December 05, 2013
Hale demands Minister intervene in flawed Alberta Energy Regulator 'orphan well' program
EDMONTON, AB (December 5, 2013): Today, Wildrose Energy Critic Jason Hale called on government to review the Alberta Energy Regulator’s Licensee Liability Rating program (LLR) and stop its implementation in order to reassess its dire impacts on junior oil and gas producers. Under the government’s new LLR rules, wells that are temporarily shut-in due to poor gas prices are classed as a liability for the energy company.
That extra liability increases the deposit fee that the energy company must promptly pay to the government. In many cases the increased deposit is on the order of millions of dollars and many times greater than the amounts of deposits required before the changes to the LLR program. Energy companies unable to raise capital to pay these new LLR fees run the risk of being forced into bankruptcy. “The changes to this program threaten the viability of hundreds of junior producers,” Hale said. “These companies are not trying to shirk their environmental responsibilities, but the inflexible rules in this new program mean that companies face fees of over $1 million, which can be 10-fold greater than what is needed,” “Albertans hoped the government learned from the 2008 royalty review disaster. If this program continues as planned hundreds of small energy companies employing thousands of Albertans could be forced out of business. This will have a huge impact on tax revenue and on the liability the government will incur for remediating orphaned wells. Hale recently questioned the Energy Minister and delivered a member’s statement in the Legislative Assembly on the LLR, but so far the government’s lack of action leaves junior producers wondering if they’ve been hung out to dry. Hale demanded Energy Minister Ken Hughes place the program on hiatus to consider solutions that would protect both the environment and save producers from becoming insolvent. “The Minister of Energy must intervene to ensure our junior producers are not being unfairly targeted, and fix the LLR so that it works for Alberta. These are the companies that live in and support our communities every day,” Hale said. “The stakes are too high to sit back and watch our junior producers go out of business. It’s time for the government to get back to the table, work with each company individually struggling to meet the demands of the LLR, and come back with a workable solution.”