Alberta’s energy sector watchdog has put in a stop production order for a northern Alberta oil and gas facility after the company was handed nearly 100 non-compliances between March and July 2022.
Everest Canadian Resources, which operates a Steam-Assisted Gravity Drainage (SAGD) facility north of Fort McMurray, was handed the order to immediately stop operations at all of its licensed assets on Friday, March 3, by the Alberta Energy Regulator (AER).
A report published by the AER states the company failed to hold to its compliance plan after it was found to be non-compliant on 93 items over a four-month period in 2022.
While the AER says there is no risk to public safety, the Reasonable Care and Measures Order was issued in an effort to protect the environment following “repeated failures by Everest Canadian Resources to comply with AER regulatory requirements,” says a statement on the regulator’s website.
“Under the order, the facility and its associated infrastructure are to be shut in, which means Everest is required to safely stop production and stop operating. In addition, the AER has directed the Orphan Well Association (OWA) to provide immediate care over the sites and confirm that the facility has been closed or shut down by March 18, 2023,” the statements reads.
“The order does not absolve Everest Canadian Resources from any of its responsibilities and liabilities but ensures that the sites are responsibly attended to for the protection of the environment.”
‘Deficient’ remedy plan
In early July 2022, the AER and members of Everest leadership met to discuss issues and “set expectations” to address the outstanding non-compliances and the AER requested it develop and submit a plan to rectify any remaining issues, the report reads.
Multiple reports and remedy proposals, including a groundwater monitoring program proposal and a groundwater monitoring thermal report were deemed “deficient” by AER.
On Feb. 21, AER field operations northeast staff inspected Everest’s McKay in-situ facility and found the company was not following the accepted actions in its compliance plan.
The following week, on March 1, Everest leadership told the AER the company would be shutting in its McKay facility, essentially stopping all productions and operations.
On March 2, an Everest employee alerted the AER to an equipment failure at the McKay facility that left it without heat.
An AER staff member visited the site that day and confirmed “the McKay facility was being shut-in and there was reduced protection from the freezing temperatures,” the report read.
After Everest assured the AER it would be restarting steaming operations at the facility, the report states that an Everest staff member told the AER the remaining heating system at the site “had to be shut down per a third-party inspector regarding integrity concerns of the equipment.”
AER’s inspecting manager, Heath Williams, made the decision to suspend the sites and Everest was given notice of immediate actions to be taken, which include the suspension of all wells and facilities operated by the company, identifying any potentially affected parties in the case of a chemical release and providing a copy of its emergency response plan, among others.
Over the next two weeks, the Orphan Well Association is tasked with ensuring any containment devices or equipment are depressurized, emptied and disposed of in a safe manner. Fifteen days after the order was released, all Everest sites are to be closed or shut down.
Representatives from Everest were not immediately available for comment.
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Tax deferments approved by RMWB council
Back in November 2022, Everest made a bid to the Regional Municipality of Wood Buffalo council to be granted a deferment on property taxes owed from 2018, 2019 and 2021.
Citing low oil prices, Everest asked council to delay nearly $890,000 in taxes owed, offering to pay the amount through monthly payments of $75,000. The request was approved with one councillor in opposition.
The previous council gave conditional forgiveness of more than $2.5 million in taxes, tax arrears and associated penalties owed by the same company.
The company has 33 well licenses, three facility licenses and 14 pipeline licenses in the region.
— With files from Vincent McDermott
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