Close to 60 natural gas well sites near the hamlet of Jenner, in southern Alberta, are supposed to have been shut down, cleaned up and the land returned to its natural state. Instead, scattered equipment, holes in the earth, dead vegetation and divots deep enough to swallow the wheel of a pickup truck dot the landscape, evidence of what one regulator called a “really serious case of falsification of documents.”
The 59 wells belong to one Calgary-based company. Another, an environmental services provider, applied to the provincial regulator for reclamation certificates that affirmed all the sites had been returned to natural prairie. But after local landowners complained, the Alberta Energy Regulator (AER) launched a two-year investigation and cancelled every certificate.
Aeraden Energy Corp. owns the wells and a company called CEPro Energy & Environmental Services Inc. signed off on the cleanup of the sites.
The AER investigation found that Aeraden had left groundwater monitoring wells, fences and berms on sites, failed to fix slumping soil and dead vegetation, and – in one case – filed for a reclamation certificate for a site that was still active.
The probe also included an audit of all reclamation certificate applications lodged by CEPro since 2016. It found the company had submitted site photos that weren’t of the wells being reclaimed, and signed off on cleanups at many sites despite holes in the ground and various infrastructure left behind.
But neither company will face financial penalties, despite the breadth and seriousness of their contraventions of Alberta’s Environmental Protection and Enhancement Act (EPEA) and regulations governing conservation and reclamation. Instead, each company received a warning letter from AER, calling the matter “very serious.”
“With additional time and investigation, it is likely that a more significant enforcement action would have been taken by the AER,” the letters noted. But a two-year time limit imposed by the EPEA on investigations meant the two companies were simply warned, and notes added to their enforcement histories. That time limit and the sheer volume of information meant the regulator could only investigate a handful of the 59 sites.
Aeraden was also ordered to complete remediation of the sites. However, the case will have no implications for several other oil and gas sites Aeraden operates across Alberta and Saskatchewan, the AER said.
Matthew Oliver is deputy registrar and chief regulatory officer of the Association of Professional Engineers and Geoscientists of Alberta (APEGA), which regulates the practices of engineering and geoscience in Alberta. It’s the largest association of self-regulated professionals in Western Canada, but Mr. Oliver said he has never seen such an egregious case since he was licensed in 1991.
“This is a really, really serious case of falsification of documents” amounting to “more than a casual slip,” he told The Globe and Mail.
But the AER said it has no evidence of a deliberate attempt by either company to mislead regulators. It’s also standing by OneStop, the online system used for reclamation applications.
The OneStop program removes the requirement for inspectors to even lay their eyes on sites before issuing certificates saying land has been returned to its pre-well state. Instead, it relies on energy companies and those that sign off on their cleanup work – agrologists and engineers, for example – to attest the information attached to their applications is true and correct.
Legislation that governs APEGA prevents Mr. Oliver from confirming whether an investigation into CEPro and its president, Lian Zhao, is underway, but he said “this is exactly the sort of case that would result in a complaint being filed with [APEGA’s] investigative committee.”
Ms. Zhao did not want to answer questions or provide information about the case when reached by The Globe by phone, saying only it was a “complex story.”
The AER says neither CEPro nor Aeraden have appealed the warning letters, and Ms. Zhao would not confirm whether her company plans to take that route.
Aeradan doesn’t list any employees on its website, but its office manager Wendy Ma – who is named in the AER penalty letter – did not return repeated phone calls and e-mails asking for comment. Nor did the company’s owner, Vancouver-based Saliance Global Holdings Co. Ltd.
According to Saliance’s website, it owns Aldesta Hotels Group, which runs a range of luxury hotels and resorts in British Columbia and Australia. It’s also an affiliate of Shanghai SanDun Auto Parts Co. Ltd. – which supplies auto parts for various companies out of its manufacturing facilities in Shanghai – and an Australian property development and management company called G&Q Real Estate.
Aeraden first came to the attention of Kris Bower, co-founder of an advisory firm called Welltraxx, about four years ago when Aeraden bought a collection of natural gas wells from Magnum Energy Inc. Welltraxx helps landowners across Western Canada manage their oil and gas holdings, and is assisting a group in Jenner.
For years, Aeraden has failed to pay those local farmers and ranchers the money they’re contracted to receive for the leases on their land, Mr. Bower told The Globe. He has worked on the land agent side of oil and gas for close to 20 years, but said the Aeraden-CEPro case was “certainly an oddball” owing to the sheer volume of breaches.
“Most of those sites were not anywhere close to being [reclamation certificate] ready,” he said. “There was still much work needed, but just how that got so far off the rails, well, I’m not really sure.”
Mr. Bower said landowners started raising red flags when they received reclamation certificate packages in the mail that indicated they had signed off on cleanup work. They hadn’t.
Mr. Oliver of APEGA, the engineering association, says it goes “right to the core of who we are are professionals” if and when members flout the rules that govern them.
“One count of falsifying a document is immensely serious. [The AER] felt there were grounds there to cancel 59 reclamation certificates, which is huge,” he said.
“We know times are tough in the industry right now, but that moves me to say we need to be focused even more on people not cutting corners and not falsifying things, because the protection of the public is even more critical.”
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.