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Insolvency is when a company is unable to meet their obligations, or their liabilities are greater than the value of their assets, including oil and gas infrastructure. When a company fails to meet their obligations, a receiver or trustee can be appointed by the courts to sell the assets of the insolvent company.

Roles During an Insolvency

Receiver or Trustee’s Role
A receiver or trustee helps to move assets into the hands of responsible operators and oversees the assets, including response to an incident or emergency, until they are sold. The receiver or trustee has the authority to sell AER-licensed assets to responsible operators, where they can remain in production or be closed through proper abandonment, remediation, and reclamation.

Our Role
We do not control or prevent insolvencies. Our main focus when a company enters into insolvency is to protect the public and the environment. Following the Supreme Court of Canada’s Redwater decision, we  work to ensure that any remaining funds in the estate are used for site cleanup before creditors are repaid.

When assets are sold, a transfer application must be submitted to us review and decision. Our final decision ensures that the purchaser is an eligible licensee and that the application meets all requirements. The new Directive 088: Licensee Life-Cycle Management introduced new requirements for license transfers  in the oil and gas sector. 

When There Is No Owner

When there is no legally responsible party to look after an asset, the AER may designate it as an orphan. The responsibility for an orphaned asset is then transferred to the Orphan Well Association (OWA). The OWA is an industry-funded not-for-profit organization that safely closes orphaned assets.

The OWA’s annual budget is funded through a levy paid by industry.

For more information, please contact the OWA.

Insolvencies in Alberta

Information about specific insolvencies, including contact information and materials for court applications, is posted on websites of the insolvency professional handling the insolvency.

The Government of Canada’s Office of the Superintendent of Bankruptcy maintains the official records about companies in formal insolvency proceedings. For inquiries related to a specific insolvency, please email @email.

Unpaid Surface Lease Payments

Landowners are eligible to apply for surface lease compensation through the Land & Property Rights Tribunal. Landowners should contact the Land & Property Rights Tribunal for information or questions about surface lease payments. The AER and OWA are not involved with surface lease payments.

The Government of Alberta has more information on what to do when a company fails to make annual surface lease payments.

The Farmers’ Advocate Office provides support and resources for farmers and ranchers, including advocacy, energy, utility and surface rights and rural dispute resolution.

Terms To Know

Common terms related to insolvencies include:

  • Bankruptcy: A company can place itself into bankruptcy or be placed by a creditor. A trustee is then assigned and may take possession and sell the company’s property.
  • CCAA protection: A company that owes more than $5 million to its creditors may seek protection under the Companies’ Creditors Arrangement Act (CCAA) to avoid bankruptcy and renegotiate its debt with its creditors. If granted, it will receive court protection from its creditors for a limited time – which may be extended with court approval – to help plan how it intends to renegotiate its debt. A court-appointed monitor will observe the company’s operations but does not take possession of the company’s property.
  • Ceased operations: When an AER-licensed company has contacted us to indicate that it is unable to continue operations and has no remaining staff to oversee and supervise its AER-licensed assets. The AER confirms that the company will not place itself into bankruptcy or be placed into receivership by a lender or secured creditor.
  • Notice of Intention to Make a Proposal (NOI): A company may restructure through preparing and submitting a formal proposal to its creditors to avoid bankruptcy. If a company does not file a proposal or it is rejected by its creditors, the company is assigned into bankruptcy.
  • Receivership: A receivership typically happens when a lender or secured creditor appoints a receiver to recover amounts owed under a secured loan agreement. The receiver may take control and possession, operate, manage, sell, or liquidate a company’s assets.

Question: When should a financially distressed licensee reach out to the AER if it is contemplating ceasing operations? 
Answer: Ideally, a company should reach out to the AER at least a month prior to ceasing operations. The AER will schedule a meeting with the licensee to better understand its circumstances (including confirming whether any insolvency proceedings are likely to be initiated) and the current state of its assets, identify site concerns, request an update of AER working interest participant records, and direct the shut-in of assets. AER requirements and expectations of a licensee when ceasing operations can be found at Manual 023: Licensee Life-Cycle Management.

