Holding AER accountable, taxpayers on-the-hook for orphan costs, and unanswered questions
The Almost Summer Edition covering Alberta under United Conservative Party rule
My Scottish/Irish ancestors were immigrants who travelled by ship to the east coast of so-called “Canada” in the late 1700’s or early 1800’s and were part of several waves of genocidal colonization of the Indigenous people on Turtle Island. We arrived uninvited on the traditional unceded territory of the Wəlastəkewiyik (Maliseet) whose ancestors along with the Mi’Kmaq / Mi’kmaw and Passamaquoddy / Peskotomuhkati Tribes / Nations signed Peace and Friendship Treaties with the British Crown in the 1700s. As a child in the 1970’s, my parents moved west to work in the oil sands industry and I grew up in the Nistawâyâw (Cree) Ełídlį Kuę́ (Dene) - Fort McMurray area within Treaty 8 territory, which his home to six First Nations and six Métis communities. Today, I am grateful to be writing this newsletter from Moh’kinsstis, and the traditional Treaty 7 territory of the Blackfoot confederacy: Siksika, Kainai, Piikani, as well as the Îyâxe Nakoda and Tsuut’ina nations. This territory is also home to the Métis Nation of Alberta, Region 3 within the historical Northwest Métis homeland. I recognize that the land I now work and live on was stolen from these Nations (truth) and I support giving the land back as an act of reconciliation. Lands inhabited by Indigenous Peoples contain 80% of the world’s remaining biodiversity. Indigenous Peoples’ traditional knowledge and knowledge systems are key to designing a sustainable future for all. We are all Treaty people on Native land.
It’s been more than two weeks since I attended a press conference organized by the Coalition for Responsible Energy (C4RE) and I can’t stop thinking about it.
Maybe it’s because following the event, the coverage I read in most of the mainstream media outlets that I checked seemed to miss important aspects of the story. More about that later in this post.
Maybe it's also because of the respect I have for good people trying to make the world a better place, even yes, here in Alberta. I’m like everyone, I welcome some inspiration in this depressing news cycle.
C4RE is a newly formed collaboration of groups demanding “sweeping changes to the way the fossil fuel energy industry is regulated in Alberta to begin prioritizing the health and well being of Indigenous Communities, Alberta’s ecosystems, and the public.” The group has decided to take the Alberta Energy Regulator (AER) and the government to task over its mishandling of the clean-up of oil and gas infrastructure.
A recent report by a fossil fuel executive hired by the Alberta government outlined the scale of the problem. Across the province there are more than 270,000 well bores that are barely profitable, inactive, or decommissioned—with reclamation not yet complete.
In addition, about half of the 38,000 production facilities built by the industry are inactive or decommissioned, but not reclaimed. And about 40% of the 440,000 kilometres of pipelines criss-crossing the province are decommissioned or not operating.
I wrote about this so-called “Mature Assets Strategy” report in another article for The Energy Mix in early May. I’ve also included additional information about that in a recent post for my newsletter.
The oil and gas industry’s playbook for avoiding the payment of clean-up costs for the environmental messes is well-documented. Alberta’s problem is not unique, but that doesn’t make it any less frustrating that so many have been fighting for accountability and so little progress has been made.
As with most of the stories I work on, not everything makes it into the final version and there are a few pieces of the recent C4RE story that I wanted to share with you, including the questions I had submitted to the AER and the Minister of Energy that they did not/would not answer.
The coalition’s submission is more than 40 pages in length and is just the latest attempt over many decades of efforts by various groups to demand the government and the regulator take steps to uphold the “polluter pay principle” that underpins environmental law.
Their argument is that the amount of money to be collected from fossil fuel companies in 2025 to cover the Orphan Well Association’s clean-up costs is not only woefully inadequate, but may be outside of the law. They are calling for a formal reconsideration of the orphan well levy decision.
Before I go any further with this, here is an excerpt, followed by a link to the story that appeared in The Mix on June 4, 2025:
Alberta’s Orphan Well Levy Is Unlawful, Insufficient, Coalition Contends
More than a dozen organizations are backing a landowner’s formal challenge to the Alberta Energy Regulator, saying the agency “failed to follow the law” when it set this year’s funding requirement for cleaning up abandoned oil and gas wells.
Alberta’s 2025 orphan fund levy determines how much money oil and gas companies must pay to the Orphan Well Association (OWA) to clean up abandoned wells, pipelines, and other fossil fuel infrastructure. The AER uses a formula to calculate how much each company is required to contribute to the total budget. Once approved, money is transferred to the OWA, which also receives funding in the form of interest-free loans from provincial and federal governments.
This year’s $144.45-million levy—just 7% higher than in 2024 despite a dramatic rise in orphan sites—triggered the demand for formal reconsideration.
