For the first time in its 65 years, the Alberta Energy and Utilities Board (EUB) has shut down an entire energy company – including all its oil production.
The EUB last week ordered the suspension and abandonment of all oil and gas operations belonging to Condor Resources Inc., a junior oil company operating out of Drayton Valley and Calgary.
“This is unprecedented,” EUB spokesman Greg Gilbertson said. “We don’t believe we’ve ever shut down the entire producing system of a company before.”
The action was deemed necessary in order to prevent a risk to public safety and the environment, after Condor Resources failed to address serious problems at its facilities, Gilbertson said. “We were concerned that if something did happen, that this guy would not respond to some kind of emergency situation.”
Business Edge left several messages for the owner of Condor Resources, but was unable to reach him for comment.
The EUB and the industry are facing other similar problems, due to companies walking away from Alberta’s aging oil and gas infrastructure.
In a separate case, the provincial government forced Legal Oil and Gas of Edmonton into bankruptcy last year after the firm ignored orders to clean up its numerous wellsites.
The cleanup bill for Legal’s contaminated legacy could be up to $12 million.
Condor Resources owns 40 wells, five production batteries and 11 pipeline licences, all in the Pembina oilfield near Drayton Valley, about 140 kilometres southwest of Edmonton.
The EUB has shut down all the wells, including six that had been producing oil, Gilbertson said. “Wellheads are chained and locked.”
None of the operations involved sour natural gas, which contains toxic hydrogen sulphide.
However, problems “that required urgent attention” at the company’s facilities included oil seepage around several wellheads, faulty equipment, production-water tanks about to overflow, and wellsites that had been neglected, Gilbertson said.
The EUB is fixing any problems that present an immediate risk, he added.
The EUB slapped closure orders on Condor’s 40 wells as of Feb. 3. Gilbertson said the EUB received a letter from the company’s owner stating that if the EUB shut down one of his wells, faulty equipment would cause a gas leak or a spill of oil and production water.
The EUB has implemented a program requiring companies with more liabilities than assets to pay security deposits, to ensure their facilities are cared for and properly decommissioned.
Condor Resources owes the EUB about $2.7 million under this program, but has not paid anything, Gilbertson said.
Condor’s owner could appeal the EUB’s actions or he could place his company in receivership and try to sell some of the properties.
But, Gilbertson noted: “We will not allow these properties to be sold to any company that we don’t think is going to be responsible in taking care of them.”
