Read first: Alberta’s Growing $30-Billion Liability: Inactive Wells, Compared to other jurisdictions, province lets oil firms off the hook when it comes to cleaning up by Andrew Nikiforuk, 13 Feb 2017, TheTyee.ca
AER enforcement action sparks questions over orphan wells by Chris Varcoe, February 16, 2017, Calgary Herald
The operator of 16 sour gas wells located south of Calgary sent a blunt letter to the Alberta Energy Regulator last month that caught the attention of the watchdog agency.
Lexin Resources Ltd. told the AER that because of its dispute with the regulator “and your actions, we are not sure we will be able to continue to provide proper health and safety overview and measures for the sour wells, particularly beyond Feb. 15, 2017,” it stated.
Sour gas, which contains hydrogen sulphide and is potentially lethal, is no trifling matter.
And sour gas wells located close to a large city are of particular concern.
One of the wells is less than two kilometres from the Auburn Bay neighbourhood, while another is just four kilometres from the city’s south hospital.
So the AER took action.
On Wednesday, it announced the suspension of all 1,380 Lexin wells, along with its facilities and pipelines.
“Lexin requested the AER orphan its sour gas well licensed assets and permit it to resume production and operations on its other assets. This is totally unacceptable,” AER vice-president Mark Taylor told reporters.
[But, it’s acceptable to the same Mark Taylor that Encana illegally frac Rosebud’s drinking water aquifers while he was manager?! And it’s acceptable for him to lie to Rosebud residents about what Encana did to the community’s drinking water supply?]
“A licensee does not have the right … to select which obligations it’s willing to fulfil.”
The case has broad ramifications, not just for the company but also the industry and Alberta’s Orphan Well Association.
Lexin did not return calls from the Herald, but the AER released an environmental protection order issued to the company, as well as other documents detailing its interaction with the producer dating back to last summer.
The regulator cited a number of issues.
On Oct. 25, 2016, for example, it issued an order requiring the company to address a hydrocarbon spill at its Mazeppa sour gas plant south of Calgary, but Lexin hasn’t complied, according to agency documents.
The AER pointed out the company laid off all but six of its employees in June to manage the entire operation.
The company has failed to pay the Orphan Well Association more than $1 million in associated fees and levies. The non-profit association collects money from producers through an annual $30-million levy, using it to plug and seal abandoned wells that don’t have an owner.
Finally, Lexin owes more than $70 million in security deposits for its end-of-life obligations, according to the regulator.
Aside from suspending the licences, the environmental protection order issued to the company and an affiliated entity, LR Processing Ltd., requires them to deal with environmental concerns at its Mazeppa sour gas plant.
Following an order last summer from the regulator, Lexin shut the facility and replaced the sour gas with sweet gas. All of the company’s sour gas wells south of the city are shut in and there are no immediate concerns to the environment or public safety, Taylor added.
Such enforcement action isn’t unprecedented, but the size and complexity of the case certainly is.
For example, the AER says it conducted 276 inspections of the producer’s sites last year.
The steps won applause from past critics of the energy regulator, such as the Pembina Institute [Typical for a Synergy Group to praise the lame and way too late actions of the AER] and Liberal Leader David Swann, although they had other concerns.
“It’s certainly welcome that they’ve taken a strong stance,” said Swann. “The bigger question is how much more liability will we be facing as a public.”
Swann wonders whether the regulator should have acted faster and what this will mean for Alberta’s orphan well fund.
The Orphan Well Association already has an inventory of more than 1,500 wells and not enough money to remediate them quickly.
He worries at some point, the number of abandoned wells across Alberta will grow so large the province may have to help pick up some of the tab. [Mr. Swann needs to read Nikiforuk’s articles, notably the one at the top of this post]
As part of the regulator’s action, the Orphan Well Association has taken over “care and custody” of Lexin’s wells and facilities for the time being.
But did the AER move fast enough?
While Andrew Read of the Pembina Institute wants to see quicker enforcement action taken, the chair of the Orphan Well Association disagrees.
Brad Herald, who is also a vice-president of the Canadian Association of Petroleum Producers, views this as an example of the AER carefully following its rules and regulations.
“They have to follow due process,” [!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! Since when does the AER follow due process? AER staff don’t know what that means] he said. “The AER stepped in when it felt it was appropriate.” [It’s a shit show scam the AER is pulling with the timing extremely suspect]
The Orphan Well Association will review all of the AER’s files on the Lexin wells and get site inspections done. Some wells could join the orphan well inventory, although Herald doesn’t know how many that will be.
The regulator believes the vast majority of the wells will not need to be suspended or abandoned.
But cases like this — and the financial woes some producers have endured during the oil price downturn — will most surely put more abandoned wells into the group’s lap.
The number has grown by 120 per cent in the past year. Herald said the association expects it will likely have to raise the industry levy in 2018-19.
So give the AER credit for taking action and staying on top of a complex case. [Why is Varcoe preaching garbage?]
But a close eye must also be kept on the number of orphan wells climbing in the province. This issue isn’t going away anytime soon. [Emphasis added]
Kingsbury Manderville · Calgary, Alberta
What a bunch of scumbags the Lexin owners are! Let’s have heir names.