A First-of-its-Kind Challenge
Dwight Popowich, a landowner from Two Hills, Alberta, and the Coalition for Responsible Energy (C4RE)—a new coalition of scientists, academics, and Indigenous and civil society organizations—filed the challenge, saying the AER failed to follow the province’s law governing orphan wells, the Oil and Gas Conservation Act (OCGA).
This is the first time such a challenge has been filed, C4RE said in a release. The involvement of the Alberta government is one of several issues raised in its submission, which seeks a formal “reconsideration” of the levy. In the document, which was shared with reporters at a news conference, the coalition argues the decision on the levy “belongs to the AER alone,” and any involvement of the government is an “error of law.”
The AER has the authority by legislation to decide the levy, but its media management specialist Renato Gandia confirmed in a statement to The Energy Mix that the final decision was made by the Alberta government.
Josh Aldrich, press secretary to Energy and Minerals Minister Brian Jean, said in an interview that he did not want to comment on why the government needed to approve the AER’s orphan well levy. Neither Gandia nor Aldrich responded to The Mix’s emailed questions about the detailed issues raised in the submission.
Read the full article for FREE on The Energy Mix website.
What I wasn’t able to delve into for this article were all of the details in the filing. The group was able to connect-the-dots to some very newsworthy facts. They did it with help from their representative for the official submission, Mark Dorin, who previously worked in the industry, but is now one of its biggest critics.
Taxpayers are already paying for orphan wells
Also, credit to Popowich, the landowner who is lending his name to the submission. He is just one of thousands of Albertans with abandoned well sites, infrastructure and/or pipelines on their property. He shared some of the documents and correspondence he received from the OWA and they are included in the submission.
The OWA sent Popowich a letter back in March saying he was encouraged to apply for compensation for unpaid surface lease rentals. They recommend this be done on an annual basis.
The letter goes on to say that decommissioning and/or reclaiming a well site will take several years but in the meantime, he is responsible for the “vegetation management issues” or weed control around the site.
They also suggested he apply for compensation for unpaid surface lease rentals and cost recovery for weed control through the Land & Property Rights Tribunal.
If he’s successful, guess who pays for costs of unpaid rental payments and/or weed control awarded through this tribunal? You got it. It’s the taxpayers of Alberta.
When the press secretary for Minister Jean called me, I took the opportunity to ask him this question (as well as emailing the question to him) - “are taxpayers not paying for costs on behalf of the oil and gas companies through this process? And if so, why is that?” He told me he did not want to comment on that.
“When the orphan fund levy is insufficient, the process of land reclamation (including the certification of land reclamation) is delayed, which extends the period of time landowners are entitled to recover compensation through section 36 of the Surface Rights Act, funded through the Government of Alberta's general revenue, whereby taxpayers are effectively compensating surface owners who host orphan wells and facilities on their land.” (P.8 of the Request for Reconsideration, May 26, 2025)
While the government and the AER made only incremental increases to the orphan well levy paid by the industry, the number of assets are increasing exponentially. And taxpayers are still on the hook for the full compensation those landowners are entitled to under the law.
As the filing says: “Therefore all Alberta taxpayers are directly and adversely affected by any delay in performing closure work including land reclamation caused by levy decisions that are inadequate to cover closure costs.”
A tale of two press conferences?
If you read the media coverage by The Canadian Press (CP) about this news conference, you’ll notice a very differing view of what was the most newsworthy.
CTV, CBC and Global News all carried the story from CP with this headline: “Levy charged to Alberta oil companies too low to cover orphan well costs: report.”
What report, you may be wondering? The story refers to a background report that analyzed the historically low orphan well levy amounts that have led to the OWA being $862 million behind on spending to clean up orphan sites. It was prepared for the C4RE coalition by Drew Yewchuk, who joined the press conference by video to summarize his findings and answer a few questions.
Yewchuk’s report is brief but powerful, pulling information from OWA annual reports, the Auditor General of Alberta’s report and a previous paper he co-authored with Shaun Fluker and Martin Olszynski. Here are a few eye-popping graphs from his most recent report. Figure 2 shows little progress on closing the gap between the levy and growing costs.
The CP story focused mainly on Yewchuk’s report and didn’t mention the filing with the AER requesting reconsideration of the orphan levy decision until eight paragraphs into the story. You have to read even further to learn that he was backed by a coalition of organizations, including the Alberta Environmental Network, the Calgary Climate Hub, and Keepers of the Water, to name just a few.
CTV News included a link to the wrong study in its first paragraph, which is ironic given that those older studies make it even clearer that this analysis has been done previously by Yewchuk and others. It’s the formal challenge by the coalition that is new!
The Globe and Mail’s headline was quite different from the CP story, focusing instead on the AER filing: “Coalition files appeals against Alberta Energy Regulator over orphan well clean-up costs.”
The story also covered Yewchuk’s analysis but recognized that the news was the challenge being filed with the AER, not the background report.
Missing from all of the above coverage was any mention of the health and safety risks discussed at the press conference, including some pretty sobering facts from Dr. Norm Campbell of CAPE (as reported in my article).
