Before becoming a band councillor of the Cold Lake First Nation, Sonny Nest was an oilpatch pressure welder. Back in the day, he fabricated well sites, assembled pipelines, whatever was required. After he retired and went to work for the band, he would engage with energy companies, ensuring his people got a share of the money being spent on their traditional territory. He knew his way around the industry and the land, and people got in the habit of calling him with questions.
He got one such question early in September 2017. A fellow councillor sent him a text about something going on at a well on band lands. Nest got in his truck to have a look. A security guard wouldn’t let him on site, but Nest just barged through. “I backed up and made like I was leaving,” he recalls. “When she closed [her truck] door, I just drove right by.” What he saw has never left him.
“It looked like nighttime in the middle of the day,” Nest says. Oil was shooting 100 metres into the air. Nest figures wind blew the plume for nearly half a kilometre, well past the lease boundaries and into nearby ponds. Within the lease, Nest says the oil and contaminated water pooled more than half a metre deep. He got as close and stayed as long as he dared, took some pictures, and left. There’s a video of Nest describing the blowout at a September 25 band council meeting. He can barely speak through his anger. “That whole area is pretty badly covered,” he said. “This didn’t happen on a lease pad. This happened on our territory, our water, our animals. The province mismanaged this. They’re not doing what they have to do.”
The Alberta Energy Regulator’s (AER’s) records for incident 329397 describe a prompt, efficient and thorough cleanup. Vacuum trucks were already onsite by the time Nest arrived. Hundreds of poplars—clean and white on one side, oily black on the other—were cut, chipped and hauled away. Absorbent booms sucked guck from ponds and streams. Contaminated topsoil was stripped.
Of an estimated 250 m3 of oil and contaminated water that shot from downhole, about 190 m3 was reportedly recovered. No wildlife or water impacts were documented. In November 2018 an assessment by the company and released under access to information legislation found “no elevated surface or soil concentrations associated with the release.” Incident 329397 was officially closed.
Nest isn’t buying it. He’s seen plenty of spills, and he scoffs at the official release estimate. He saw bears and two flocks of geese the day of the blowout. Cranberries, eaten by bears, were exposed to the plume. Nest hunts and traps for food, but he no longer harvests that area. “I won’t take anything from where the contamination happened,” he said. “I’ll never feel safe there.”
Nest doesn’t trust the AER. Neither do many other Albertans. “The trust has been broken,” a government report titled the “Mature Asset Strategy” admitted in April 2025. The report was commissioned by premier Danielle Smith as part of her review of the AER.
The regulator is responsible for the “safe, efficient, orderly and environmentally responsible development of energy resources throughout their life cycle.” Trust has been broken at every stage of this cycle. Smith’s report focuses on the province’s “orphan well” issue and “related challenges surrounding legacy asset retirement and closure funding.” It adds that a lack of trust was “voiced repeatedly by representatives of rural municipalities and private surface-lease owners,” the very communities the oil and gas industry works most closely with.
He doesn’t trust the AER. Neither do others. “Trust has been broken,” a government report admitted in April 2025.
Such an admission from the government is new. The author of it is surprising too—David Yager, a long-time oil and gas industry insider, conservative activist and confidant of premier Smith. Yager led the consultation that resulted in the Mature Asset Strategy. “Mature assets” is the industry term for the hundreds of thousands of wells, pipelines and outbuildings that continue to dot the Alberta landscape years after the oil and profits are gone.
The report’s proposals are the clearest indications of how Smith intends to address Albertans’ low trust in the AER. Officials say the strategy will ease industry burdens, free resources for cleanup, return activity to parts of the province and accelerate remediation. Critics, however, say the strategy simply caters to industry, and will transfer risks—and the costs of restoring sites to their previous state—to taxpayers. Bill Heidecker, president of the Alberta Surface Rights Federation, called the strategy a “Christmas wish list” for industry. “I’m outright disgusted,” he said. “The predetermined outcome was that the industry needed more leniency. That is extremely disturbing to landowners.”
For decades, independent researcher Kevin Timoney has explored how trust in the AER was broken. He’s poked and prodded at how the regulator reaches conclusions like the one delivered in 329397. That work has resulted in five published, peer-reviewed scientific papers and two books. “What the AER is reporting to the public is very different from what they have in hand,” he says. “The public doesn’t know what’s going on.”