Regardless of the reason for ceasing operations, the licensee remains responsible for regulatory and liability obligations associated with their AER-licensed assets, including providing reasonable care and measures, conducting suspension, abandonment and reclamation. 

Question: I’m a licensee that is considering ceasing operations. Can the AER provide guidance whether I should make certain payments before ceasing operations? 
Answer: No. Licensees should consult legal counsel.

Question: I’m a landowner with wells on my land, and the licensee has not made annual surface lease payments. What can I do? 
Answer: Landowners may contact the Land & Property Rights Tribunal to determine if a Recovery of Compensation application can be submitted. The Government of Alberta has more information on what to do when a company fails to make annual surface lease payments.

Question: I understand that a certain licensee is financially distressed and am interested in acquiring some of their assets. Can the AER assist?
Answer: Companies that are not in formal insolvency proceedings may also conduct their own sales. Company transactions involving the proposed change in AER licensee of record require AER approval following submission of a licence transfer application. Environmental or safety concerns observed can be reported to the AER’s emergency response line at 1-800-222-6514

Question: Can a licensee ask the Orphan Well Association (OWA) to appoint a receiver over its properties? 
Answer: Once a licensee has made a corporate decision to cease operations and has confirmed to the AER that formal insolvency proceedings will not be initiated, the AER will issue an order directing the licensee to provide reasonable care and measures and shut-in and abandon its licensed assets. The AER will notify the OWA of the company’s decision to cease operations so the OWA may begin its review regarding receiver appointment. Generally, the AER will not bring an application to appoint a receiver, though the OWA may, at its discretion, apply to appoint a receiver over the company’s assets to have assets sold to new responsible parties to reduce the potential impact facing the OWA. The OWA will not communicate its decision over whether a receiver will be appointed until after the AER has issued an order to the licensee. 

Question: What is the role of the AER in interacting with the receiver/trustee to enforce outstanding amounts owed by the licensee for municipal taxes, private surface lease payments, and other contractual amounts owing? 
Answer: We play no role. The AER has no jurisdiction over outstanding amounts owed for municipal taxes, surface lease payments, or under contractual agreements. 

Question: What is a working interest participant (WIP)?
Answer: A WIP is a person who owns a beneficial or legal undivided interest in a well or facility under agreements that pertain to the ownership of that well or facility. WIPs may be required to provide reasonable care and measures; suspend, abandon, remediate, and reclaim a well or facility that they have a working interest in; and are required to pay their share of reasonable care and measures, suspension, abandonment, remediation, and reclamation costs.

Question: I am the licensee of record and am seeking to update the working interest participants associated with my licensed wells or facilities. How can I do this? 
Answer: Please see our YouTube tutorial for updating working interest participant information through One Stop. 

For bulk changes to working interest information by the licensee of record:

  1. Log into OneStop
  2. In the top right-hand corner, click “Bulk Upload” 
  3. Under “Upload Category”, select Other à Working Interest Participant
  4. Click Button “Download Template”
  5. Outside of OneStop, fill out and save the WIP changes in this spreadsheet
  6. Return to One Stop
  7. Click “Upload CSV”
  8. Select the WIP file you want to upload.
  9. Click Submit
  10. When the file has been submitted, it will display under “Uploaded Files” 
    1. If there are any errors in the submission, you will see an error indicator for the given file, under “Error File”

Question: What happens if a WIP is not paying their share of closure costs?
Answer: If a WIP has failed to meet its obligations and meets the criteria to be deemed a defaulting WIP under section 70(2)(b) of the ​​​​​​ Oil and Gas Conservation Act (OGCA), their share of outstanding costs may be claimed by the remaining WIPs through the working interest claim process set out on the Orphan Well Association’s website under Producers > Working Interest Claims.

If a WIP defaults on its obligations but does not meet the criteria under section 70(2)(b) of the OGCA to be deemed a defaulting WIP, then the remaining WIPs can submit an application to the AER for a cost determination provided that the closure activity has been directed by the AER. The application requirements are set out in section 3.071 of the Oil and Gas Conservation Rules. To start this process, please contact @email.

