How many piddly millions in Alberta’s Orphan-Well-Get-Out-of-Jail-Free Club?
Kenney stealing $16.6 Billion from Alberta teachers to give yet more corporate welfare to polluting oil & gas & frac bankrupters via AIMCo?
BNN Interviews Alberta Oil Patch Consultant Brent Nimeck on Lexin and AER’s Orphan Wells: “This problem is 30 years in the making. … I would call it a Ponzi Scheme…. This is an orchestrated fraud from multiple angles: Industry, CAPP and the Alberta Energy Regulator have enabled this to happen. … Through our independent analysis and we’ve confirmed this at multiple sources within the energy regulator, the liabilities are over $300 billion. That’s what’s on the hook for Alberta taxpayers right now – $300 billion.”
Calgary-based Houston Oil & Gas ceases operations, leaving almost 1,300 wells needing cleanup, Another company folds as sector struggles with low prices, less investor interest by Kyle Bakx, Nov 06, 2019, CBC News
Another Alberta oil and gas company has closed its doors, leaving more than $80 million in estimated costs to clean up its remaining wells, pipelines and facilities.
Calgary-based Houston Oil & Gas told the Alberta Energy Regulator (AER) last month that it was ceasing operations and no longer has any employees, according to court documents. Houston entered receivership last week.
The company is focused primarily in southeast Alberta and predominantly produces natural gas, according to its web site.
“I feel bad for them,” said Marc Raedschelders, who has a Houston natural gas well on his property near Pincher Creek in the southwest corner of the province.
Raedschelders said he’s not surprised the company is no longer operating, since Houston’s surface rights payments to him were often delayed. He’s unsure whether the well on his property will be sold to a different company or be decommissioned.
“I don’t know what my options are,” he said.
Houston has 1,264 wells, 41 facilities and 251 pipelines, according to documents.
The court documents say some of the wells have already been transferred to the Orphan Well Association (OWA) to be decommissioned. The OWA is an industry-funded organization that cleans up old oil and gas infrastructure when companies go bankrupt and the assets cannot be sold. [And intentionally set up by the scammers at AER and industry to never have enough money to take care of business appropriately and completely]
“If all of Houston’s wells are ultimately designated as orphans, the orphan inventory of wells requiring [decommissioning] will increase by nearly 30 per cent,” according to a court submission by the OWA. In that event, the AER estimates the price tag at $81.5 million.
Houston is the latest oil and gas company in Alberta to fail. [It’s all Andrew Scheer’s fault right, for lying to Canadians?]
Last month, Bellatrix Exploration [of Diana Daunheimer lawsuit fame] entered creditor protection and is still looking for a buyer.
In May, Trident Exploration shut down, which put 94 people out of work and left approximately 3,650 wells without an owner. [And how many aquifers frac’d and water wells contaminated?]
While there is no official list of how many firms have declared bankruptcy since the oil price crash in late 2014, many others have declared bankruptcy or entered creditor protection.
[Oil price crash reality check:
Frackers have spilled billions of dollars in red ink. Fracked oil & natural gas have been financial disasters. “Cash flows from fracking-focused oil and gas companies across the US have been negative for decades — even when oil and gas prices were higher than they are now.”
End Oil price crash reality check]
Some small and mid-sized companies are faring better than others, according to Patrick O’Rourke, an analyst with Calgary-based AltaCorp Capital.
“Everybody is facing headwinds here on a number of fronts,” he said, pointing to “lower capital flows, less investor interest and weaker prices.”
Big or small, the more successful companies are focused on oil properties or natural gas wells that are “liquid,” meaning they also produce higher valued commodities such as ethane, propane, butane, isobutane, and pentane.
Companies primarily focused just on natural gas, seem to struggle the most.
“Gas prices have been extremely challenging, specifically in Alberta,” said O’Rourke. “We’ve seen some strengthening in October with low storage levels and the weather out the window here being pretty cold, but generally, the producers who have pursued that liquids strategy have fared better than some junior gas producers.”
According to Houston’s web site, the company formed in 2002 and began production in 2015.
“Houston Oil & Gas Ltd. is steadfast in the management of its end-of-life liabilities. The company invests on a monthly basis, addressing the down hole abandonment of wells, decommissioning of facilities, infrastructure and reclamation of wells that are non-productive,” according to its web site.
