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Alberta’s Mega Oil and Gas Liability Crisis, Explained
Alberta’s Mega Oil and Gas Liability Crisis, Explained
A Supreme Court ruling now forces firms to clean up abandoned wells before paying creditors. That doesn’t solve much.
Just how will an increasingly indebted industry, hobbled by low energy prices and rising costs, find the up to $260 billion needed to clean up its inactive pipelines, wells, plants and oilsands mines as it enters its sunset years?
To date permissive provincial regulations have created the problem by only requiring industry to set aside $1.6 billion for the job.
That potentially leaves more than $200 billion in unfunded liabilities for taxpayers.
Technically the 5-2 court decision will make it easier for provinces to prevent insolvent companies from selling assets to pay creditors while dumping the cleanup bill onto taxpayers.
That’s been a big problem in Western Canada, where lower provincial court decisions have allowed bankrupt firms to pay off banks first and ignore their cleanup obligations under provincial laws.
As a result, a number of firms in Alberta walked away from more than 1,800 inactive wells and dumped more than $110 million worth of liabilities onto the lap of the provincial regulator over the last three years.
The province’s Orphan Well Association, a non-profit supported by annual $30-million industry levies to prevent taxpayers from footing the cleanup bill, is now so overwhelmed that it was rescued with a $300-million loan from the province and federal government.
The Orphan Well Association handled 74 orphan wells (properties with no legal or financial owner) in 2012. Now it has a backlog of 3,000 wells, with each well averaging $300,000 for plugging and reclamation.
…click on the above link to read the rest of the article…
Ecuador vs. Chevron, By Way of Canada
Ecuador vs. Chevron, By Way of Canada
In the latest twist to a 22-year-old legal saga, Canada’s Supreme Court ruled on September 4th that Ecuadorian villagers can seek to enforce an Ecuadorian legal judgment in Canada for $9.5 billion against Chevron Corporation for polluting the Amazon rainforest.
The plaintiffs were successful in arguing that since Chevron owns at least $15 billion worth of assets in Canada – including Newfoundland offshore oil fields, major investment in the Alberta tar sands, an oil refinery in B.C., natural gas holdings, and other assets – they can pursue the case in Ontario courts. In the unanimous 7-0 ruling, the Canadian Supreme Court sided with the villagers’ lawyers, agreeing that the province of Ontario has jurisdiction to recognize the $9.5 billion judgment obtained in 2011 by the villagers in an Ecuadorean court. [1]
Chevron Corp. had appealed to the Supreme Court in the hopes of overturning a lower-court decision that said the villagers could pursue their case in Ontario courts.
In the Supreme Court case, California-based multinational Chevron Corp. argued that its Canadian assets don’t belong to the parent company, but to a subsidiary called Chevron Canada Ltd. But the high court rejected the company’s arguments. Justice Clement Gascon ruled that Chevron Canada’s “bricks-and-mortar business in Ontario and its significant relationship with Chevron” is enough to establish jurisdiction for the case. [2]
The ruling does not mean that the Ecuadorian villagers can now seize Chevron’s Canadian assets. It only means that the case can go forward at a subsequent trial court in Ontario. As Justice Gascon wrote, “A finding of jurisdiction does nothing more than afford the plaintiffs the opportunity to seek recognition and enforcement.”
Nonetheless, the villagers and their lawyers believe the decision by the Supreme Court of Canada “has set an important milestone” [3] in a case that has been called “the trial of the century.”
…click on the above link to read the rest of the article…
Canada Clears Way for Ecuadorean Case Against Chevron Over ‘Amazon Chernobyl’
Canada Clears Way for Ecuadorean Case Against Chevron Over ‘Amazon Chernobyl’
A protestor shows his black painted hand as he carries an Ecuador flag to protest against Chevron and the oil contamination in Ecuador’s Amazon region during a joined global demonstration in Madrid, Spain, in 2013.. (Andres Kudacki / AP)
Canada’s Supreme Court ruled Friday that Ecuadorean villagers can go after Canadian assets of the US-based oil major Chevron. The lawsuit has been one of the most bitterly contested environmental cases in history, involving a contamination that environmentalists have dubbed the “Amazon Chernobyl.”
From Al Jazeera:
The plaintiffs, who include about 30,000 villagers and indigenous people, decided to go after the energy giant’s assets in Canada, Brazil and Argentina after the company contested a ruling by Ecuador’s highest court to pay $9.5 billion to clean up the contamination site.
Communities in the Lago Agrio region of Ecuador allege that Texaco, which was acquired by Chevron in 2001, dumped some 16 billion tons of oil and toxic waste in the Amazon rainforest as a cost-saving measure between 1964 and 1992, Telesur reported. That’s 80 times the amount of oil spilled in the 2010 British Petroleum Gulf of Mexico oil disaster, the Latin American news website added.
Ecuadorian villagers and indigenous communities affected by the contamination allege that it has resulted in illness and death, Telesur reported in June, and that they are still suffering the consequences of Texaco’s actions.
Plaintiffs claim that Texaco attempted to hide the dumping by covering nearly 1,000 oil pits with vegetation. People eventually built homes over some of the pits, and began coming down with mysterious illnesses, it is claimed.
“It has been 33 years … and I never knew that this was a covered pit,” local resident Serbio Curipoma told Telesur.
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