On February 14, 2021, in response to a public call from the Alberta Energy Regulator (the “AER“) for submissions on proposed changes to AER Directive 067, Eligibility Requirements for Acquiring and Holding Energy Licences and Approvals, Polluter Pay Federation (“PPF“) made related submissions.
We also made related submissions on security deposits, which are more properly related to AER Directive 006, Licensee Liability Rating (LLR) Program and Licence Transfer Process
Links to copies of the PPF covering letter and AER proposed Directive 067 feedback form are provided below.
The AER Liability Management System or Framework
The page on the AER’s website devoted to Liability Management states the obvious: The systems used to manage upstream oil and gas liabilities (end of life obligations all well and facility licensees have, and must bear the cost of) have not worked. The AER outlines what needs to change, at least from the Regulator’s perspective, and gives some insight into a proposed new liability management framework (including a related video).
Existing Liability Management Rules (Directives)
The existing Liability Management system or framework (to apparently be replaced as per the above video) consists of a number of AER Directives including the following (available from the AER website or via Google search):
- Directive 001
- Directive 006
- Directive 011
- Directive 067
The Chief Justice of the Court of Queen’s Bench of Alberta discussed the AER’s Liability Management system starting at para. 25 in the matter of Redwater Energy Corporation (Re), 2016 ABQB 278 (CanLII).
Polluter Pay Federation Submissions
The PPF Submissions filed with the AER on February 14, 2021 consist of:
Statement of Concern No. 31884 also submitted to the AER by PPF similarly deals with Liability Management issues.
Alberta Energy Regulator Reform
The Polluter Pay Federation holds that Liability Management failures are a result of dysfunction of the AER and that AER reform in general is urgently required.
Several Directors of the Polluter Pay Federation hold the informed view that a full public inquiry into AER dysfunctionality is urgently required, which can be performed by AER hearing commissioners or Surface Rights Board members (having Public Inquiry Act Powers). Alberta’s future depends on it because of the massive cost of unfunded upstream oil and gas liabilities and lack of profit in this segment of the oil industry.