DATE ISSUED: June 17, 2020

The Regulator has designated 401 wells and three facilities formerly owned by Ranch Energy (Ranch) as orphans, following the June 12, 2020 approved sale of Ranch assets by the Court of Queen’s Bench of Alberta. As orphans, site clean-up and restoration work will be carried out by the Regulator, paid for through the industry-funded Orphan Site Reclamation Fund.

We have been monitoring this situation closely since Ranch was placed in receivership on July 19, 2018. Throughout the court proceedings, the Regulator took action to complete high priority work on Ranch sites to ensure public safety and protection of the environment. This included the abandonment (permanent plugging) of 11 wells, as well as draining water levels in a storage pond to safe levels. The Regulator continued to inspect Ranch sites to ensure the ongoing safety of operations throughout the proceedings.

The addition of the 404 Ranch sites means the Regulator is now responsible for 770 orphan sites in B.C. – though 56 sites are substantially restored - which is less than three per cent of all oil and gas wells in B.C. The rest are in the care and control of viable companies. We will continue working with land owners impacted by the Ranch decision.

The Regulator’s orphan program – fully funded by industry - is spending more than $27 million during 2020/21. The work includes abandonment of 80 wells, investigation of 40 sites, remediation of 20 sites and reclamation of 15 sites, with as many as 25 sites possible.

Backgrounder below.

If you have any questions regarding this Information Bulletin, please contact:

Mike Janzen

Director, Orphan Planning & Restoration

BC Energy Regulator

Mike.Janzen@bcogc.ca

250-419-4464

Media Inquiries:

Lannea Parfitt

Manager, Communications

BC Energy Regulator

Lannea.Parfitt@bcogc.ca

250-980-6081

Ranch Energy Assets Backgrounder

June 17, 2020

The BC Energy Regulator

The BC Energy Regulator has been monitoring the ongoing proceeding involving Ranch Energy (Ranch), which was placed into receivership in 2018. We have continued to regulate all assets owned by Ranch and taken the steps necessary to protect public safety and the environment. This includes the abandonment (permanent plugging) of 11 wells, as well as draining water levels in a storage pond to safe levels.

The Regulator is now liable for the remaining unsold assets, including 401 wells and three facilities, which have been deemed orphans; adding to the current B.C. inventory of 366*, for a total of 770. The Regulator has been preparing for this possibility for many months. The orphan designation of the Ranch sites will allow further site clean-up and restoration work to be done. (*Nine Norcan sites were added to the orphan list on June 11, 2020.)

Timeline of Ranch Energy Court proceedings and actions taken by the Regulator

• In 2017, Predator Oil BC Ltd. acquired B.C. assets and currently holds permits for 815 wells in B.C., about half of which are inactive. Subsequently, Ranch Energy (Ranch) purchased certain oil and gas infrastructure regulated under the permits held by Predator Oil BC Ltd.
• On April 18, 2018, the B.C. Government introduced new legislation that allows the Regulator to improve the funding model of the Orphan Site Reclamation Fund (OSRF) and provides the tools to increase the restoration of orphan sites overall.
  • The enhanced tools the Regulator now uses:
    • Enforce – through regulation – an accelerated timeline for industry to restore inactive and abandoned sites.
    • Make sure industry continues to pay the full cost of restoration for all sites, including orphan sites, which is funded through an increased levy charged to industry.
    • Prevent operators with a history of insolvency from operating oil and gas sites in B.C.
    • Stop the transfer of oil and gas properties and permits to companies that do not have the financial means to restore the sites.

• On July 19, 2018, a Court order is issued, placing Ranch in receivership, and appointing E&Y as the receiver. Under receivership, Ranch receives Court protection from certain actions by its creditors while the receiver implements a process to sell Ranch’s assets. These protections remain in place.
  • The Regulator participates in the receivership proceedings, in addition to continuing to regulate all assets owned by the company. Regulator inspectors assess assets held by Ranch, identifying priority sites near a residence or community and take necessary steps to protect public safety and the environment.

• On Jan. 24, 2019, the Regulator hosts a public information session in Fort St. John for land owners on dormant sites.
• On April 24, 2019, the Regulator hosts a public information session in Fort St. John for land owners on orphan sites.
• On May 31, 2019, the Regulator releases its Comprehensive Liability Management Plan (CLMP), which includes the new dormancy regulation, making B.C. the first province in western Canada to impose timelines for the restoration of oil and gas wells. The regulation also ensures 100 per cent of the costs associated with restoration work continues to be paid for by industry. The plan provides a clear path forward to continue to hold industry accountable, enhance opportunities to collaborate with Indigenous communities and examine the role of traditional knowledge in restoration practices, protect public safety, and safeguard the environment.
• On July 29, 2019, the Court approves the sale of some Ranch assets to a new owner, Erikson National Energy Inc.
• The Court approved transaction closed June 12, 2020 which will see 414 oil and gas sites owned by Ranch transferred to Erikson National Energy Inc.
• The Regulator is now responsible for the remaining unsold assets, including 401 wells and three facilities, which will be deemed orphans, adding to the current inventory of 366.
• The Regulator will continue working with impacted land owners following the Court approved sale.

Protecting Public Safety and the Environment

The BC Energy Regulator is the provincial agency regulating energy resource development within British Columbia, including oil and gas, renewable geothermal energy, pipeline transportation and reclamation. The Regulator ensures industry complies with provincial legislation and works with governments, Indigenous people, land owners and industry to ensure safe and responsible energy development to benefit all British Columbians.

For more information, please contact: OrphanRestoration@BCOGC.ca