Shell, Pieridae to try again after Alberta Energy Regulator blocks licence transfers

Two energy companies whose deal over aging assets in Alberta failed to win approval from the province’s energy regulator over environmental concerns say they will try again.

“We’re trying to find the right mechanism,” Michael Crothers, president of Shell Canada, said Friday.

On Thursday, the regulator refused to transfer licences for 284 wells, 66 facilities and 82 pipelines in the southern Alberta foothills — most involving toxic sour gas — from Shell to Pieridae Energy. Pieridae is a small Calgary company that plans to pipe the gas to the East Coast, liquefy it in an as-yet-unbuilt plant and ship it to Germany.

The sale has closed and Pieridae owns and operates the assets.

The regulator said it didn’t like how the application to transfer the licences would have split liabilities for cleaning up the sites, especially two gas-processing plants. The terms of the sale would have had Shell responsible for existing contamination and Pieridae on the hook for future problems.

The regulator said it would be impossible to know which company would be responsible for what part of remediation. It also said the company that made the mess should be the one to clean it up.

Crothers acknowledged the application was unusual, but said Shell stands by its plans.

“We’ve moved into a new era,” said Shaun Fluker, a University of Calgary professor of resource and environmental law.

“If you are going to take on assets, you have to demonstrate that you can meet those obligations and have the financial ability to meet them.

“You can’t structure a proposal where the resulting approvals will be a workaround of the statutory regime, which is really what this was.”

Pieridae, which said its finances are healthy, says that’s not so.

Until the licences are transferred, the liabilities remain with Shell, Crothers said.

He said the companies are examining their options. They may take the ruling to the regulator’s internal appeal board or submit a rejigged application.

Source: Read Full Article