“Declaration naming Michael J. Smith, Jasmina Cezek, and Rob Jennings under section 106 of the Oil and Gas Conservation Act”
Julie Ali · University of Alberta
I doubt this action by the AER will restore public confidence in its work.
What we have in Alberta is a captive GOA, captive political parties and an energy regulator that has been made immune by the captive GOA/political parties. It is ridiculous that we have an energy regulator that has an immunity clause protecting it from any challenge by citizens. Such immunity would work in Russia but in Alberta?
As for the orphan well program that the AER is in charge of–this is a major liability that Albertans will end up with. We also have the moonscape of the tailings ponds that have not been remediated and will remain as a public works project.
When will the Auditor General of Alberta look at these liabilities and determine the costs for citizens? The oil and gas industry is not being responsible and the GOA simply doesn’t work in the public interest.
“A licensee does not have the right … to select which obligations it’s willing to fulfil.”
Not according to Neil Berry, inspector with the AER, who is on record stating it’s a companies “prerogative” and “discretion” to follow mandate directives.
The AER continually overlooked violations by our home, which included falsified public notices (so that we were unaware of sour gas venting by our home), operation of a well site over the licensed concentration of H2S, unlicensed venting and unreported SCVF/GM.
Hundreds of families across the province have similar experiences with the AER’s regulatory inaction and enabling of industry.
This recent PR stunt, is only because Lexin owes the AER a large sum money. In any other scenario, the AER is agreeable, even co-operative in allowing operators to harm public health, since they operate with no public interest or health mandate.
The AER deserves no credit, they doubled the OWF with one order, and have nearly 83,000 more inactive sites.
Pembina is no critic. They are controlled opposition.
Who funds Pembina’s unGala 2017? Shell, Suncor, Enbridge, Cenovus, ConocoPhillips and Greenfield, to name a few.
Nikki Way with Pembina is on record stating the AER technical health reports that the corporation wrote about families in the Lochend, Didsbury and Fort McKay were “absolutely not based in reality.”
Duncan Kenyon, although tasked with touring the province talking about fracking, actually claimed in person at the Synergy 2015 conference, he has no mandate to do so.
Pembina is a laughing stock of counterfeit environmentalism, mere podium props for greenwashing governments and insincere, regurgitated quotes, for articles like this.
CAPP has no place on the OWA, they are a lobby group. Considering the insurmountable costs that will befall the Fund, perhaps, trimming the useless fat of lobby interests from operations, would be a prudent start to fiscal and ethical management.
Doug Mackenzie · Calgary, Alberta
Diana, do you really expect readers to believe that Neil Berry said this ? Do you really expect readers to believe “hundreds of families”? People have caught on to the difference between truthfulness and truthiness….
I had the recording posted publicly for over a year, when I find a way for facebook to host voice memos, I will post it for you again Doug.
Mr. Berry also stated that companies do not engage in the proper air quality monitoring or testing and the AER does not enforce the mandated directives to ensure AAAQO parameters are not exceeded, because it is simply too expensive for companies to do proper monitoring. Berry also gets the directive on sour gas modelling incorrect, stating the threshold for dispersion modelling is 1% H2S, when the directive states 5%.
Geoffrey A Pounder
“The non-profit association collects money from producers through an annual $30-million levy, using it to plug and seal abandoned wells that don’t have an owner.”
To put the $30 million a year for the Orphan Well Association into context — Exxon Mobil’s CEO earned $40.3 million in 2012. $33 million in 2013. Chevron CEO earned $32.2 million in 2012.
And the Orphan Well Association is expected to reclaim orphan wells all over AB with $30 million?
Mark Dorin · Didsbury High School
Some relatively rare good work and common sense exercised by the Alberta Energy Regulator, abeit overdue. It’s time to issue some similar orders for unsafe operations in urban Edmonton. There are orphan wells within Edmonton that the AER refuses to consider for the orphan well program. Flaring (and venting) of sour gas next to the freeway in Edmonton is acceptable in the AER’s book as well. The body refuses to say if permits have been applied for or issued, or for how many years this has been going on. So much for transparent administrative decision making across Alberta.
February 16 2017 Email from Albertan Stewart Shields to elected officials, federal and provincial:
This certainly is a refection on the type of management Alberta has managing our petroleum resources!! Appearances would certainly suggest that Lexin Resources should have never been allowed a license to operate in the first place!! It’s very difficult to blame Lexin’s failure on the drop of crude oil prices since it’s production and plant were sour gas wells and facilities?? Natural gas is selling for more than it has for some time!! I certainly don’t like to here comments that orphan wells are being dropped on the Alberta public for clean-up!! Industry has always had this task as one of their responsibilities to operate in Alberta? Any change to governments paying for orphan well abandonment—should certainly be reflected by who and how operators licenses are acquired??
Premier wall in Saskatchewan has been determined to get our federal tax dollars for a make work project in his province!! However, Wall is still offering industry drilling incentives during a time when the world is awash in crude oil, does this make sense?? The incentives consists of course of Saskatchewan public royalties—that if collected would allow the province to handle it’s own industry messes!! Calgary oilmen just love Brad Wall, and a view of his drilling incentives paid with his public’s royalties is one reason Calgary pays for Walls re-election expenses!
