Calgary company ordered to pay $70K for unauthorized construction near Swan Hills

BARRHEAD — A Calgary-based oil and gas company, N7 Energy, has been ordered to pay $70,000 for conducting extensive construction work along a stream west of Swan Hills in August 2020 that threatened to cause significant harm to the aquatic ecosystem. 

In Barrhead Provincial Court Dec. 13, N7 Energy pleaded guilty to contravening Section 141 (1) (H) of the Water Act — commencing or continuing prohibited activity without obtaining prior approval or authorization on or between Aug. 8-19, 2020. Four other charges were withdrawn. 

Judge John Maher agreed with the joint submission from the Crown and defence that will see the company pay $65,000 to the Alberta Energy Regulator (AER), which will hold the money in trust and use it to fund at least one creative sentencing project. 

As noted in a release from the AER, this project will occur within the Lesser Slave Watershed or the municipal districts of Greenview, Lesser Slave River or Big Lakes County and “must demonstrate benefits to aquatic ecosystems and environments.” 

The remaining $5,000, which is inclusive of a victim-fine surcharge, will be paid to the Provincial Court of Alberta. Both amounts must be paid by Feb. 1, 2023. 

Reading out a prepared statement of facts that was entered into evidence, specialized Crown prosecutor Lindsay Tate said that N7 Energy is the owner and operator of a number of oil wells and related infrastructure west of the Town of Swan Hills. 

The offence concerns work that was conducted as a bridge crossing over an unnamed stream known as the 1619 Bridge. 

She said the stream is a permanent tributary of the Goose River and has a “restricted activity period” (RAP) from Aug. 1 to July 15 during which time no construction may occur without seeking prior approval. 

‘The purpose of the RAP is to provide protection during times when fish migration, fish spawning, egg incubation, fry emergence or early fry development are likely to occur,” she said. 

Tate said that on Aug. 18, 2020, an AER representative conducted an inspection of N7 Energy’s nearby facilities and drove down the access road where the bridge crossing is located. He came upon N7 employees excavating and moving earth along the banks of the stream. 

The AER inspector initially observed workers actively move dirt to fill up a collapsed portion of the road, but then also saw some work had been conducted in the creek without any proper erosion controls. 

Tate said N7 had begun this work in early August with the intention of stopping erosion of the bridge abutments and stream banks. 

“This construction activity posed significant risks for erosion of the bed and shore of the water body, and siltation of the water body,” she said. 

Tate noted that fish sampling was conducted on Sept. 18, 2021, approximately 100 metres upstream of the 1619 bridge — 77 fish from five different species were captured over a three-day period, indicating that this was “quite a vibrant fish area,” Tate said. 

Also, the captured fish included 12 Arctic Graylings that are classified as a species of special concern by the Alberta Species Conservation Committee “because its characteristics make it particularly sensitive to human activities.” 

Tate stressed that the company could have gotten approval from the AER to conduct construction work during the Restricted Activity Period, but they did not do so.  

After the AER inspection, N7 Energy quickly retained Woodlands North Inc., a third-party environmental consultant, to conduct further inspection and assist in remediation, Tate said. 

From Sept. 6-24, 2020, N7 took a number of steps, spending approximately $300,000 to mitigate any further damages and repair and remediate the erosion at the bridge. 

In addition to taking steps to rectify this error, Tate said the matter had never been set for trial and the company has been in contact with the Crown since the beginning seeking a resolution. 

“The company should get significant credit for … the guilty plea,” she said, noting that the trial (if there had been one) would have run two to three weeks and involved the calling the expert witnesses. 

Also, she acknowledged that N7 is not a multinational company, but a relatively small corporation with eight employees. 

Speaking on behalf of the company where he works as an in-house counsel, Jeff Carlson said he had been with N7 Energy for about six months and the ownership group was “very ashamed” of its participation in this incident. 

“The whole team involved in this action has been terminated, and we’re just looking to make amends and move forward,” he said. 

Judge Maher said the factors in this case warranted the $70,000 penalty recommended through the joint submission. 

He added that in cases like this, he believed that the ends of justice are most appropriately met through creative sentencing options. 

“I think the public benefits from creative sentencing options far more than they do with the penalty entirely going into the general revenue of the province where it disappears and different priorities take place,” he said.

Kevin Berger, TownandCountryToday.com