This past winter he published research looking at 514 spills between January 2014 and March 2023. He compared how spills were recorded in three different databases: the official AER record, records from the province’s Environmental Management System, and spill reports released under access to information legislation. He found some odd things. First, according to the AER records, crews either got all the oil (75 per cent of cases recorded 100 per cent cleanup) or none of it. “In practice, most spills would experience partial recovery, but no partial recoveries were recorded,” he wrote in the journal Environmental Monitoring Assessment. Those all-or-nothing records, he wrote, “demonstrate that the values are subjectively chosen and arbitrary, not the result of measurement.”
The AER’s ability—or willingness—to evaluate even the size of Alberta’s oil and gas liability problem is in doubt.
As well, spill volumes in the AER record were consistently lower than those in the other two sources—sometimes by a lot. The AER recorded one spill as 45,000 m3; the access-to-information documents recorded volumes 100 times larger. The AER also under-reports spill numbers, Timoney says, because it sometimes lumps together spills in the same area. The AER’s 514 spills break out into 989 different events.
Spill footprint estimates were also suspect. The AER says almost all spills affected less than 100 m2 of land. At the same time, it reports most spills released more than 10 m3 of oil or gas, and nearly 40 per cent released more than 100 m3. “It is unlikely that spill volumes of more than 10 m3 could be contained within (that) area, and virtually impossible for spill volumes of more than 100 m3 to be contained within (that) area,” Timoney wrote. Spill locations were inaccurate, sometimes by many kilometres. Dates were wrong. More than once he found recovery volumes exceeding spill estimates.
And everywhere in the AER record, he said, are assumptions that spills caused no harm and that contaminants were captured. “You keep looking for the proof and it’s not there. The entire system is based on industrial self-reporting. It doesn’t take a large jump in logic to realize that the people spilling this material have a vested interest in under-reporting the volumes and effects.”
Spills occur at active wells, but Alberta has many more wells that are either inactive or squeezing out a mere trickle of oil. Albertans—especially landowners on whose property the wells are sited—expect those sites to be returned to their original state. A big part of the AER’s job is to track those impacts and enforce industry efforts to, in the words of right-wing sage Jordan Peterson, “clean up your room.”
For more than a decade, academics at the University of Calgary have tracked the AER’s performance. Their work can often be found on ABlawg, a go-to website for informed legal commentary about provincial laws and policies. In February 2025 ABLawg analyzed the AER’s 2023 liability management performance report. Its conclusion: “This is not a performance report—it is another exercise in public relations.”
Cleanup spending is increasing. The AER had set a $700-million industry-wide requirement in 2024, which was to increase to $750-million this year. Industry has significantly exceeded that target. But that’s not the whole story. Law professor Shaun Fluker, a regular ABLawg contributor, points out the AER has never explained how that spending target was set. As well, the regulator divides wells into low, medium and high risk without defining those categories. And Fluker notes the number of high-risk wells, representing at least $2-billion in liability by the AER’s own estimates, has barely budged. Nor is there any schedule for when the province’s already depleted wells will be cleaned up. “The AER is allowing industry to tread water,” Fluker says.
Fluker says there isn’t enough information to gauge cleanup progress. “The regulator’s not really helping us understand how effective the regulatory framework really is. We don’t have benchmarks, and there are no real stated goals. The regulator’s not telling us how they use this information in actual decision-making, other than to say they do. ‘Trust us’ isn’t well received.”
Although the AER now collects security deposits when well licences are transferred to companies considered high-risk, these amount to less than a quarter of the estimated cleanup cost, Fluker says. Little security is required for low-risk transfers. That, he says, kicks the liability can down the road until the resource that would have paid for cleanup is pumped out and piped away.
The AER’s ability—or willingness—to evaluate even the size of the problem is in doubt. It now estimates there’s about $36-billion worth of oil and gas industry liability in Alberta to clean up. However, internal AER documents reported on by The Canadian Press suggested a total tab of $88-billion. Other internal AER estimates have gone as high as $260-billion, although the regulator has since said those represent a hypothetical worst-case scenario and calls them “an error in judgment.”
The vast range of estimates shows Alberta doesn’t actually have a handle on its single greatest environmental challenge, Fluker says. “The AER continues to use methodology it developed at the turn of the century that has been shown to be wildly inaccurate.” Alberta’s Auditor General has pointed out the problem several times. The AG’s 2023 report on the regulator found problems with poor performance measures, lack of timelines, and lax inspections.