Major changes are needed in how western provinces go about managing their petroleum resources to prevent it from becoming a Albatross around the neck of the federal government! If indeed our federal tax dollars are ever required to support Foreign owned petroleum giants, then the federal government will have to take over the collect of royalty payments. Just the thought that the public must abandon wells drilled by Exxon-Mobil or Royal Dutch Shell is totally unbelievable!! Lexin seen the problem low producing oil operators are having, and since their production doesn’t justify the needed expense– are using this time to bail with what they can get away with!! However it’s a resource management problem that must be addressed for the well being of all!! But again-keep your oily fingers off my tax dollars!! [Emphasis added]
Super slow “escalation!” AER escalates enforcement action against Lexin Resources Ltd. Press Release by AER, February 15, 2017
Calgary, Alberta (Feb 15, 2017)… Calgary, Alberta (February 15, 2017)… The Alberta Energy Regulator (AER) has suspended the licences of all Lexin wells, facilities, and pipelines, requiring the company to cease all production.
Lexin has failed to comply with multiple orders, lacks sufficient staff to manage its more than 1600 sites, and owes more than $1 million in orphan fund levies and administrative fees and more than $70 million in security for its end of life obligations. Repeated attempts by the AER to bring the company into compliance have failed. As a result, the AER has little confidence in Lexin’s ability to conduct its operations safely and is taking measures to prevent increasing public safety, environmental, and financial risk.
AER licensees with working interests in any of Lexin’s AER-licensed operations are required to secure, shut in, and provide emergency and incident response at those sites. The AER has directed the Orphan Well Association (OWA) to provide care and custody of Lexin sites.
Today, the AER has issued an environmental protection order against Lexin and LR Processing Ltd., an affiliated entity, requiring them to address environmental concerns at the Mazeppa sour gas plant. On August 9, 2016, the AER ordered Lexin and LR Processing to suspend the Mazeppa gas plant and related infrastructure
Lexin may only resume operations at its AER-licensed properties if the AER provides written approval to do so and will be subject to any terms or conditions the AER deems necessary.
The AER has been advised that equipment has been removed from AER-licensed Lexin properties and has sought a court order to stop this from happening. On February 14, 2017, the Court of Queen’s Bench of Alberta issued an interim order prohibiting removal of equipment from Lexin’s AER-licensed sites, subject to review of the order by the court on February 17, 2017. If anyone has information about the removal of Lexin equipment over the past six months, please contact the AER’s 24-hour emergency and complaint line at 1-800-222-6514.
Copies of the closure order, environmental protection orders, and court order can be found on the AER’s Compliance Dashboard.
FOR BROADCAST USE
Backgrounder: Action against Lexin Resources Ltd.
– 30 –
For more information, please contact:
Cara Tobin, AER Public Affairs
Media line: 1-855-474-6356
From: Stakeholder Engagement
Sent: Wednesday, February 15, 2017 2:04 PM
Subject: AER Enforcement Action against Lexin Resources Ltd.
On February 14, 2017, the Alberta Energy Regulator (AER) ordered the suspension of all wells, facilities, and pipelines held by Lexin Resources Ltd. The AER has taken this step to ensure that sites licensed to Lexin will not pose a risk to public safety or the environment.
The AER has transferred the Lexin sites to the Orphan Well Association (OWA) and directed that the Orphan Well Association and any companies with a working interest in these sites shut in operations, secure the sites, and provide for their care and custody.
The AER is taking these actions because Lexin failed to comply with multiple orders, lacks sufficient staff to manage its more than 1600 sites, owes more than $1 million in orphan fund levies and administrative fees, and owes more than $70 million in security deposit.
The Mazeppa gas plant south of Calgary remains suspended; however, there are outstanding environmental concerns that must be addressed. The environmental protection order issued February 15, 2017, is a necessary next step.
The AER also obtained an interim court order to prevent the unauthorized removal of Lexin equipment, as equipment removal could present a risk to public safety and the environment.
A copy of the AER orders can be found on the AER Compliance Dashboard at http://www1.aer.ca/compliancedashboard/enforcement.html.
Please feel free to forward this email on to stakeholders who would be interested in receiving this information.
For concerns relating to a specific energy operation, site, or facility, please contact the AER 24-hour emergency and compliant line at 1-800-222-6514.
Alberta Stakeholder Engagement
Alberta Energy Regulator
Suite 1000, 250 – 5 Street SW, Calgary, Alberta T2P 0R4
inquiries 1-855-297-8311 24-hour emergency 1-800-222-6514 www.aer.ca
AER Comes Down On Lexin by Don McCracken, February 15, 2017, High River Online
The Alberta Energy Regulator has issued an environmental protection order against Lexin and LR Processing Ltd., an affiliated company, requiring them to address environmental concerns at the Mazeppa sour gas plant.
Lexin and LR Processing were ordered, on August 9, 2016, to suspend the Mazeppa gas plant and related infrastructure.
The Energy Regulator has also suspended the licences of all Lexin wells, facilities, and pipelines, meaning the company will have to shut down operations.
