Alberta company falsified documents relating to well abandonment and reclaimation

[ExtraSlow]

Energy firms misled Alberta regulators on cleanup of well sites
EMMA GRANEY ENERGY REPORTER
PUBLISHED 9 HOURS AGO
UPDATED JANUARY 14, 2021

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.”
https://www.theglobeandmail.com/business/article-energy-firms-misled-alberta-regulators-on-cleanup-of-well-sites/

Wow this is shady even by the already lax standards of professional conduct out there. I hope APEGA can destroy a few of these fools, because the AER isn't going to.

[killramos]

Shady Chinese money doing illegal things?

Quelle surprise.

[Brent.ff]

AER is so captured it's ridiculous. Literally just a slap on the wrist with a letter, and no balls to actually fine someone..

"But the AER said it has no evidence of a deliberate attempt by either company to mislead regulators"

I work in environmental consulting, putting the wrong photos in for one site is one thing, but 59 of them? Wow. How much more proof do you need.

[Disoblige]

I don't get why AER is not doing any penalties. Maybe there is more to the story of course, but strange.
Makes it easier for other smaller companies to start taking risks because they know they can just play dumb and get a "stern warning"...

[killramos]

Their first mistake was letting engineers decide what “clean” looks like

[Xtrema]

I don't get why AER is not doing any penalties. Maybe there is more to the story of course, but strange.
Makes it easier for other smaller companies to start taking risks because they know they can just play dumb and get a "stern warning"...

Because we are open for business.

[killramos]

If I had a guess the company itself is completely underwater and punishing them would cost more money than they could ever recover?

LMR of .28, 100boe/d over 16 net producing wells. Confirmed shitco.

[ExtraSlow]

the recovery of monetary damages isn't the only or main point of punishments.

I'm just horrified, as an Albertan, as a person in the energy industry, as an engineer, on every level.

[killramos]

the recovery of monetary damages isn't the only or main point of punishments.

I'm just horrified, as an Albertan, as a person in the energy industry, as an engineer, on every level.

Oh if I had my way we would squeeze every penny out of the owners of those wells and lock up everyone who touched the paper trail of the fraudulent reports. But my opinion doesn’t mean much and I do figure the AER would have done something if they thought they had a chance in hell of fixing the issue.

[Brent.ff]

I do figure the AER would have done something if they thought they had a chance in hell of fixing the issue.


I think you're giving AER way too much credit. I hope APEGA strips them all of their P. Engs..

[killramos]

I think you're giving AER way too much credit. I hope APEGA strips them all of their P. Engs..

Pretty sure this is merely grounds to make them redo their multiple choice ethics test.

[ExtraSlow]

I think Apega has more options for punishments with teeth against these companies than the AER does.

[Rocket1k78]

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.”

Very serious warning letter:rofl::rofl::rofl:

[ExtraSlow]

a stern talking.

[Rocket1k78]

a stern talking.

That in my opinion would be harsher than a Serious warning letter lol This whole thing is a major joke, you got a company who falsifies shit, they hire a company whos responsible to make sure its done right add to the falsification, they all get caught on 59 wells and their punishment is a warning letter.

[msommers]

APEGA doing their job.

You make the best jokes, ES.

[Brent.ff]

That in my opinion would be harsher than a Serious warning letter lol This whole thing is a major joke, you got a company who falsifies shit, they hire a company whos responsible to make sure its done right add to the falsification, they all get caught on 59 wells and their punishment is a warning letter.

Id be far more shocked if there was no connection between the two companies beyond that relationship..

[ExtraSlow]

It is a common practice for operating companies to have similar ownership to service companies, and to have close operating relationships as well.

[Rocket1k78]

Id be far more shocked if there was no connection between the two companies beyond that relationship..
Extraslow nailed it

[ExtraSlow]

Extraslow nailed itI would like to clarify that I have no intimate or insider knowledge of any of the companied named in that article, or any persons related to them, certainly not any of thier professional members. My speculation is based only on dealings I've had with companies that sound superficially similar.

[revelations]

https://www.linkedin.com/in/dr-lian-zhao-p-eng-president-2b348717/

[ipeefreely]

Very serious warning letter:rofl::rofl::rofl:


I hope one of those never shows up in my inbox I don't think I could handle it..... :facepalm:


202011-23 (http://www1.aer.ca/compliancedashboard/enforcement.html?searchcol=1&searchstr=202011-23)

202011-24 (http://www1.aer.ca/compliancedashboard/enforcement.html?searchcol=1&searchstr=202011-24)


Good thing the AER laid off a bunch of staff. Trusting companies always works out! :rolleyes:

[schurchill39]

Shady Chinese money doing illegal things?

