Good news for landowners as Supreme court overturns Redwater decision.

[grassfarmer]

Pleased to see the decision today supporting the the polluter pays principle, pleased that the National Farmers Union spoke for it's farm members in the appeal.

http://www.cbc.ca/news/business/supreme-court-redwater-decision-orphan-wells-1.4998995?fbclid=IwAR3tPqpjFg0wV-3c62kk3PYpSTQjeqqwjkCxbWqFmvJas6lJRvkMeFm292I http://https://www.cbc.ca/news/business/supreme-court-redwater-decision-orphan-wells-1.4998995?fbclid=IwAR3tPqpjFg0wV-3c62kk3PYpSTQjeqqwjkCxbWqFmvJas6lJRvkMeFm292I

[jimmy]

Pleased to see the decision today supporting the the polluter pays principle, pleased that the National Farmers Union spoke for it's farm members in the appeal.

http://www.cbc.ca/news/business/supreme-court-redwater-decision-orphan-wells-1.4998995?fbclid=IwAR3tPqpjFg0wV-3c62kk3PYpSTQjeqqwjkCxbWqFmvJas6lJRvkMeFm292I http://https://www.cbc.ca/news/business/supreme-court-redwater-decision-orphan-wells-1.4998995?fbclid=IwAR3tPqpjFg0wV-3c62kk3PYpSTQjeqqwjkCxbWqFmvJas6lJRvkMeFm292I

Reading the comments on this is educating I never thought of the abandoned mines in Canada and mines all over the world owned by Canadian companies that where mined then left. Reality tv gold mining in Yukon is one example destroy the landscape and move on but then again it’s for gold.

[jamesb]

It must be different in Alberta but in Sask, there is a fund to deal with orphan wells. I do know it has worked.
https://www.saskatchewan.ca/business/agriculture-natural-resources-and-industry/oil-and-gas/liability-management/orphan-fund-procurement-program

[grassfarmer]

It must be different in Alberta but in Sask, there is a fund to deal with orphan wells.

Did you read the article I posted? the whole issue was about orphan wells and the ability of oil companies to walk away from their responsibilities. Since the original Redwater decision there has been a huge increase in wells abandoned and the orphan well fund was overwhelmed.

[jamesb]

Did you read the article I posted? the whole issue was about orphan wells and the ability of oil companies to walk away from their responsibilities. Since the original Redwater decision there has been a huge increase in wells abandoned and the orphan well fund was overwhelmed.

What I know is there was a orphan well close to us that was cleaned up this past year. No other oil companies wanted it.

[chuckChuck]

The orphan well fund is underfunded. And some landowners underestimate the cost of cleaning up an oil well and lease site. Contaminated sites will run into the millions because of the cost of removing contaminated soil.

Saskatchewan and Alberta have lax regulations allowing oil companies to leave suspended wells for an indefinite time period.

North Dakota has much stricter rules.

https://business.financialpost.com/commodities/energy/north-dakotas-last-orphan-how-canada-needs-a-lesson-on-cleaning-up-an-oil-boom-gone-bust

"If a well has not produced any oil or gas in 12 straight months, North Dakota’s industrial commission requires the owner of the well to either start pumping or plug the well. If the state doesn’t get a response from the producer, it calls the company’s bond, levies fines and plugs the well itself.
Helms said his state’s 12-month time limit was put in place after previous oil booms in the state went bust, and legislators learned some “hard lessons.”

Williston, N.D. — On fertile land, surrounded by nodding pumpjacks that light up at night under the torches of flared natural gas, Donald Sundhagen has a relatively unusual problem for a farmer in North Dakota.

"On his property is an orphaned oil well that was neglected for more than two years, left behind by Rio Petro Ltd., and it is causing a major headache for the American farmer. “They just packed up and left,” he said of the company.

The North Dakota Industrial Commission’s Oil and Gas Division spent $87,000 from its well remediation fund in October to plug the well on farmland that Sundhagen’s family has owned since the 1940s, leaving him annoyed by the hassle but relieved his land has been partly cleaned up.

