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Obsidian Energy Ltd. OBE-T is disputing an environmental protection order from the Alberta Energy Regulator, saying it wants to see more evidence that the injection of wastewater from its oil sands production caused a series of earthquakes.

The order relates to seismic events that rocked the Peace River region in November and March, including one of the largest earthquakes ever recorded in Alberta. The 5.6-magnitude quake hit in the early evening of Nov. 29, 2022, and was felt as far as Edmonton, more than 500 kilometres away.

Initial findings from the Alberta Geological Survey, a branch of the AER, indicated that the earthquake was a result of natural tectonic movement. But last week the provincial regulator said the Calgary-based oil and gas producer had induced the events with its liquid disposal operations and slapped it with an order.

Obsidian president and chief executive officer Stephen Loukas said in a statement Monday that the company has requested the numbers and analysis the AER relied on when making its decision.

“Since we have not seen any data or other evidence for the AER’s conclusions, we cannot – and do not – agree with these conclusions,” he said.

Mr. Loukas said Obsidian intends to engage independent third-party experts to examine the data and better understand the AER’s reasoning.

“We believe that this additional evaluation and further monitoring are required before a proper conclusion can be reached regarding the cause of the seismic events,” he said.

The injection of wastewater into underground reservoirs is a standard industry practice in the Peace River region.

Obsidian said Monday that its water disposal well has been approved and licensed by the AER and operates at pressures “far below licensed rates.” It has operated safely for more than a decade, the company said, much like the wells of other oil producers in the area.

It said it doesn’t anticipate that the order will have any impact on production.

The AER issued the order against Obsidian on the same day that Stanford University released a study concluding the Nov. 29 quake was most likely caused by wastewater being injected underground by oil sands operators. It was the first study to link seismic activity in the area to industry.

Peace River is Alberta’s smallest oil sands region. Deposits there are deeper than around Fort McMurray, so instead of mining them producers use in situ methods, in which steam or solvents are injected into the ground to recover the bitumen.

Wastewater produced in the process is then pumped back into the ground, which can put pressure on fault lines and cause earthquakes.

The regulator said the unique geological features of the area also contributed to the earthquakes but gave Obsidian seven days to submit a plan and implement a series of steps to reduce the frequency and magnitude of seismic events that might be caused by its liquid disposal.

Obsidian shares fell as much as 4 per cent before markets opened Friday. While they rose later in the day, by Monday morning they remained slightly down.

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Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 13/06/24 4:00pm EDT.

SymbolName% changeLast
OBE-T
Obsidian Energy Ltd
-3.47%9.73

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