In a release, the regulator says Lexin has failed to comply with multiple orders, doesn’t have enough staff to manage its more than 1,600 sites, and owes more than $1 million in orphan fund levies and administrative fees and more than $70 million in security for its end of life obligations.
It says repeated attempts to bring the company into compliance have failed so the regulator has little confidence in Lexin’s ability to conduct its operations safely and is taking measures to prevent increasing risk to public safety, the environment, and finances.
The AER has been advised that equipment has been removed from AER-licensed Lexin properties and has sought a court order to stop this from happening. On February 14, 2017, the Court of Queen’s Bench of Alberta issued an interim order prohibiting removal of equipment from Lexin’s AER-licensed sites, subject to review of the order by the court on February 17, 2017.
If anyone has information about the removal of Lexin equipment over the past six months, please contact the AER’s 24-hour emergency and complaint line at 1-800-222-6514.
ASRG FB comments to the above
Rob Schwartz If my memory serves correctly was it not Lexin that laid off the last 6 staff at their Mazeppa sour gas plant almost a year ago ?
… Rob Schwartz So it appears that the problem and risk to public safety was well under way over one year ago and it appears that the AER may now be promoting it’s tardy action as timely.??
Rob Schwartz Does anyone know if these Lexin facilities were previously operated by Compton Petroleum ?
Richard Miller Compton was bought out by MFC.. MFC divided the assets into smaller numbered company’s cherry picking the assets that have value
Richard Miller MFC created Lexin
Rob Schwartz It appears that the regulator may have been aware of corporate deal making leading up to the creation of Lexin that might be described as “not in the public interest” at least 2 and possibly 3 years prior to the shit hitting the orphan fan.
Dale Christian remember though – seriously- this is not the fault of the guys who are hired and need the jobs
Rob Schwartz I have not looked in the help wanted section for a long time but I would assume that there must be other jobs posted that do not require experience in willful dissemination of alternative facts.
Mark Dorin With great respect for the opinion in the previous post, my view is job creation should not occur at the expense of land and safety rights and the rule of law. Balance is always required (as I tell the AER, which body has its ears closed for the most part).
Mark Dorin Absent the rule of law, in time we will have no land, no rights, and no future, and perhaps no way to protect our very lives. As such, it is about time the AER did something about the Lexin situation to say the very least. Better late than never. I’ll be publishing some information shortly on total lack of AER action (i.e. absence of the rule of law) in urban Edmonton and elsewhere. Included in forthcoming publications are some Initiatives proposed as to what can be done to solve problems at the experiment that is the AER. AER problems lead to surface rights problems. Lack of property rights protection leads to loss of safety and loss of human life. I hope to gain some support for positive change that is based on real problems caused by real administrative errors (facts well recorded). We need our oil industry and our rights to life, safety, and to hold and protect property. One cannot be sacrificed at the cost of the other. Simple stuff. It is time to get responsible energy development actually implemented in Alberta. Shutting down unsafe operations is an improvement. Someone else will take over and hire people. Time to do the same in Edmonton.
Alberta orphan oil well tally jumps as Lexin licenses suspended by Nia Williams, Reuters, February 15, 2017, The Globe and Mail
The Alberta Energy Regulator (AER) suspended licenses on all oil and gas well facilities and pipelines belonging to Lexin Resources Ltd on Wednesday, nearly doubling the number of orphaned wells in Canada’s main crude-producing province.
The provincial regulator ordered privately-held Lexin to cease all production, saying it failed to comply with multiple orders and lacked enough staff to manage its more than 1,600 sites.
Calgary-based Lexin also owes more than C$1-million to Alberta’s orphan fund and more than C$70-million in security for its obligations to clean up its oil and gas facilities at the end of their producing life.
“The closure order is the result of a year of trying to work with the company to come into compliance,” said AER spokeswoman Cara Tobin. “With the number of non-compliances and the debt that was owed we felt it was important to take these steps.”
Lexin did not immediately respond to a request for comment.
Alberta’s Orphan Well Association (OWA) is responsible for cleaning up wells that have no owners financially able to deal with abandonment and decommissioning costs. It is overseen by the AER and funded by levies from the oil and gas industry.
The enforcement action by the regulator means the 1,380 wells belonging to Lexin are now in the care and custody of the OWA, taking the total numbers of ownerless wells in Alberta to 2,970.
Tobin said that at this time there is no abandonment order on Lexin’s wells, and she did not have any estimate of how much crude Lexin had been producing because the company stopped reporting output last summer.
Brad Herald, chairman of the OWA, said he expects a number of Lexin’s wells that are commercially viable will eventually be bought by other companies, but that process could take up to six months.
“This is quite an unusual situation,” Herald said, adding that normally wells came to the OWA via a court appointed receiver process following a company going bankrupt.
There are 1,590 other orphan wells in Alberta that are awaiting abandonment and clean-up, an issue that prompted the Alberta government in the past to say it could ask the federal government for help in covering the costs.