Although the well has been plugged, he’s waiting for crews to arrive and clean up the surface, where there are still pieces of equipment lying around, ditches scarring his farm and contaminants possibly in the soil where he would otherwise be growing wheat, barley or sunflowers.

“It probably never will be the way it was,” Sundhagen said.

So when you think that those farmers "lucky" to have oil wells on their land may be facing a permanent contaminated site that will never be the same as before the puny surface lease payments may never cover the long term loss and nuisance.

It will be interesting to see if either Alberta or Saskatchewan will tackle this problem in an effective way that protects taxpayers and landowners.

[wd9]

Alberta would never pass stricter regulations because all the oil companies will leave. Idiots. Screwing the taxpayer, much better.

[oneoff]

The orphan well fund is underfunded.
So when you think that those farmers "lucky" to have oil wells on their land may be facing a permanent contaminated site that will never be the same as before the puny surface lease payments may never cover the long term loss and nuisance.

It will be interesting to see if either Alberta or Saskatchewan will tackle this problem in an effective way that protects taxpayers and landowners.

Luck is highly over rated. Often cited with intent that shows envy and coveting wealth and possessions and good fortune of others.

" Puny surface lease payments". All a matter of timing and how things are looked at. Maybe some even asked for the surface leases that they "got"

Other factors not mentioned (eg. mineral rights)

Always live and learn if you have an open mind.

Make sure you demand cleanups cost millions..eh...because I'm sure doing cleanups "satisfactorily" is a better general alternative than bankrupting or causing financial hardships to the deepest pockets of any oil company on whose products we absolutely depend upon.

Time to be reasonable and quit demanding perfection????l

[chuckChuck]

Luck not important? So it was your good planning and hard work to descend from ancestors who just happened to choose land that had lots of oil under it? LOL!

North Dakota has a better system of regulations than Saskatchewan and Alberta when it comes to dealing with suspended and orphaned wells.

Why? North Dakota is the number 2 producer in the US only behind Texas. And the US is now the number 1 producer of crude in the world. How could they do this is if the reclamation regulations are an impediment?

So if an average surface lease on a well in SE Sask pays $3000 and the average cost of plugging the well is $87,000 and that doesn't include the cost of surface clean up, road removal and replacement of top soil which could easily run into the hundreds of thousands.

Lets pick a very conservative cost of $150,000. Many wells will be multiples of that cost for reclamation. That is 50 years of lease payments, minimum to cover the $150,000!

If oil companies are so marginal that they can't cover the cost of cleanup and remediation up front with a bond and payments into the orphan well fund then they shouldn't be in business.

But this is the boom and bust industry that takes the money and excess profits in good times and runs away from their cleanup liabilities in the bad times? It certainly looks like that is the business model for some companies.

I am just not sure why any farmer, landowner or taxpayer would think this is acceptable?

[oneoff]

The North Dakota bonding system looks like Canadian oil producers should want a similar regulation


