Alberta court rules insolvent oil company’s assets won’t be used to clean up idle wells

, Income

An abandoned gas well in Alberta.

CALGARY – A precedent-setting court decision is expected to add to the number of orphaned oil and gas wells dotting the Alberta landscape and leave the Alberta Energy Regulator with mounting costs to clean up the problem.

In a ruling Thursday, Alberta Court of Queen’s Bench Chief Justice Neil Wittmann said money from the sale of bankrupt Redwater Energy Corp.’s assets should not be used to clean up idle oil wells, but would instead be used to pay back the company’s creditors, which include the provincially owned bank ATB Financial.

The decision, widely anticipated in the oilpatch, allows Redwater’s creditors to accept responsibility only for the company’s economically viable, and therefore valuable, wells. It will likely result in Redwater’s roughly 70 inactive oil wells being orphaned — meaning there is no longer a financially responsible party to clean them up.

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