Fully reclaiming a disused oil well can cost between C$60,000 and C$300,000 depending on factors including well depth and location. [Emphasis added]
Alberta shuts down Lexin Resources, leaving big mess to clean up, ‘You don’t see these very often,’ says Alberta Energy regulator in largest shutdown ever by Tracy Johnson, February 15, 2017, CBC News
The Alberta Energy Regulator will shut down 1,600 sites, including 1,380 wells owned by Lexin Resources.
The Alberta Energy Regulator (AER) has suspended the operation of Lexin Resources, leaving more than 1,600 well sites, pipeline segments and other facilities to be cleaned up or sold off.
This is the largest suspension order ever by the AER.
Alberta Energy Regulator tries to stem tide of orphan wells
Calgary-based Lexin, which also operated a sour gas plant in southern Alberta, has 1,380 well sites, 201 pipeline licences and 81 facilities. Those have all been turned over to the Orphan Well Association to be suspended and locked up.
“We have not issued an order like this to a company this size,” said Cara Tobin, a spokesperson for the regulator. “We will be working with Lexin and with interested participants and the Orphan Well Association to shut in and secure the sites.”
Lexin unable to maintain sour gas wells
In making the suspension, the AER said Lexin failed to comply with orders made by the regulator to address hydrocarbon spills at its sour gas facility, to close and abandon wells, to pay its administration fees or its security deposit for well reclamation.
As well, in a letter to the AER dated Jan. 31, Lexin advised the regulator it was unable to provide proper health and safety overview and measures for its sour wells after Feb. 15.
In recent months, alarms were raised about Lexin’s sour gas wells and facilities in the province. Sour gas contains hydrogen sulphide and is toxic if released into the atmosphere. [It’s not only toxic, it can kill, quickly] Lexin stopped making surface lease payments to landowners last year and therefore wasn’t able to access its sour gas well sites.
Allan MacRae, an engineer who used to work at the High River sour gas plant under a previous owner, said the company wasn’t injecting anti-corrosive elements into its pipelines and was not maintaining the plant. He informed the AER of his concerns and the regulator told the company in August to suspend operations at the plant.
MacRae said now that the plant is shut down, it should remain so. “This is a very severe condemnation of the company,” said MacRae. “You don’t see these very often.” [Oh ya? Like Encana illegally frac’ing and contaminating a community’s drinking water aquifers, enabled and covered-up by the AER, government, and Alberta Environment?]
Orphan Well Association workload to jump
The AER will now work with the Orphan Well Association and the company to determine what is to be done with the remaining well sites and facilities.
“What we’re doing now is to shut in and secure the sites and to make sure it’s left in a safe state,” said Tobin.
The Orphan Well Association currently has a list of nearly 1,600 wells that need to be plugged and reclaimed and a further 700 that are under reclamation. The suspension order of Lexin could potentially double the association’s workload.
Energy watchdog shuts down Lexin Resources, citing environment and safety issues by Reid Southwick, February 15, 2017, Calgary Herald
In a rare move, Alberta’s energy watchdog publicly admonished an oil and gas company for refusing to comply with a litany of orders to properly care for its wells and facilities, citing concerns for the environment and public safety.
The Alberta Energy Regulator said Wednesday it has suspended all licenses held by Lexin Resources Ltd., including nearly 1,400 wells.
It also issued an environmental protection order against the company and an affiliate, requiring them to address outstanding environmental concerns at a sour gas plant in Mazeppa northeast of High River.
Mark Taylor, a vice-president at the regulator, said the case is highly unusual because of the company’s scale of operations, with more than 1,600 licenses spread across Alberta, and its long-standing refusal to comply with orders.
[Mark Taylor Check:
In 2004, when Mark Taylor (now VP Industry Operations at the AER) was manager at Encana, he said, face to face to Rosebud citizens, many of them with contaminated water, that the company would never frac a community’s drinking water aquifers or anywhere near them to prevent gas from migrating into water supplies, after Encana had already secretly frac’d directly, intentionally into drinking water supplies used by Pavillion, Wyoming and Rosebud, Alberta.
End Mark Taylor check]
The watchdog has not ruled out criminal charges against Lexin as it continues its investigation. [When is the AER going to file criminal charges against Encana for breaking the law in 2004?]
“The AER has very little confidence in Lexin’s ability to conduct their operations safely,” Taylor told reporters. “We’re taking measures to prevent any increase in public safety, environmental or financial risk.” [Is AER not filing criminal charges against Encana because ex-Encana manager Mark Taylor is now a VP at AER, along w ex-Encana VP Gerard Protti as Chair?]
Lexin did not immediately respond to requests for comment. Bonnie Roberts Jones, the company’s lawyer, declined to comment on the regulator’s allegations because the file is before the courts.
The regulator has obtained a court order preventing Lexin from removing equipment from its properties, arguing the suspension order extends to company equipment. Several companies claim they have financial interests in Lexin equipment.
The rebuke and fresh orders against the company came weeks after Lexin sent the regulator a letter arguing its more than year-long dispute with the watchdog has “adversely affected” its operations and access to capital.
“We also advise that because of the dispute and your actions, we are not sure that we will be able to continue to provide proper health and safety overview and measures for the sour wells particularly beyond Feb. 15,” Michael Smith, a Lexin director, wrote in the Jan. 31 letter. [Did the AER delay this long to help Lexin executives dash off with the company’s cash?]