This is surprising, given that Dr. Campbell’s information really elevated the rationale for taking this problem seriously, that is, the harm to people, as well as to the environment and nearby animals, both wild and domesticated.
Free loans to the industry-led association
Another fact that didn’t get a lot of coverage, even in my article, was that both the provincial and federal governments have made interest-free loans to the OWA. These loans now exceed $337 million. They have until 2035 at the very latest, to pay back those taxpayer funds, all while the OWA is facing an increase in orphan assets in coming years. According to Yewchuk’s report, there are another 100 licensees in “high financial distress.”
“Those 100 licensees hold $2.38 billion in closure liabilities, a significant share of which is likely to be transferred to the OWA in the coming years as those licensees enter insolvency processes. (Drew Yewchuk, Why the Polluter Has Not Paid: Alberta’s Under-funded Orphan Program, May 27, 2025)
Unanswered questions and the claims by C4RE
For a little insight into the lack of transparency on the part of the AER, here are the questions I had emailed to their media relations team. None of my specific questions below were answered.
C4RE argues in its submission that decisions about the amount of the levy are to be made by the AER alone as outlined in The Oil and Gas Conservation Act, Section 94.
Why is the regulator not making the decision and instead sending a “recommendation” to the Government of Alberta?
Can you explain this process further, who and how is this decision made? It is sent directly to the Minister of Energy Brian Jean?
Were changes made to the AER recommended levy amount or was it accepted as is?
The Oil and Gas Conservation Act, Section 70 outlines the specific requirements for deciding on the levy amount. Does the levy recommended by the AER in March, 2025 meet the requirements? If not, what are the reasons for deviating from this?
Ed. note: The requirements are:
1. All costs for the fiscal year (which are outlined in detail in the Act)
2. Any deficiencies from the previous fiscal year
3. Any other expenditures the AER considers necessary
If the OWA is telling landowners they don't have enough funding to clean up wells that have been non-producing for decades, why would the Alberta Energy Regulator not levy sufficient funds to cover these costs?
What are the next steps for the AER and when can the applicants expect a reply from the AER? Any details on the reconsideration process, timelines, etc?
“No comment” and a prepared statement
I also emailed these same questions to the Minister of Energy’s press secretary, along with a couple of additional questions:
Assuming the final decision was made by the Energy Minister, The Oil and Gas Conservation Act, Section 70 outlines the specific requirements for deciding on the levy amount. Are there other factors in the decision-making NOT outlined in the Act? If yes, what are they?
If the OWA is telling landowners they don't have enough funding to clean up wells that have been non-producing for decades, does the government believe this is a reasonable and safe amount of time for landowners to wait?
Also, the claimant says he received a letter from the OWA encouraging him to seek compensation for the unpaid surface least rentals via the Surface Rights Act and the Land and Property Rights Tribunal, compensation which would be paid by taxpayers if he was successful.
Does this not mean this is another way that taxpayers are "on the hook" because of companies not paying their bills?
I did receive a phone call from the press secretary, who referred me to the general statement sent to all media, and recommended I contact the AER. When I asked about those last few questions above, he refused to comment.
Accountability - One way or another
I’d like to leave you with a final note about accountability.
A group called the “Investors for Paris Compliance” recently attended the annual general meetings for Suncor and CNRL to ask questions of their auditors, KPMG and PwC.
The small team of researchers and analysts represent investors, looking at their net zero plans. According to their website, their goal is to improve accountability.
They found that auditors of these two companies, Canada’s two largest oil and gas companies, failed to question the “lack of detail and uncertainty related to both oil and gas liabilities and the energy transition.”
“Credible estimates suggest Suncor and CNRL may face liabilities far greater than they acknowledge in their financials, potentially tens of billions of dollars higher. The massive clean-up bill that oil and gas companies have racked up is a serious controversy in Alberta. If companies aren’t assessing and budgeting for these clean ups properly, shareholders have an inaccurate accounting of how much these companies are worth.” (Auditor Gaps Put Canadian Oil and Gas Valuations in Question, by Jessica Carradine, May 16, 2025)
The team reported that when they attended the AGM’s of the two companies and asked questions about liabilities and the stranded asset risks, “instead of providing straightforward answers, both the auditors and the company executives dodged our questions, offering vague responses or deflecting entirely.”
These are just two instances but it does raise questions as to whether public companies are accurately accounting for their liabilities around clean up. This should include not only their own but in Alberta’s case, sharing financial responsibility for the whole industry’s assets.
“Their avoidance warrants serious concerns about both transparency and accountability of the audits performed on public companies.” (Auditor Gaps Put Canadian Oil and Gas Valuations in Question, by Jessica Carradine, May 16, 2025)
The group has submitted a letter to the Canadian Public Accountability Board, requesting file inspections of the most recent KPMG audit of Suncor and the PwC audit of CNRL.
(Ed. note: Make sure you stick around until the end of the video for some dancers in what looks like Saran Wrap.)