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Canada Supreme Court Says Clean Up Old Oil Gas Wells Before You Pay Your Creditors

By: Emma McIntosh of Calgary

When energy companies go bankrupt, the cleanup of their old oil and gas wells must take priority over paying off creditors, the Supreme Court of Canada ruled Thursday.

Though centred in Alberta, the 5-2 decision sets a precedent across Canada, empowering provincial governments to stop defunct companies from off-loading their messes onto other companies or the public. The judgment is expected to resonate across the western provinces, where the number of companies walking away from old wells has skyrocketed amid low oil prices.

“Bankruptcy is not a licence to ignore rules,” wrote Chief Justice Richard Wagner in the court’s decision.

Though the Alberta government, the province’s energy regulator and environmental groups hailed the court’s decision as a victory, critics noted the underlying problems that led to the Redwater case remain. In some bases, a company’s assets may not be enough to cover cleanup costs. 

“The fact of the matter is that when these companies go bankrupt, they have very little resources left,” said Daryl Bennett, director of Action Surface Rights, a group that helps farmers with inactive wells on their land. Such wells can cause safety issues and contamination for the people living around them, Bennett added.

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