Even industry acknowledges problems. Consultants have developed their own ways of estimating what they call asset retirement obligations, a crucial calculation for any company committed to maintaining accurate books. “We recognize that current AER liability estimates, while valuable, have inherent limitations,” wrote Jennifer Baerg of Xi Technologies, a Calgary firm that helps energy companies estimate their true cleanup costs. “They do not currently include remediation costs within reclamation figures, and the public data used is constrained by regulatory scope and availability …We believe it is prudent for companies to go beyond basic compliance and also utilize other methods for calculating end of life costs for oil and gas assets.”
In February the AER published reforms to how it estimates liability. These commit the regulator to provide data on total estimated liability as well as assessments of the abilities of individual licence holders to meet environmental commitments.
But even those welcome changes lack specifics on exactly what will be released, Fluker says. As well, the changes only clarify how the AER sets its cost estimates, without improving them. “The AER is aware these estimates are out of date and significantly too low but is delaying updating these cost estimates,” Fluker wrote in an ABLawg analysis. Neither do the estimates include the cost of remediating pipelines, a multi-billion-dollar item. The changes also let the AER determine how much cleanup security is required rather than legislating levels.
It’s as if the province has awoken the morning after a lively party. It’s time to tidy up, but there are dirty glasses all over the house and some guests are still around, piling up more dishes. The mess includes not only leaks at active well sites and neglected cleanup at tens of thousands more sites, but unpaid taxes to rural municipalities that at end of 2024 totalled about $254-million and 274,215 marginal and non-producing wells. The Mature Asset Strategy is the government’s vision for how to keep the party going while clearing enough tabletops to set down fresh drinks.
The strategy’s proposals result from a series of consultations held between August and December 2024. They involved nine provincial ministries, four provincial agencies, five municipal governments, five rural or municipal agencies, six industry trade organizations, three Indigenous representatives—and 64 private oil and gas companies.
It seems, in places, to suggest a large part of the problem lies with an ungrateful, misinformed and demanding public. “For decades,” David Yager wrote, “resource development in Alberta was built on a partnership between the public (as owners of most subsurface resources) and private landowners (who provide access as required by law), underpinned by mutual benefit and respect. However, in the 21st century, resource wealth has been taken for granted, individual rights increasingly rival or surpass the so-called ‘greater good,’ and mature assets are now operated by underfunded licensees, making fixed costs—such as surface lease payments and property taxes—critical to sustaining operations.”
Easing the liability posed by those mature assets is a big part of the strategy. At present, producers must keep the possible environmental liabilities on their books long after old wells are officially closed, in case problems surface down the road. Those liabilities can persist for years. The strategy’s “long-term liability indemnity fund for closed assets post reclamation certificate” would enable producers to remove those liabilities by buying insurance for wells that have met cleanup standards, to protect against a possible future remediation failure. It would turn a long-term corporate liability into a small annual expense. Government officials, speaking on background, say money from industry in the insurance fund would cover “rare” environmental failures. The fund would be managed by government. This means the government would have to ensure the fund is adequate. If it were to become drained by multiple failures, which officials consider unlikely, taxpayers would top the fund up.
The strategy also proposes an entity called HarvestCo. This Crown corporation would take over marginal wells from failed companies that would otherwise be turned over to the Orphan Well Association, an industry-funded organization responsible for cleaning up wells for which no owner can be found. Instead of capping and closing them, HarvestCo would operate the wells and use the resulting revenue to fund cleanup of truly dry wells. Officials say HarvestCo would be viable because it wouldn’t have to generate a profit or a rate of return on money used to buy the wells. Those requirements, officials say, are why so-called “stripper” companies such as Sequoia Resources failed so spectacularly, dumping millions of dollars worth of liability onto the Orphan Well Association.
Critics say Alberta’s new cleanup strategy caters to industry, and transfers risks—and costs—to taxpayers.
The Mature Asset Strategy also seeks some way to lessen the impact of the Supreme Court of Canada’s “Redwater” decision. That ruling held that under federal bankruptcy law, a failed company’s legal environmental liabilities must be covered before creditors can divvy up what’s left. “Redwater” was hailed as a victory for the polluter-pay model. But industry has long held the decision adds risk for lenders and restricts access to capital. The strategy proposes that cleanup money should be attached to the well licence, not the licence holder. That means the purchase of a well would come with some remediation resources already in place, reducing lenders’ risk.