“We believe the situation creates serious health and safety risks for all concerned.” [But OK to let Rosebud residents drink and bathe in water contaminated by Encana, and live in explosive risk from Encana’s frac’d methane, ethane, propane and butane? And OK to let a Wheatland County worker get seriously injured and hospitalized when Encana’s natural gases contaminating Rosebud’s aquifers blew up the community’s drinking water reservoir? Why the bias AER? Why pretending now to be a “regulator?”]
Taylor said the regulator’s assessment of Lexin’s wells, pipelines and facilities suggest they do not pose any immediate environmental or public safety threats. [Not as immediate as Rosebud’s water manager blowing up and ending up in hospital because of Encana’s law violations and water contamination that the AER ignored for 13 years now, and keeps ignoring? And not as immediate as families living in explosive risk because of Encana and who knows what health impacts?]
Lexin told the regulator in June 2016 that its leak-detection system at its Mazeppa site was no longer operational, that it had laid off most of its staff and that it could not respond to any potential emergencies.
Following orders from the regulator, Lexin later returned its remaining sour gas pipelines to a safe state, and replaced all sour gas – a poisonous substance — with sweet gas. It had already shut down its plant and removed all sour gas from it.
Still, the regulator has several outstanding problems with the Mazeppa operation, including the company’s failure to clean up a spill, which triggered the environmental protection order.
Officials at the regulator said they don’t know how many Lexin wells are still producing oil and gas because the company has not reported production for months. The company’s 16 sour gas wells in southern Alberta have been shuttered.
The watchdog outlined even more concerns with the company, including that it has received reports equipment has been removed from Lexin sites, violating provincial rules. [Encana gets to violate provincial rules, but not Lexin? Something stinks at the AER]
Lexin owes more than $1 million in fees and levies to pay for the future cleanup of wells and facilities, and more than $70 million in security deposits.
The regulator has ordered companies with working interests in Lexin’s operations to shut them down and provide emergency services to those sites, which account for a minority of the company’s holdings.
The rest of Lexin’s properties are now under the control of the Orphan Well Association, an industry-funded group that cleans up abandoned wells. Taylor said the association is responsible for ensuring the wells have ceased production and do not pose any safety concerns, but it is not responsible for cleanup.
The regulator is still holding out hope that Lexin will become compliant with the rules and regain custody of its facilities, or that the wells can be sold off to interested parties. [Emphasis added]
This is simply a very poorly managed company that failed to do it’s due diligence. The AER enforcement, inspections and orders were all in line with their mandated policies. The liability solely lies on the company. Maybe if people would actually do a little research before they jump to conclusions, they might actually learn something.
Lexin has failed to comply with multiple orders, lacks sufficient staff to manage its more than 1600 sites, and owes more than $1 million in orphan fund levies and administrative fees and more than $70 million in security for its end of life obligations. Repeated attempts by the AER to bring the company into compliance have failed. As a result, the AER has little confidence in Lexin’s ability to conduct its operations safely and is taking measures to prevent increasing public safety, environmental, and financial risk. This is just a short list of compliance orders issued by the AER. http://www1.aer.ca/compliancedashboard/enforcement.html
Do go to the compliance dashboard again, and type in Lexin Resources in a company search, there are only 9 submissions, they are all orders, not a single “incident” is reported, and the orders only date back to June of 2016, a mere 9 months. How long has Lexin been operating?
If the AER was actually inspecting and enforcing non-compliances at the companies facilities and well sites, there would be a significant amount of incident reports, in either the compliance dashboard or ST-108. There are none.
This is a poorly managed company no doubt, like many are, but they get away with it, as long as they are paying their bills. The AER only turns their attention to non-compliant operators in this manner, when arrears reach $71 million, which is a significant percentage of a $245 million annual operating budget.
This demonstrates a clear and absolute failure of the AER LLR program and the effectiveness of the regulator to properly manage liabilities in the event of insolvent and non-compliant operators.
Why did the AER let it get this bad? Why did an employee have to call in serious, high risk non-compliances of a sour gas facility? Where are the comprehensive inspections and credible enforcement the AER promises they perform? The AER is simply a fiasco on every level.
As well, why the disparity of action from the AER? When landowners inform the AER of non-compliant and unsafe operations, we are rebuked, discredited and ignored. Is this just because Lexin was not paying the AER’s bills? This has nothing to do with environmental protection, or public safety, the AER approves unsafe, environmentally unsustainable and fiscally questionable operations every day, this is about AER collecting monies owed.
AER just doubled the OWF.
Laid off employees are apparently getting no response from Lexin regarding their owed vacation pay, severance pay, etc. This has been the case for many months. A very sad story of the little guys (including vendors and creditors) left holding the bag while the top management seem to have disappeared into the mist.
disappeared into the mist, with buckets of off shore money
Grant Collies shared a link.