Quelle surprise.

QFT. This is why we are always so cautious working for small Chinese companies. There are some good ones, and we've got a few great contacts in that community but its always dicey. This does not come as a surprise at all and the shittiest part of the article is that it helps fuel the "oil and gas companies don't care about the environment" narrative and "the AER doesn't protect our land worth shit". I think the AER is a pain in my back as much as the next guy but I would have expected way harsher punishment than a sternly worded letter.

[lasimmon]

Oh if I had my way we would squeeze every penny out of the owners of those wells and lock up everyone who touched the paper trail of the fraudulent reports. But my opinion doesn’t mean much and I do figure the AER would have done something if they thought they had a chance in hell of fixing the issue.

At least the people involved will be on the newly developed list. They will be done in the industry here in Alberta. One thing the AER has finally started doing correctly.


But it happens a lot. Poor landowner I was dealing with this week will never see a rec cert because Husky scammed their way to getting one without cutting off their wellhead and won’t ever come back to do anything. So sucks to own that land I guess.

- - - Updated - - -


QFT. This is why we are always so cautious working for small Chinese companies. There are some good ones, and we've got a few great contacts in that community but its always dicey. This does not come as a surprise at all and the shittiest part of the article is that it helps fuel the "oil and gas companies don't care about the environment" narrative and "the AER doesn't protect our land worth shit". I think the AER is a pain in my back as much as the next guy but I would have expected way harsher punishment than a sternly worded letter.

This made me chuckle.

[Brent.ff]

At least the people involved will be on the newly developed list. They will be done in the industry here in Alberta. One thing the AER has finally started doing correctly. .

I don’t think they get on any ‘bad list’ that keeps them out of the industry as all they got is a ‘record of enforcement for future issues’. There are zero consequences hinted at here

“ Warning letter issued. This will form part of Aeraden Energy Corp.’s enforcement history and may be taken into consideration should future contraventions occur.”

This is an embarrassing statement by AER. We have a set timeline to investigate, there was too much to investigate so here’s your letter vs fine..

“ The AER considers this matter to be very serious. With additional time and investigation, it is likely that a more significant enforcement action would have been taken by the AER; however, due to the proximity of the November 22, 2020 limitation date, the AER has decided to issue a warning letter. Therefore, in consideration of the findings and conclusions identified by the investigation, this warning letter is the enforcement action for these contraventions and closes this investigation. This warning letter will form part of Aeraden Energy Corp.’s enforcement history and may be taken into consideration should future contraventions occur”

[lasimmon]

I don’t think they get on any ‘bad list’ that keeps them out of the industry as all they got is a ‘record of enforcement for future issues’. There are zero consequences hinted at here

“ Warning letter issued. This will form part of Aeraden Energy Corp.’s enforcement history and may be taken into consideration should future contraventions occur.”

I’ve heard recently there is a list and saw first hand someone get denied some wells via regulatory directed transfer because of their previous involvement in failed companies. Not sure the exact details but they are finally coming around apparently.

[schurchill39]

I’ve heard recently there is a list and saw first hand someone get denied some wells via regulatory directed transfer because of their previous involvement in failed companies. Not sure the exact details but they are finally coming around apparently.

I really really hope that this is true.

[e31]

The negative exposure gained by being listed in this thread is the only punishment anyone will ever see. Look at that, a google spider crawling all over Aeraden Energy Corp. If you're affiliated with them, better start governing yourself accordingly.

[davidI]

As much as I support the energy industry in Alberta/Canada, well abandonment and orphaned wells deeply concern me.

It's the clearest example of wealthy industrialists dumping their issues/costs on tax-payers that I can think of in Alberta. These guys should be in prison.

[SKR]

You can send the fucker an email if you want. [email protected]


Greg,

I have read your letters to Aeraden Energy Corp and CEPro Energy and Environmental Services Inc. You closed both letters with, "If you have any questions, please contact me at [email protected] or by phone at XXX-XXX-XXXX." I don't know if anyone involved with those two companies have any questions, but as an Albertan I've got one.

WTF?

The accusations sound serious, and the punishment appears toothless. What have you done to ensure that Albertans' rights are protected? I'm not at all confident based on these two decisions that any energy company has any incentive to follow any regulations.