Two other proposals include issuing carbon credits for carbon dioxide pumped underground to force out more oil. The value in those credits could help finance remediation, the document says. Government officials say a similar model exists in the US, where companies sell the carbon credits they get from closing wells and use the money to fund reclamation. The strategy also suggests a more “transparent” process to review non-payment of taxes, a major concern of municipal governments, and a new quasi-judicial tribunal to adjudicate such disputes.
Observers welcome some of the strategy’s suggestions. Martin Olszynski, a University of Calgary resource law professor, says attaching cleanup dollars to wells is a good idea. Companies would have to put up money up front, but they know it’ll be part of the purchase price when the well is sold and thus will come back to them. “When that asset changes hands, that money is always there,” Olszynski said. “How much money is another question, but it’s head and shoulders above the current system.”
But many concerns persist. Jason Schneider, reeve of Vulcan County, represented Rural Municipalities Alberta (RMA) at consultations that led up to the strategy. He says industry representatives dominated rushed discussions. Schneider sensed from the start that some kind of fix was in. “It was definitely weighted to oil and gas,” he said. “They definitely had much more opportunity to present their side. I felt like certain ideas were already in the works.”
Schneider also doubts a beefed-up, quasi-judicial Surface Rights Board can fix the unpaid tax issue. “We deal with a lot of these quasi-judicial boards,” he said. “They can be extremely frustrating to deal with. They’re given a mandate and it’s hands off. There’s no mechanism for when they make a bad decision.” Boards dealing with the energy industry tend to be dominated by people working in the industry, Schneider said. “They seem to develop their own mandates rather than serve the public.”
Paul McLauchlin is a former president of the RMA. He says the Mature Asset Strategy was written for industry. “It’s being driven by industry concerns, not by the concerns that are at hand, which are surface rights, taxes and liability reduction. It was never really defined what a mature asset was. If you’re going to give a lot of regulatory reductions, everybody in the province is going to call themselves a mature asset.”
On March 26, 2025, the Action Surface Rights Association sent a letter to its members suggesting the Mature Asset Strategy was more about protecting energy companies than landowners or the environment. “The few positive recommendations in this report are dwarfed by the negative impact of recommendations to loosen regulations on industry and reduce their liabilities, which can only be at the expense of landowners and taxpayers,” wrote Heidecker. “We are deeply troubled by (the strategy’s) direction.”
Heidecker said landowners weren’t even at some of the discussions behind many of the strategy’s proposals. “If the intent is to take this report and go straight to policy, there’s massive concerns. It wasn’t a proper stakeholder engagement.”
Critics are skeptical about both the insurance fund and HarvestCo. McLauchlin called HarvestCo a dodge to keep marginal wells out of the orphan well fund and reduce the need to increase the industry levy that funds it. That extra money will come instead from the public. “There’s no way they’re not going to be using public money,” said McLauchlin. “There is no business case for low-producing wells.” Olszynski said HarvestCo keeps profit in private hands while pushing the risk onto taxpayers. “When it comes down to marginal production, the profit-making enterprise walks away and the state enterprise picks it up. If we’re going to nationalize the sector, we should just nationalize the sector.” Olszynski also points out that, yet again, the government has refused to even suggest that some kind of timeline should be imposed on energy companies to clean up their wells.
New Democrat energy critic Nagwan Al-Guneid is concerned about an insurance fund “managed” by the province. “I’ve asked the minister what that actually means,” she said. “There’s no definition.” Al-Guneid points out that despite the confident tone of the strategy document, it contains no financial analysis of how—or even whether—HarvestCo or the insurance fund might actually work. Nor does it defend the common-sense idea that those responsible for a mess should clean it up. “There are zero mentions of the polluter-pay principle in this report,” she said. “This report seems like a scheme to use public money to cover for the cleanup of bankrupt oil companies.”
Al-Guneid fears that proposals given to a supposedly independent regulator are in fact backdoor government policy. She points out premier Smith has long supported the use of tax dollars to clean up after the energy industry. Smith called for such programs as head of the business lobby the Alberta Enterprise Group. As premier she told her energy ministers to implement royalty credits for companies that met cleanup obligations. As well, Yager himself is closely associated with Smith, boasting a 16-year friendship with the now premier. Yager is both a “special adviser” to Smith and sits on the AER’s board. Published reports have found he’s received at least four sole-source government contracts worth nearly $500,000.