No one should be applauding the AER on this one, this whole situation stinks to high heaven. It outlines clearly the failings of the License Liability Program, Lexin is the result of 3 rapid name changes, it was Compton Petroleum changed to MFC processing 2014 to Lexin in 2016. In June of 2016 its LLR rating was at .98 just below the threshold for the requirement of security deposits to be paid on its facilities and non had be paid. But here is the thing; the corporation had stopped paying the annual lease payments to landowners in October of 2015, 9 month prior to this. Wouldn’t it be better to shutdown the corporation at the first sign of non-payment. Well, the orphan well list is now at 2900 wells to be and another 600plus on the reclamation list, they should be done reclaiming and abandoning these about the time the Earth spirals into the Sun at their operations budget of $50 million a year and guess what the AER has even more surprises up their LLR sleeves waiting to be revealed to Albertans. Time to triple the Orphan Well Levy on the whole industry including the tarsands operations because at some point the taxpayer is going to be left on the hook for what the Orphan Well Association is doing now. It was a first step for the AER to raise the threshold LLR for the requirement of security deposits to 2.0 but, that in the long run will prove to be fruitless; the time has come for a Real Watchdog to watch the industry, one that requires security deposits from day one and places time lines on all wells and facilities.
[Refer also to:
2016 08 30: Lexin Resources complies with safety orders after AER sounds alarm; What about the leaking methane ordered repaired? Is that fixed yet? Is the “watchdog” monitoring area aquifers and citizen water wells for methane and H2S contamination? Or not, the way it’s not at Rosebud?
Lexin Resources complies with safety orders after watchdog sounds alarm by Reid Southwick, August 30, 2016, Calgary Herald
A Calgary oil and gas company that ran afoul of Alberta’s energy watchdog has complied with orders to return its sour gas pipelines to a safe state after warning about gaps in its ability to detect and respond to leaks.
Lexin Resources Ltd. had told the Alberta Energy Regulator in late June that it had laid off most of its staff, leaving behind just six employees to oversee its sour gas plant in Mazeppa northeast of High River, along with its network of pipelines.
The company had indicated it could not respond to any emergencies at its facilities and that its leak detection system was no longer working.
The admissions prompted a stern warning from the regulator, which said any failure to provide sufficient oversight could result in sour gas — a poisonous substance — being released into the environment with potentially dangerous effects.
The regulator said this week Lexin has complied with orders to ensure its facilities are in a safe state. The company had already shut in its plant and replaced all sour gas with sweet gas. Last week, it shut in its remaining sour gas pipeline and replaced the sour gas with sweet gas. [Who trusts/believes the AER? Who trusts/believes Lexin?]
The energy watchdog had also ordered the company to submit an emergency response plan, among other measures. The regulator said this week it has received the requested plans and is reviewing them, though it left the door open to further action against the company if it uncovers any more breaches.
Lexin has also attracted complaints for failing to compensate landowners who have the company’s wells on their properties.
The company could not be immediately reached for comment. [Emphasis added]
A comment to the article:
I know of another case of a company admitting to the AER it ‘could not respond to emergencies’ and telling AER it was aware of the problem and that was a risk it was willing to take. The site is within the corp limits of a city as well.
WHAT ABOUT THE POLLUTION BELOW? WHO FIXES IT?
Under section 113 of the Environmental Protection and Enhancement Act
Under section 27 of the Oil and Gas Conservation Act
Shoreline Energy Corporation
c/o Grant Thornton Limited
900, 833-4 Ave SW
Calgary, AB T2P 2V6
Attention: Guy Odhams
High Mark Energy Corp.
#600, 9835 101 Ave
Grand Prairie, AB TBV 5V4
Dark Warrior Resources Ltd.
1100, 630 6 Ave SW
Calgary, AB T2P 058
Progress Energy Canada Ltd.
1200, 205 5 Ave SW
Calgary, AB T2P 2V7
Iteration Energy/Chinook Energy Inc.
1000, 517 10 Ave SW
Calgary, AB T2R OSS
Lexin Resources Ltd.
400, 1035 7 Ave SW
Calgary, AB T2P 3E9
WHEREAS Shoreline Energy Corporation (Shoreline) is the holder of well licences granted by the Alberta Energy Regulator (AER) under the Oil and Gas Conservation Act (OGCA) including wells licence numbers 0120403 and 0123432 (Wells);
WHEREAS on December 23, 2015, Shoreline made a voluntary assignment in to bankruptcy and Grant Thornton Limited was appointed as trustee (Trustee) in accordance with the Bankruptcy and Insolvency Act (8/A);
WHEREAS a “working interest participant” is defined in section 1(1)(fff) of the OGCA as a person who owns a beneficial or legal undivided interest in a well or facility;
WHEREAS High Mark Energy Corp., Dark Warrior Resources Ltd., Progress Energy Canada Ltd., Iteration Energy (Partnership), Chinook Energy Inc. (surviving partner of Iteration Energy) and lexin Resources ltd. (the WIPs) are working interest participants of the Wells;
WHEREAS Shoreline disclosed to the AER that natural gas (the Substance) has escaped and been released by way of escaping from the surface casing of the Wells, an event also commonly known as a Surface Casing Vent Flow (SCVF);
WHEREAS the SVCF is deemed to be “serious” by Interim Directive ID 2003~01, section 2.2 Definitions, article #8;
WHEREAS the Substance contains methane which is a substance known to be hazardous to the environment and human health;
WHEREAS the Substance may enter the aquifer, or may have entered the aquifer and continue to enter the aquifer if it is not contained forthwith;
WHEREAS the AER in a letter dated January 27, 2016 notified the Trustee of its obligations under the OGCA and requested that the Trustee provide its agreement to repair the SCVF by February 3, 2016; [Was the repair appropriately undertaken? Was it successful?]
