SanLing Energy to cease operations amid AER suspension order

SanLing Energy Ltd. has told Alberta regulators it plans to cease operations at the end of April, just weeks after the licences it held for thousands of oil and gas wells had been suspended.

In early March, the Alberta Energy Regulator said the privately owned junior energy company owes $67 million in security to the agency for its end-of-life obligations. 

It also said at the time it had “little confidence in SanLing’s ability to conduct its operations safely.” On Wednesday, the AER said the company intends to cease operations as of April 30. 

SanLing Energy, headquartered in Calgary, holds licences for 2,266 wells, 227 facilities and 2,170 pipelines.

The AER said the Orphan Well Association (OWA) has applied to Alberta’s Court of Queen’s Bench to have a receiver assume control of SanLing’s inventory.

“Our repeated attempts to bring SanLing into compliance have failed,” Blair Reilly, AER director of enforcement and emergency management, said in a release.

“While it’s unfortunate SanLing has decided to cease operations, we have systems in place for when companies cannot meet their responsibilities to close and clean up their sites.” 

The AER said SanLing has committed “to an orderly transition of its assets to a receiver before it ceases operations.” 

This includes maintaining its 24-hour emergency response number and responding to any incidents, ensuring adequate staffing and maintaining care of its assets until a receiver is in place.

“The receiver will support a transition of SanLing’s inventory to responsible parties, and the AER will orphan any remaining assets to the OWA for closure,” according to the regulator.

The AER said it will oversee SanLing’s assets to ensure they are safe, transferred into the hands of responsible operators, or, as a last resort, transitioned to the OWA for closure. 

“Albertans know that times are tough and our province’s energy industry is struggling,” said Lars DePauw, executive director for the OWA.

“In these times, sometimes companies fail. When this happens, the Orphan Well Association is here to ensure the problems these companies are experiencing don’t become a problem for Albertans.”

The number of orphan oil and gas wells in the province have been a growing concern in the province for both financial and environmental reasons.

Last year, the federal government announced it would provide Alberta with $1 billion to help clean up orphaned and inactive oil and gas wells.

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