“There is that history,” said Al-Guneid. “We’re seeing massive political interference in the process.” Indeed, in July the environmental law firm Ecojustice asked Alberta’s Ethics Commissioner to look into how the Mature Asset Strategy was developed. On behalf of a central Alberta landowner, it has asked Shawn McLeod to examine Yager’s role in the process, as well as his sole-source contracts. The firms allege Yager’s straddling the public–industry fence creates conflicts of interest and raises questions about the Mature Asset Strategy.
Government officials hasten to point out the Mature Asset Strategy document is just a series of proposals. They do not—yet—represent policy. Consultations and discussions will continue, officials say. They add that one of the main points of the report is to encourage industry activity in areas it has largely left. Most of the unpaid taxes and unreclaimed wells are in southern and central Alberta. Getting industry active again in those regions will restart the normal well life cycle, they say, culminating in cleanup. How long it will take, they’re not saying. They only say that at some point the problem will stop getting bigger. Government knows there’s a problem, and officials say they’re confident the strategy’s proposals will improve relations with rural municipalities and landowners.
But it’s not clear they go far enough to restore trust in the Alberta Energy Regulator—now commonly believed to be subservient to the industry it purports to regulate. “Nothing is broken here except the regulator,” McLauchlin said. “That trust has been broken for a long time. Is the AER a vehicle for extracting resources, or is it protecting the public good?”
Shaun Fluker too raises concerns about the AER’s relationship with the public. The agency is wholly funded by industry, which Fluker says isn’t uncommon for regulatory bodies. But, he says, for a body with a strong public interest mandate it has “precious little” public representation. “You have to be making sure that the regulator isn’t governed entirely by the industry it regulates. That leads strongly into situations such as regulatory capture.” He says the AER’s arm’s-length status from government is in doubt. The regulator was recently deferential to energy minister Brian Jean when he suggested a previously rejected coal exploration project should move to a public hearing. “That raised questions about the so-called independence of the regulator,” Fluker said.
I contacted the AER for this article. At its request, I sent the regulator a list of detailed questions about the concerns Albertans are raising. Its responses were to defer to the provincial government or point to public reports already released—the same reports on which its critics base their concerns. But it did respond to the following: “Over and over I hear the charge that the AER is a captured regulator. Is that fair? Whom does the AER serve?”
This is its response, in its entirety: “The AER is mandated by the Responsible Energy Development Act to provide for the efficient, safe, orderly and environmentally responsible development of energy and mineral resources in Alberta. The AER carries out this statutory mandate in service of the interests of all Albertans. The AER’s mandate and governance structure ensures that the AER operates independently of the industries that it regulates, and at arm’s length from the government of Alberta.”
Landowners are running out of patience with such assurances. Dwight Popowich, the landowner behind the Ecojustice complaint, has a farm near Two Hills. It has one oil well that produced for about four years and has since sat idle for 13. Now he’s told by the Orphan Well Association that it’ll be at least another decade before it gets cleaned up. Enough, he said. Popowich, backed by landowner groups and other organizations, has filed a formal request for a hearing on how the AER has consistently allowed industry to underfund the cleanup of abandoned wells. That request uses the regulator’s own figures to suggest that in order to keep up with growing inventory, the Orphan Well Association is behind by $862-million, a gap that’s only expected to grow. The application also says the regulator is too willing to dance to the government’s tune.
“This is supposed to be arm’s length,” Popowich said. Now the provincial government is proposing to make the AER weaker than ever. “We’ve lost trust in the industry regulator,” he said. “When we lose trust in our institutions, we’re in trouble.”
Even the AER’s harshest critics acknowledge the need to keep Alberta’s energy industry viable. But patience is fading as the industry’s messes just keep getting bigger, and as its regulator grows increasingly unwilling to do its job. Just ask Sonny Nest. “The [AER] sticks a dipstick into the contamination and puts it in a vial and sends it to a lab. But that’s not the full amount. It says ‘That looks pretty good. Let’s call it a day.’ But I still don’t know what’s underground.”
Bob Weber retired this year from The Canadian Press. He started at CP in 1996 and specialized in environmental and Arctic issues.
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Update from The Narwhal “‘By the wayside’: rural Albertans are angry at companies not paying their bills” Nov 5, 2025.
