Sour gas development in the Waterton Field

The Alberta Energy Regulator (AER) is the sole regulator for energy development in Alberta, responsible for approving energy development applications, ensuring industry compliance, and ensuring safe and responsible project closures. In order for energy projects closure to occur safely and responsibly, energy companies must be financially capable of supporting the end-of-life reclamation and liability management costs of their assets. In 2020, the Government of Alberta announced it was developing a new Liability Management Framework for the oil and gas sector to address a growing problem of inactive and orphaned facilities and unfunded end-of-life liabilities. New applications for oil and gas development are subject to the new Framework which includes an enhanced capacity review for operators and mandatory inactive inventory reduction.

The Clinic was retained by a resident who lives in the Waterton field near the Hamlet of Beaver Mines and is opposed to a new sour gas pipeline which was approved by the AER in September 2021. Among other environmental and safety concerns, our client believes the licensee for the pipeline does not meet the capacity requirements for end-of-life-liability required by the new Framework and associated AER rules. Clinic staff and students assisted the client with drafting and filing of an application for an internal AER appeal of the license decision, including arguments that our client met the ‘directly affected’ test for standing under the Responsible Energy Development Act (Alberta).

In the January 2022 the AER granted our client standing to appeal the license decision. The AER regulatory appeal hearing is scheduled to occur in February 2024. However, the AER panel refused our client’s request for disclosure of the licensee capacity assessment under AER Directives 067 and 088, and our client believes this refusal is a breach of procedural fairness. Our client is seeking leave to appeal this procedural decision to the Alberta Court of Appeal. The leave application will be argued by the Clinic at the Court of Appeal in mid-September 2023.

The matter is ongoing.