I look forward to your template response.

Thanks.

SKRNN is hard hitting investigative journalism.

[ThePenIsMightier]

I think Apega has more options for punishments with teeth against these companies than the AER does.

I wonder if any of them will have to verify their CPD hours. Shit would be getting serious, then!

[Euro_Trash]

It is a common practice for operating companies to have similar ownership to service companies, and to have close operating relationships as well.

Common practice is likely a stretch - I was racking my brain and I can only think of 2 in my experience (Murray Edwards and the other one isn't public so I won't disclose).

[ExtraSlow]

Common practice is likely a stretch - I was racking my brain and I can only think of 2 in my experience (Murray Edwards and the other one isn't public so I won't disclose).
You are thinking too big and too long term. But the last ~10 years, a lot of money has flowed into the Canadian oilpatch from what we used to call "non-traditional investors" and those investors have bought or started dozens of operating and service companies with that money. The ownership has a lot of overlap. Maybe not big names, but more the size of the companies listed in that article.

[msommers]

I wonder if any of them will have to verify their CPD hours. Shit would be getting serious, then!

The real shit hits the fan when you call yourself an Engineer or Geologist on LinkedIn and you haven't paid your dues yet for the year. Someone will call you, addressing themself as "Dr. Xxxx xxxx, P.Eng, PhD" threatening to take legal action if you don't change your online title or pay immediately. Don't ask me how I know.

APEGA is essentially a power tripping hall monitor who arguably hasn't done anything since Bre-X.

[killramos]

Real gold when you get an “audit” full of LinkedIn screen shots.

[Type_S1]

Color me shocked that a Chinese owned company buying dogshit assets would ever do something like this. A large portion of Chinese money (excluding the major NOC’s) that has been put in Alberta O&G was done so with fraudulent intent anyways (tax evasion, buying a BS asset base to IPO companies on the Chinese stock exchange for other fraudulent purposes, getting money out of China, etc.). I know quite a few Canadians that got involved with these companies and the stories are crazy.

I sent a message on LinkedIn to this fraudster calling her out - will post a response if I get one. People like this should be facing severe criminal charges and be in jail. Nothing less is an acceptable punishment in my view. Anyone who defrauds taxpayers deserves to be in jail, including the Canadian owned companies doing it as well. The AER and OWA have done a piss poor job at regulating abandonment and reclamation across the province for decades and now, like most everything else, the younger generation will have to pay for the boomers BS schemes.

[lasimmon]

Color me shocked that a Chinese owned company buying dogshit assets would ever do something like this. A large portion of Chinese money (excluding the major NOC’s) that has been put in Alberta O&G was done so with fraudulent intent anyways (tax evasion, buying a BS asset base to IPO companies on the Chinese stock exchange for other fraudulent purposes, getting money out of China, etc.). I know quite a few Canadians that got involved with these companies and the stories are crazy.

I sent a message on LinkedIn to this fraudster calling her out - will post a response if I get one. People like this should be facing severe criminal charges and be in jail. Nothing less is an acceptable punishment in my view. Anyone who defrauds taxpayers deserves to be in jail, including the Canadian owned companies doing it as well. The AER and OWA have done a piss poor job at regulating abandonment and reclamation across the province for decades and now, like most everything else, the younger generation will have to pay for the boomers BS schemes.

I would lay a lot of blame on industry itself.

[killramos]

I would lay a lot of blame on industry itself.

I mean, that’s an interesting statement an industry process that 99% of the time does it all correctly, but some Chinese scumbag owners took advantage for personal gain and are making everyone look bad.

How many of the orphan well environmental mismanagement headlines in the past few years have had to do with trash Chinese owned shitco’s?

Sequoia, Lexin, Aereden, heck even Husky or CNOOC - I guess all those examples are representative of the industry as a whole?

If you want to paint anyone with a wide brush, it’s pretty tough not to paint the Chinese owned companies with a brush literally dipped in shit

[lasimmon]

I mean, that’s an interesting statement an industry process that 99% of the time does it all correctly, but some Chinese scumbag owners took advantage for personal gain and are making everyone look bad.

How many of the orphan well environmental mismanagement headlines in the past few years have had to do with trash Chinese owned shitco’s?

Sequoia, Lexin, Aereden, heck even Husky or CNOOC - I guess all those examples are representative of the industry as a whole?