WHEREAS in a letter dated February 12, 2016 the Trustee stated it was immediately taking certain steps in relation to the SVCF;
WHEREAS on February 17, 2016 the AER issued a Notice of Noncompliance to Shoreline in care of the Trustee with copies to the WIPs requiring certain remedial actions be completed by March 17, 2016 in order to be compliant with regulatory requirements;
WHEREAS Shoreline and the Trustee have failed to comply with the directions contained in the Notices of Noncompliance;
WHEREAS the AER has reasonable grounds to believe that Shoreline and the Trustee have failed to repair or remediate the surface casing to stop the SCVF;
Whereas on March 15, 2016, the Trustee executed a Notice of Renunciation in accordance with section 20(1) of the BIA to quit claim and renounce Shoreline’s interests in the AER well, facility and pipeline licenses held by Shoreline.
WHEREAS the Environmental Protection and Enhancement Act (EPEA) and the OGCA permit the AER to issue orders in certain circumstances;
WHEREAS Helene de Beer, Director, Closure and Liability, has been authorized to issue orders under EPEA and the OGCA;
WHEREAS under section 113 of EPEA, the Director is of the opinion that a release of the Substance into the environment has occurred, is occurring, or may occur and that the release of the Substance has caused, is causing, or may cause an adverse effect to the environment; [Where’s the AER’s order against Encana for illegally injecting chemicals into Rosebud’s drinking water aquifers in 2004 and contaminating them and area municipal and private citizen water wells with methane, ethane, heavier hydrocarbons, chromium, phthalates, Tert-butyl alcohol and other harmful substances? ]
WHEREAS the Director is of the opinion that Shoreline, as licensee is a “person responsible” as defined in section l(tt) of EPEA;
WHEREAS the Director is of the opinion that the WIPs, as beneficial or legal owners of an interest in the Wells are “persons responsible” as defined in section l(tt) of EPEA;
WHEREAS under section 27(3) of the OGCA, the Director is of the opinion that it is necessary to abandon the Wells to protect the environment; [What if the leaking methane is already contaminating aquifers and water wells?]
WHEREAS section 250(4) of EPEA provides that a person directed under an environmental protection order to carry out any work or do anything in respect of a place, and any other person carrying out the work or doing the thing on that person’s behalf, may, without incurring liability for doing so, enter the place for the purpose of carrying out the work or doing the thing required by the environmental protection order;
WHEREAS section 101(1) of the OGCA provides that a person carrying out suspension or abandonment operations pursuant to section 27 or 28 of the OGCA is entitled to have access to and may enter on the land and any structures on the land concerned for the purposes of carrying out the suspension or abandonment;
THEREFORE, I, Helene de Beer, Director, Closure and liability (Oil & Gas), pursuant to section 27(3) of the OGCA, section 113 of EPEA and section 241 of EPEA, DO HEREBY ORDER that Shoreline and the WIPs shall do the following:
1. Zonal abandon the Wells in accordance with the requirements of Directive 020: Well
Abandonment by June 30, 2016 as follows:
a. Perform a zonal abandonment for the Doe Creek perforations;
b. Repair the following low cement top deficiencies:
i. Porous zones isolation; and
ii. Base ground water isolation from the hydrocarbon formations below
and protected intervals above the base ground water protection.
Repair of SCVF
2. Repair the SCVF by June 30, 2016 as follows:
a. Repair the SCVF and/or gas migration in accordance with the requirements in ID 2003-01, section 2.4 Repair Requirements.
b. Monitor the wells for a minimum of 5 months to confirm the repair was
c. Report the repair required in clause 4 on the DDS system.
d. Cut and cap the Wells by December 31, 2016.
Reporting to the Director
3. Provide to the Director by 12:00 noon on Thursday of each week, a weekly written
report outlining the progress on the activities required by clauses 1 and 2 of this Order,
until otherwise directed by the Director in writing.
4. Submit all applicable documentation confirming completion of abandonment
operations, including confirmation of surface abandonment and removal of surface
equipment, cement pads, debris, and produced liquids associated with the wells by the
dates specified in Clauses 1 and 2.
5. Where a deadline or reporting frequency has been specified in this Order, the Director may authorize in writing a different deadline or reporting frequency as applicable.
2016 08 10: AER: Toothless, Legally Immune (even for acts in bad faith and gross negligence), Charter Violating, Best in the World Wonder. Why hasn’t AER shut rogue Lexin Resources Ltd. down? Why leave Albertans in danger of being killed or poisoned? “The regulator said in an order released Tuesday that if Lexin and its related company, LR Processing, fail to provide sufficient oversight, sour gas could be released into the environment with potentially dangerous effects.”