Alberta Appeal Court keeps $217 million oilpatch cleanup liability case alive

Alberta’s top court has ruled a bankruptcy hearing that could determine whether $200 million in oilpatch environmental liabilities wind up on the public dime will have to go back to court.

The Court of Appeal said Friday that the long-running bankruptcy of Sequoia Resources should be heard again in Alberta Court of Queen’s Bench.

Sequoia Resources was created in 2017, holding a tiny share in a series of profitable wells and full ownership of almost 4,000 money-losing and unreclaimed wells and pipelines.

Sequoia then transferred its profitable wells to Perpetual Energy and declared bankruptcy in 2018 with $217 million in environmental liabilities still on the books.

The bankruptcy trustee took Perpetual to court, arguing that Sequoia only held those profitable wells long enough to dodge regulatory scrutiny to determine if it was able to clean up its various sites.

A judge initially ruled the transaction was valid and that the cleanup costs shouldn’t affect whether the company is considered bankrupt.

But in two separate decisions the Appeal Court disagreed, sending the matter back to the lower court.

This report by The Canadian Press was first published March 28, 2022.

The Canadian Press

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