If you want to paint anyone with a wide brush, it’s pretty tough not to paint the Chinese owned companies with a brush literally dipped in shit

Industry wants a weak AER with minimal enforcement - or at least they have in the past. Things are slowly coming around.

Where do these shitco's get their wells from? Everything is above board there too right? Perpetual just got let off the hook today. AER should be all over deals like that and denying them. Industry should be pushing them to deny deals like that.

How many companies are operating right now where the C suite/Boards were involved in companies that are now with the OWA?

[msommers]

We should have stayed like the Wild West of Texas and stop pretending regulation is a high-end thing. At least in Texas they stand by it with their saying, "jackrabbits don't have lawyers."

[Type_S1]

I would lay a lot of blame on industry itself.

How so? Left to itself, any industry will act in its own self-interest for gain. A set of rules is required to protect all stakeholders (shareholders, public, tax-payers, etc.). When your rules suck and have no repercussions to clear cases of fraud then the system is as much to blame as the companies.

If you let the flames and oilers get on the ice together without refs, a set of rules, and no penalties you would be watching a completely different game then that of hockey.

- - - Updated - - -


We should have stayed like the Wild West of Texas and stop pretending regulation is a high-end thing. At least in Texas they stand by it with their saying, "jackrabbits don't have lawyers."

Texas is hilarious when it comes to regulation surrounding abandonment and reclamation, because, basically there is none. Liberals in Canada would be calling for heads if any Albertan company operated like they do in Texas.

[msommers]

^^^ To add to that, the surface well spacing is something I've personally never seen in Alberta.

96843

[dirtsniffer]

god bless the permian

[ExtraSlow]

Nearly as ugly and damaging as a solar farm. Gross.

[msommers]

That's why wind is the answer!!!......

[killramos]

That's why wind is the answer!!!......

I laughed a bit there. Good one

[lasimmon]

How so? Left to itself, any industry will act in its own self-interest for gain. A set of rules is required to protect all stakeholders (shareholders, public, tax-payers, etc.). When your rules suck and have no repercussions to clear cases of fraud then the system is as much to blame as the companies.

If you let the flames and oilers get on the ice together without refs, a set of rules, and no penalties you would be watching a completely different game then that of hockey.

I don't disagree about how industry will look after themselves.. and they should to protect stakeholders like you said. However, with an industry like O&G there is significantly more involved than just leaving it to industry.

What happens when we start seeing more defunct companies that the orphan levy has to increase significantly? To an amount that companies can no longer afford?

What happens when taxpayers realize loans industry has received for orphaned sites likely aren't going to be repaid?

The answer is you don't get to operate anymore. The public opinion will shift (is already shifting).

The worst thing that is happening is the UCP is in power. They are likely to lose next election and cause a massive policy swing.

Prior to the pandemic I attended a breakfast with a bunch of people in industry in positions that decide on money spending, and the prevailing opinion was they needed another pipeline so the industry can make more money as a whole and they can all spend more money on decommissioning - because that's been top of mind ever before.


There is a lot of pain coming to the industry in Canada. And a lot of it is going to be brought on by industry itself. I am a little drunk so my rumblings are hopefully readable.

[ExtraSlow]

I don't disagree about how industry will look after themselves.. and they should to protect stakeholders like you said. However, with an industry like O&G there is significantly more involved than just leaving it to industry.

What happens when we start seeing more defunct companies that the orphan levy has to increase significantly? To an amount that companies can no longer afford?

What happens when taxpayers realize loans industry has received for orphaned sites likely aren't going to be repaid?

The answer is you don't get to operate anymore. The public opinion will shift (is already shifting).

The worst thing that is happening is the UCP is in power. They are likely to lose next election and cause a massive policy swing.

Prior to the pandemic I attended a breakfast with a bunch of people in industry in positions that decide on money spending, and the prevailing opinion was they needed another pipeline so the industry can make more money as a whole and they can all spend more money on decommissioning - because that's been top of mind ever before.


There is a lot of pain coming to the industry in Canada. And a lot of it is going to be brought on by industry itself. I am a little drunk so my rumblings are hopefully readable.

You might have been a little drunk but your thoughts are pretty understandable. I use the term "self inflicted wounds" for many of the industry problems.

[killramos]

https://boereport.com/2021/03/05/aer-suspends-sanling-energy-ltd-s-operations/

Surprised these jokers have limped along this long. Big surprise as to what happens when you buy your teenage son an oil company to run so he stops sitting in the basement playing video games.