BARRHEAD - Farmers who have a wellsite on their property cannot deny access to it.
That is what Michele Del Colle from the Farmers’ Advocate Office told an audience of about 80 people at the Fort Assiniboine Royal Canadian Legion Feb. 26.
“You cannot deny access to an energy site for environmental and public safety, the liability that can be imposed on you.”
She added that if access is denied, whether it be for operations, abandonment, or reclamation, under the Surface Rights Act, the Surface Rights Board will cancel a landholder’s application and the minister will not direct payment to them.
Del Colle, an energy, utilities, and policy specialist, spoke, as part of a public information session hosted by Woodlands County to help residents understand their rights and what happens when an energy company becomes insolvent.
Many of the county’s residents, as well as those in neighbouring municipalities (County of Barrhead and Lac Ste. Anne), were impacted when Trident Exploration Corp ceased operations in May leaving its 3,650 wells, 240 facilities and 500 pipelines are now the responsibility of the Alberta Energy Regulator (AER). Since then PricewaterhouseCoopers was appointed to oversee the distribution of the company’s assets.
Other organizations in attendance included Synergy Alberta, the AER, the Surface Right Board (SRB) and via telephone the Orphan Wells Association (OWA).
The Farmers’ Advocate Office was formed in 1973 by the Alberta Ministry of Agriculture (now Agriculture and Forestry).
“Our role is to ensure that the rights of rural Albertans are recognized and understood and protected,” she said.
Del Colle started by explaining what insolvency is, saying it is when a company cannot pay its debts.
“It is a description of a companies financial state, it isn’t a formal legal state,” she said.
Del Colle noted that due to the economic difficulties the energy sector is facing, most notably low natural gas and oil prices, many companies have arbitrarily reduced or stopped completely paying their annual rental payment.
She added it isn’t always because of insolvency that an energy company isn’t paying what is owed to property owners.
“The companies can still be financially viable and it is a choice that they are making,” Del Colle said.
She noted property owners who find themselves in this situation still have recourse to go after what they are owed through the SRB.
Earlier in the meeting, SRB executive director Mike Hartfield outlined the process (under Section 36 of the Surface Rights Act) property owners are can apply to have their case reviewed to receive compensation.
Unfortunately due to the large volume of applications, a 900 per cent increase in the last two years, it can be over a two-year wait until the SRB hears the case and they are seven months behind in acknowledging applications.
Del Colle said the amount owed to property owners is set at the time the surface lease agreement is signed.
“That is the anniversary date and the amount payable. A company cannot unilaterally make changes to that,” she said.
“If a company isn’t successful in renegotiating a new rate with the landowner, they (energy company) has to go to the Surface Rights Board and they would make that decision.”
Del Colle noted that an SRB ruling supersedes any negotiated agreement, adding that if a landowner cashes a cheque for a lesser amount that doesn’t mean they have come to a new agreement.
“A landowner is under no obligation to accommodate the change in the financial state of a company,” she said.
Question of liens
Del Colle added her office is receiving an increasing number of questions from property owners concerned that a builders’ lien.
A builders’ lien provides security for unpaid contractors, labourers and suppliers who have “improved” lands.
It can be filed in two ways, the first being under the energy interest.
“If it lists the person that is receiving the benefit, for example, Trident Exploration and it lists the name of the service company and it lists the work they have done and why then that’s fine,” she said. “It only impacts the well site and has no bearing on you.”
But if it is registered on the fee simple title it becomes an issue.
“If that happens, we need to get it removed,” Del Colle said, adding some of the liens being put on the titles were as high as $3 million.
“So if you sold your land it would all go towards the builders’ lien.”
Length of payments from energy companies
After a well is decommissioned, Del Colle said that doesn’t mean a landowner should not be getting their negotiated lease payments.
“The payments continue until the land is reclaimed,” she said, noting there are two phases of reclamation.
The first is remediation is the cleanup of the contaminated groundwater and soil. The energy company then needs to bring it back to “equivalent land capability.”