Hardie and Kelly Inc. has been appointed to ensure Houston’s wells are properly maintained and to look at possibly selling some of the assets.
A few of the comments:
How dare Justin Trudeau lower world oil prices?
And how dare he force Alberta to have a one dimensional economy?
And how dare he let all the oil companies monetize Alberta’s resources and then fold or move their HQ?
And how dare he legislate Alberta to not build up a fund for rainy days, as Norway has?
I can see why Albertans just hate the guy SO much.
Guy D’Aramitz Reply to @Casey Jay:
Well said, but that will go right over the heads of the petro hillbillies.
Reminder, they can’t just walk away, and for what I believe is one of the first times bankruptcy doesn’t protect the creditors before the environment. [Since when does the oil and gas industry and AER heed court rulings, tell the truth, or responsibly regulate itself? AER is 100% funded by the industry it deregulates and lovingly set up the scam of an “orphan” well club to let polluters run and escape paying to clean up after sucking out the profits]
It is outrageous that these oil and gas companies can just walk away and leave all the decommissioning costs on the public. If the government will not enforce a method of ensuring funding for clean up it should be able to recover those costs personally from the directors and upper management or the limited liability of the shareholders has to give way. Chances of the UCP enforcing their corporate masters to pay more is unlikely so it’s business as usual in the Alberta oil patch. No wonder this whole industry is in trouble and it doesn’t take a genius to see who is going to end up paying for the mess.
October 29, 2019
Filing Type: Receivership
Trustee: Hardie & Kelly
Applicant: Orphan Well Association
Applicant Counsel: Miles Davison
Industry: Oil and Gas
Houston Oil & Gas, a Calgary, Alberta-based oil and gas company that focused on acquiring and rejuvenating legacy oil and gas assets, was placed in receivership on October 29 on application by the Orphan Well Association. Holding licenses to operate over 1,400 sites in Alberta, the company has been in discussions with the Alberta Energy Regulator (AER) for several months in relation to its financial difficulties. In early October, the company advised the AER that it had ceased operations and did not have the ability to shut-in all of its wells.
In the interest of public safety, the OWA moved for a receiver to be appointed to ensure the wells are properly maintained and, where possible, sold and placed in the hands of responsible producers.
The total abandonment and reclamation obligations relating to the company’s assets are estimated to be over $81.5 million.
Hardie & Kelly was appointed receiver. Miles Davison is counsel for the applicant.
Houston Oil & Gas Ltd. RECEIVERSHIP PROCEEDING by freedomfromdebt.ca
On October 29, 2019, the Court of Queen’s Bench of Alberta (the “Court”) granted an order (the “Receivership Order”) placing Houston Oil & Gas Ltd. (“Houston” or the “Company”) into receivership. Hardie & Kelly Inc. has been appointed as the receiver of the Company (the “Receiver”). A copy of the Receivership Order can be found below under the section entitled “Court Orders”.
The Receivership Order provides for a stay of proceedings such that creditors are prohibited from continuing or commencing any actions or exercising any rights against Houston and or its assets for payment of goods and services supplied to prior to October 29, 2019, absent seeking leave of the Court. The Receivership Order further provides that suppliers of goods and services are restrained from discontinuing the provision of goods or services to the Receiver absent leave of the Court.
Field Operational Contact Information
The Receiver has retained Veracity Energy Services Inc. (“Veracity”) to assist with the day-to-day management and operations of Houston’s assets. Inquiries associated with day-to-day field operations can be directed to Veracity at 403-537-1300.
- Originating Application re: Appointment of Receiver – filed October 18, 2019
- Affidavit of Mr. Lars De Pauw – filed October 18, 2019
- Bench Brief re: Appointment of Receiver – filed October 21, 2019
- Supplemental affidavit of Me. Lars De Pauw – filed October 22, 2019
Refer also to:
“A Murderer’s Row: Maturities are coming year after year.” Bankruptcies rising in U.S. oil patch as Wall Street’s disaffection with frac’ers reverberates through industry. 26 producers file for bankruptcy so far in 2019; 28 filed in all of 2018. Bankruptcies expected to rise, “Debt levels are just too high and they’re going to have to take their medicine.”