43-02-03-15. Bond and transfer of wells.
1. Bond requirements. Prior to commencing drilling operations, any person who proposes to
drill a well for oil, gas, injection, or source well for use in enhanced recovery operations, shall
submit to the commission, and obtain its approval, a surety bond or cash bond. An alternative
form of security may be approved by the commission after notice and hearing, as provided by
law. The operator of such well shall be the principal on the bond covering the well. Each surety
bond shall be executed by a responsible surety company authorized to transact business in
North Dakota.
2. Bond amounts and limitations. The bond shall be in the amount of fifty thousand dollars
when applicable to one well only. Wells drilled to a total depth of less than two thousand feet
[609.6 meters] may be bonded in a lesser amount if approved by the director. When the
principal on the bond is drilling or operating a number of wells within the state or proposes to
do so, the principal may submit a bond conditioned as provided by law. Wells utilized for
commercial injection operations must be bonded in the amount of fifty thousand dollars. A
blanket bond covering more than one well shall be in the amount of one hundred thousand
dollars, provided the bond shall be limited to no more than six of the following in aggregate:
a. A well that is a dry hole and is not properly plugged;
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b. A well that is plugged and the site is not properly reclaimed; and
c. A well that is abandoned pursuant to subsection 1 of North Dakota Century Code section
38-08-04 or section 43-02-03-55 and is not properly plugged and the site is not properly
reclaimed.
If this aggregate of wells is reached, all well permits, for which drilling has not commenced,
held by the principal of such bond are suspended. No rights may be exercised under the
permits until the aggregate of wells drops below the required limit, or the operator files the
appropriate bond to cover the permits, at which time the rights given by the drilling permits are
reinstated. A well with an approved temporary abandoned status shall have the same status
as an oil, gas, or injection well. The commission may, after notice and hearing, require higher
bond amounts than those referred to in this section. Such additional amounts for bonds must
be related to the economic value of the well or wells and the expected cost of plugging and
well site reclamation, as determined by the commission. The commission may refuse to
accept a bond or to add wells to a blanket bond if the operator or surety company has failed in
the past to comply with statutes, rules, or orders relating to the operation of wells; if a civil or
administrative action brought by the commission is pending against the operator or surety
company; or for other good cause.
3. Unit bond requirements. Prior to commencing unit operations, the operator of any area
under unitized management shall submit to the commission, and obtain its approval, a surety
bond or cash bond. An alternative form of security may be approved by the commission after
notice and hearing, as provided by law. The operator of the unit shall be the principal on the
bond covering the unit. The amount of the bond shall be specified by the commission in the
order approving the plan of unitization. Each surety bond shall be executed by a responsible
surety company authorized to transact business in North Dakota.
Prior to transfer of a unit to a new operator, the commission, after notice and hearing, may
revise the bond amount for a unit, or in the case when the unit was not previously bonded, the
commission may require a bond and set a bond amount for the unit.
4. Bond terms. Bonds shall be conditioned upon full compliance with North Dakota Century
Code chapter 38-08, and all administrative rules and orders of the commission. It shall be a
plugging bond, as well as a drilling bond, and is to endure up to and including approved
plugging of all oil, gas, and injection wells as well as dry holes. Approved plugging shall also
include practical reclamation of the well site and appurtenances thereto. If the principal does
not satisfy the bond's conditions, then the surety shall satisfy the conditions or forfeit to the
commission the face value of the bond.
5. Transfer of wells under bond. Transfer of property does not release the bond. In case of
transfer of property or other interest in the well and the principal desires to be released from
the bond covering the well, such as producers, not ready for plugging, the principal must
proceed as follows:
a. The principal must notify the director, in writing, of all proposed transfers of wells at least
thirty days before the closing date of the transfer. The director may, for good cause,
waive this requirement.
(1) The principal shall submit a schematic drawing identifying all lines owned by the
principal which leave the constructed pad or facility and shall provide any details the
director deems necessary.
(2) The principal shall submit to the commission a form 15 reciting that a certain well, or
wells, describing each well by quarter-quarter, section, township, and range, is to be
transferred to a certain transferee, naming such transferee, for the purpose of
14
ownership or operation. The date of assignment or transfer must be stated and the
form signed by a party duly authorized to sign on behalf of the principal.
(3) On said transfer form the transferee shall recite the following: "The transferee has
read the foregoing statement and does accept such transfer and does accept the
responsibility of such well under the transferee's one-well bond or, as the case may
be, does accept the responsibility of such wells under the transferee's blanket bond,
said bond being tendered to or on file with the commission." Such acceptance must
likewise be signed by a party authorized to sign on behalf of the transferee and the
transferee's surety.
b. When the commission has passed upon the transfer and acceptance and accepted it
under the transferee's bond, the transferor shall be released from the responsibility of
plugging the well and site reclamation.

I've deliberately shortened the rest of the text to comply with agriville 10,000 character limit. SEE ORIGINAL TEXT IF INTERESTED




History: Amended effective April 30, 1981; March 1, 1982; January 1, 1983; May 1, 1990; May 1, 1992;
May 1, 1994; July 1, 1996; December 1, 1996; September 1, 2000; July 1, 2002; May 1, 2004;
January 1, 2006; April 1, 2012; April 1, 2014; October 1, 2016; April 1, 2018.
General Authority: NDCC 38-08-04
Law Implemented: NDCC 38-08-04