Question: When there is nobody caring for sites held by an inactive licensee, what does the AER do to make sure that the sites are closed? 
Answer: The AER typically works with the licensee to ensure that all regulatory requirements are met. However, where the licensee is no longer able to meet their regulatory requirements, which is the case in insolvency and ceased operations, the AER looks to other responsible parties to execute the remaining closure obligations that are required under regulations. 

Where there is a responsible party found to do closure—for example, a working interest participant (WIP)—the AER may issue orders to the working interest participant to execute abandonment or reclamation on the sites where they are a responsible party. The WIP may also be directed to provide reasonable care and measures for the site. Orders issued to licensees and WIPs are intended to provide transparency to all stakeholders about the parties and actions directed to close the sites.

An order is one example of a compliance and enforcement tool that can be used by the AER. The AER issues orders to ensure compliance in many different areas of energy development, including insolvency and ceasing operations. A listing of all orders issued by AER can be found on the Compliance Dashboard

Where there are no remaining viable responsible parties to conduct abandonment or reclamation, the AER may direct the Orphan Well Association (OWA) to conduct this work. Sites that have been designated as orphan are listed on the OWA’s website. The OWA contacts landowners when a site has been designated as orphan. If a landowner has not received communications from the OWA, the associated site has not likely be designated as an orphan and may be under AER order and the responsibility of a working interest participant. 

Question: What is expected of a working interest participant (WIP) who has received an AER order to provide reasonable care and measures because the licensee is insolvent or has ceased operations? 
Answer: Where a licensee is no longer providing reasonable care and measures to prevent impairment or damage over its assets, the AER may direct a WIP to take certain steps to provide such measures in place of the licensee. This can occur in situations such as a licensee who has ceased operations or become insolvent. Examples of actions expected of a WIP in providing reasonable care and measures include the following: 

  • Ensuring the site’s 24-hour emergency number is active and initiates a response when called. 
  • Reporting any events of site impairment or damage observed to the AER (e.g., surface casing vent flow, gas migration, substance release). 
  • Depressurizing and emptying on-site containment devices or equipment, including fluid removal and disposal. 
  • Securing the site, with periodic site visits and inspections. 

Sites that have unique circumstances (e.g., H2S present on site, located in an environmentally sensitive area) may require additional measures. 

Question: If a working interest participant (WIP) has received an AER order to abandon a well or facility because the licensee is insolvent or has ceased operations, what is expected? 
Answer: Where abandonment has been directed, the parties are responsible for ensuring the abandonment of the properties is complete, including downhole abandonment and surface decommissioning, in accordance with AER regulations. WIPs may be required to provide information to the AER throughout the abandonment process, to demonstrate progress. For copies of AER orders issued, please see the Compliance Dashboard.

Question: I am a WIP in another licensee’s well or facility and have been ordered by the AER to complete the closure work. Can I ask the OWA to complete this closure work on my behalf? 
Answer: A WIP that has been directed or ordered by the AER to conduct closure work over an insolvent or defunct licensee’s properties may contact the OWA to determine if the OWA is willing to enter into a working interest participant agreement to conduct the closure work on the WIP’s behalf. In using the OWA’s economies of scale, the OWA may be able to complete the closure work at a reduced cost and reduce the overall impact to the Orphan Fund. The OWA retains discretion whether to enter into such an agreement, and WIPs are expected to pay their proportionate share of closure costs prior to the OWA conducting the associated work. Details on these agreements are available on the OWA’s website. Where the OWA has declined to enter into an agreement, the WIP remains responsible to conduct and complete the closure work directed by the AER. 

Question: What happens to properties if a WIP does not complete the directions contained in the order? 
Answer: If a licensee or associated WIPs do not comply with an abandonment order, our staff will review the identified parties and enforcement options available under the AER’s compliance assurance program. If there are no remaining responsible parties for a property, it may be designated as an orphan and referred to the OWA to be abandoned and reclaimed.

Contact Us

If you have safety or environmental concerns about an oil and gas site, please call the AER’s 24-hour response line at 1-800-222-6514. We respond to all complaints.

If you have questions about insolvencies, please contact our Customer Contact Centre.