president of the Canadian Association of Petroleum Producers, views this as an example of the AER carefully following its rules and regulations.
“They have to follow due process,” he said. “The AER stepped in when it felt it was appropriate.”
The Orphan Well Association will review all of the AER’s files on the Lexin wells and get site inspections done. Some wells could join the orphan well inventory, although Herald doesn’t know how many that will be.
The regulator believes the vast majority of the wells will not need to be suspended or abandoned.
But cases like this — and the financial woes some producers have endured during the oil price downturn — will most surely put more abandoned wells into the group’s lap.
The number has grown by 120 per cent in the past year. Herald said the association expects it will likely have to raise the industry levy in 2018-19.
So give the AER credit for taking action and staying on top of a complex case.
But a close eye must also be kept on the number of orphan wells climbing in the province. This issue isn’t going away anytime soon.
Chris Varcoe is a Calgary Herald columnist.
cvarcoe@calgaryherald.com

Julie Ali ·
I doubt this action by the AER will restore public confidence in its work.

What we have in Alberta is a captive GOA, captive political parties and an energy regulator that has been made immune by the captive GOA/political parties. It is ridiculous that we have an energy regulator that has an immunity clause protecting it from any challenge by citizens. Such immunity would work in Russia but in Alberta?

As for the orphan well program that the AER is in charge of--this is a major liability that Albertans will end up with. We also have the moonscape of the tailings ponds that have not been remediated and will remain as a public works project.

When will the Auditor General of Alberta look at these liabilities and determine the costs for citizens? The oil and gas industry is not being responsible and the GOA simply doesn't work in the public interest.
LikeReplyJust now
Diana Daunheimer
“A licensee does not have the right … to select which obligations it’s willing to fulfil.”

Not according to Neil Berry, inspector with the AER, who is on record stating it's a companies "prerogative" and "discretion" to follow mandate directives.

The AER continually overlooked violations by our home, which included falsified public notices (so that we were unaware of sour gas venting by our home), operation of a well site over the licensed concentration of H2S, unlicensed venting and unreported SCVF/GM.
Hundreds of families across the province have similar experiences with the AER's regulatory inaction and enabling of industry.

This recent PR stunt, is only because Lexin owes the AER a large sum money. In any other scenario, the AER is agreeable, even co-operative in allowing operators to harm public health, since they operate with no public interest or health mandate.

The AER deserves no credit, they doubled the OWF with one order, and have nearly 83,000 more inactive sites.
UnlikeReply11 hr
Diana Daunheimer
Pembina is no critic. They are controlled opposition.
Who funds Pembina's unGala 2017? Shell, Suncor, Enbridge, Cenovus, ConocoPhillips and Greenfield, to name a few.
Nikki Way with Pembina is on record stating the AER technical health reports that the corporation wrote about families in the Lochend, Didsbury and Fort McKay were "absolutely not based in reality."
Duncan Kenyon, although tasked with touring the province talking about fracking, actually claimed in person at the Synergy 2015 conference, he has no mandate to do so.
Pembina is a laughing stock of counterfeit environmentalism, mere podium props for greenwashing governments and insincere, regurgitated quotes, for articles like this.

CAPP has no place on the OWA, they are a lobby group. Considering the insurmountable costs that will befall the Fund, perhaps, trimming the useless fat of lobby interests from operations, would be a prudent start to fiscal and ethical management.
LikeReply1 hr
Geoffrey A Pounder
"The non-profit association collects money from producers through an annual $30-million levy, using it to plug and seal abandoned wells that don’t have an owner."

To put the $30 million a year for the Orphan Well Association into context — Exxon Mobil's CEO earned $40.3 million in 2012. $33 million in 2013. Chevron CEO earned $32.2 million in 2012.
And the Orphan Well Association is expected to reclaim orphan wells all over AB with $30 million?
LikeReply12 hrs
Mark Dorin ·
Some relatively rare good work and common sense exercised by the Alberta Energy Regulator, abeit overdue. It's time to issue some similar orders for unsafe operations in urban Edmonton. There are orphan wells within Edmonton that the AER refuses to consider for the orphan well program. Flaring (and venting) of sour gas next to the freeway in Edmonton is acceptable in the AER's book as well. The body refuses to say if permits have been applied for or issued, or for how many years this has been going on. So much for transparent administrative decision making across Alberta.
LikeReply3 hrs

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