Alberta landowners take energy regulator to court over orphan well levy funding

Alberta landowners take energy regulator to court over orphan well levy funding

Two Alberta landowners and two advocacy groups have filed a judicial review application against the Alberta Energy Regulator, alleging the agency has chronically underfunded the cleanup of orphan oil and gas wells across the province. The legal challenge, announced at a news conference Tuesday, asks the Court of King's Bench to declare the regulator's 2026-27 levy unreasonable and order it recalculated. The claims have not been tested in court.

Who is behind the challenge

Lawyers at environmental law charity Ecojustice are representing landowners Dwight Popowich and Teresa Patry, along with the Polluter Pay Federation and the Alberta Surface Rights Federation. Their judicial review application challenges what they describe as the Alberta Energy Regulator's "chronic underfunding" of the Orphan Well Levy, the industry fee that finances cleanup of sites left behind by failed energy companies.

The regulator deems oil and gas wells "orphans" when a company becomes insolvent, defunct or unable to meet its obligations to safely close its sites. Cleanup is managed through the non-profit Orphan Well Association, and the levy amount is recommended by the regulator to the Alberta government each year.

Ecojustice lawyer Susanne Calabrese told reporters she has heard some compare steady increases to the levy as gradually paying down a mortgage. She rejected that framing, noting the inventory of orphaned wells continues to climb.

"That does not make any sense when the amount of wells are just astronomically increasing at the Orphan Well Association," Calabrese said. "It's like you're paying interest-only payments on a mortgage and your house is doubling in size and you're buying 10 more houses."

What the application alleges

The application alleges the regulator is in violation of part of the Oil and Gas Conservation Act that says it alone is responsible for determining the amount of the levy. The levy must be "sufficient to cover, among other things, a number of costs associated with orphan oil and gas wells in the current fiscal year, as well as deficiencies arising from the previous fiscal year," according to the applicants' reading of the legislation.

The claim also alleges the regulator has improperly delegated its legal responsibility to set levy rates to Alberta's political executive and allows for too much industry influence. It further accuses the regulator of improperly taking into account factors like commodity prices and the health of the industry when setting the levy.

Among other things, the applicants are asking the court to declare the 2026-27 levy "unreasonable" and order it to be recalculated.

The Orphan Well Levy for the 2026-27 fiscal year is $154.56 million, up from $144.45 million the previous year. The well association has pegged total cleanup costs of its current inventory at $1.66 billion.

The scale of the problem

The latest monthly numbers from the Orphan Well Association include an inventory of 7,370 wells in need of decommissioning, which involves permanently dismantling equipment so the site is safe. Another 9,151 wells are in need of reclamation, meaning restoring the land so it resembles its original state.

In the 2025-26 fiscal year, the average cost of decommissioning a well was $28,800. For reclaiming a site, the average cost was $27,700.

The applicants argue such wells can come with "significant risks." In their court document, they said orphan wells can leak contaminants into the soil, the air and the water, putting Albertans' health at risk and causing irreversible damage to the environment. They added that orphan wells can also affect property values and land use, and come with large unpaid bills to municipalities and landowners.

"Oil and gas corporations with closure liabilities that exceed the value of their remaining assets often do not pay their bills, causing economic damage — and taxpayer funds are used to cover these shortfalls," the applicants said in the court document.

The issue touches on a long-standing reality of Alberta's oil and gas economy. When companies fail or walk away from their obligations, the burden of cleanup does not disappear — it shifts to landowners, municipalities and, ultimately, the public purse. The regulatory framework governing orphan wells sits within provincial jurisdiction over natural resources, and the Alberta Energy Regulator plays a central role in overseeing the industry's lifecycle obligations.

Landowners describe years of uncertainty

Popowich, who lives in Two Hills, Alta., said an inactive well on his property was designated an orphan in 2025 after eight years of effort on his part. He was then informed by the Orphan Well Association that it would take 10 to 12 years to reclaim the site.

He told the news conference Tuesday that he has tried to work through the proper channels, but his concerns have been dismissed while the problem keeps getting worse.

"This isn't complicated. Even my grandkids know that if you make a mess, you clean it up," Popowich said.

"Landowners have held up their end of the bargain. As Albertans, we understand the importance of resource development to our province, and we welcome that development in exchange for the promise that, when companies were finished producing, they would clean up after themselves."

"That promise to me and thousands of other Albertans has been broken over and over again."

Patry, who lives near Vermilion, Alta., told the news conference the issue goes beyond finances.

"For years my family has lived with uncertainty about what these sites mean for our home, our land, our health and our future. We've experienced unexplained health concerns in our family, worry about our animals and repeatedly tried to get answers from the Alberta Energy Regulator," she said.

"Living with that uncertainty takes a real toll."

Their experiences reflect a broader dynamic in rural Alberta, where landowners host energy development on their property and municipalities rely on industry tax revenue. When companies become insolvent, those communities are left with the physical remnants of extraction and the financial consequences of unpaid obligations.

Regulator's response and the road ahead

The Alberta Energy Regulator declined to comment on the legal challenge Tuesday. However, a statement from the regulator noted that the most recent annual levy has increased by seven per cent from a year earlier.

"The increase provides additional funding to help the Orphan Well Association address the growing number of orphaned oil and gas sites across the province," the statement said.

The complainants' claims have not been tested in court, and the regulator declined to address the substance of the allegations when contacted Tuesday. The judicial review application will proceed through the Court of King's Bench, where the court will consider whether the regulator's approach to setting the levy complies with its statutory obligations under the Oil and Gas Conservation Act.

The outcome could have significant implications for how orphan well cleanup is funded in Alberta, a province with a long history of oil and gas development and a substantial inventory of wells that require attention. The case also raises broader questions about the balance between industry viability and environmental obligations, and about who ultimately bears the cost when energy companies fail to clean up after themselves.

For Popowich and Patry, the court challenge represents the latest step in what they describe as a long struggle to hold the system to its promises. Whether the court agrees with their arguments remains to be seen, but the application puts a spotlight on a funding gap that the regulator itself acknowledges is growing.

By Alex Thompson, Staff Writer

This article was produced with AI-assisted research and editorial support. Sources: The Canadian Press via Global News (Sept. 8, 2026).