Originally formed in 1938, the AER has undergone changes in policy orientation, priority and name. Its name has evolved from the Petroleum and Natural Gas Conservation Board, to the Oil and Gas Conservation Board, to the Alberta Energy and Utilities Board, to the Energy Resources Conservation Board, and now the Alberta Energy Regulator.¹

The AER was established in its current iteration in December 2012 via the Responsible Energy Development Act.² Under the act, the AER assumed the regulatory functions of the Energy Resources Conservation Board as well as those previously under the purview of Alberta Environment and Sustainable Resource Development, related to managing public lands, conserving water resources and protecting the environment. This consolidation makes the AER a “one-stop shop” for regulatory approvals.³

As the single regulator of the energy sector in Alberta, the AER handles all aspects of the regulatory process from “application and exploration, to construction and development, to abandonment, reclamation, and remediation.”⁴ It is also charged with overseeing public hearings and consultation regarding oil and gas development.⁵

The AER was created in response to pressures from industry to streamline applications for project approvals, as well as struggles waged by Indigenous communities, environmentalists and scientists to improve environmental regulation.⁶ The creation of a new regulatory system offered the possibility that Alberta’s regulatory processes would better reflect the public interest by giving the AER an expanded mandate for environmental impact management and provide opportunities for increased public participation in policy-making.

On April 1, 2014, the day the transition to the AER as the province’s single energy-sector regulator was completed, Alberta’s then minister of environment, Diana McQueen, pledged a future in which the environment would be “a top priority.”⁷ Yet since that day, “the AER has not developed a clear role in the protection of the environment and public health,”⁸ while the resulting regulatory structure has largely therefore meant a big win for industry proponents of “streamlining regulation.”

The AER’s focus on industry interests is evident in its current inability to protect the public from environmental harms from abandoned oil and gas wells. Once a company no longer uses a well or a well’s productive life has ended, it can choose to suspend the well (temporarily take it out of service), or decommission it by sealing it (known as abandoning). In sealing, the company must identify any issues within the well that could lead to leaks, clean wellbores to avoid soil and groundwater contamination and cap the well. Once wells are abandoned, companies have a further duty to “reclaim” energy sites by returning the land to the way it looked and was used before the development took place (through cleanup of contamination as well as soil and vegetation restoration). There is a growing problem with abandoned wells in Alberta (the AER estimates that about 170,000 exist in the province). ⁹

Abandoned wells that are not properly sealed and reclaimed pose serious environmental and public safety risks, including contamination of freshwater aquifers, accumulation of explosive gases and contribution to greenhouse gases through continuous methane leakages. However, the AER has not been dealing with the growing public health and safety issues these pose in a timely manner¹⁰, and under the current system of industrial oversight, there are no time frames as to when a well should be properly sealed and reclaimed, unlike in other jurisdictions.¹¹

Not only is the regulator failing to deal with abandoned wells, there are currently close to 2,000 additional wells that have been “orphaned.” Orphaned wells are those that have yet to be properly and safely sealed, but whose owners are now bankrupt.¹² The total number of orphan wells climbed from fewer than 800 in 2016 to more than 2,000 in 2018, and it appears likely to continue to increase.¹³

According to critics, these figures suggest the AER has been propping up a beleaguered industry, without requiring the necessary assurances that wells will be cleaned up in the future.¹⁴ Alberta has a liability system designed to ensure that companies assume the costs of abandoned well cleanup and reclamation, even if they go bankrupt. But observers charge that the AER relies on an accounting system that exaggerates company assets and underestimates liabilities. The result is that financially unstable companies are able to drill new wells, despite questions about their ability to pay for their eventual cleanup. Concerns about the AER’s ability to hold companies accountable for their cleanup obligations has led to growing fears that taxpayers will be on the hook to cover a significant portion of the estimated $260 billion cleanup (liabilities) associated with the oil and gas sector broadly (including wells, pipelines and tailings ponds).¹⁵

Autonomy:

The AER is entirely funded by industry and is authorized to collect funds through an administrative fee levied on oil and gas wells, oil sands mines and coal mines.¹⁶ This funding raises issues of conflict of interest, as environmental considerations may be compromised if critical decisions relating to development in the energy sector—including oil, gas and coal—are regulated by a body that is funded by these industries.

When the AER was founded, the government appointed the Canadian Association of Petroleum Producers’ founding president and former executive vice-president of Encana, Gerry Protti, as its board chair. Within days of the appointment, a coalition of over 30 First Nations, landowners, and labour and environmental organizations demanded that the “fox not be charged with watching the henhouse,” suggesting that the AER’s transformation into the sole regulator for the province’s energy sector should be put to public consultation.¹⁷

Public Involvement:

The new regulatory system created through the Responsible Energy Development Act is also a major step backwards in terms of opportunities for public involvement in the decision-making process for energy projects. The definition of “standing”—the opportunity for the public to be heard in a project approval process—applied by the AER is narrower than under the prior regime. Under the new rules, participation is conditional upon evidence that individuals will be “directly and adversely affected” (either in monetary or health terms), preventing intervenors from speaking to the decision-making process itself, or to broader societal concerns.¹⁸ The AER has also tried to prevent citizens from acting collectively through associations, enforcing a strict definition of “persons.” Moreover, the act gives wide discretion to the AER to decide whether or not to hold a hearing and provides little direction as to what the AER should consider in its decision-making. Subsequently, the AER, as Corporate Mapping Project researcher and University of Alberta professor Laurie Adkin reports, appears to be implementing directives on public hearings in a restrictive fashion, having denied standing to environmental organizations and First Nations over 10 times since 2013.¹⁹

The AER’s dubious autonomy, the regulatory structure through which it was created and the limited opportunities for public involvement in the project approval process all favour industry interests over environmental protection and democratic decision-making.