A northern Alberta oil sands operator has been ordered to shut down after repeatedly failing to meet its regulatory obligations.

Alberta’s energy regulator has issued an order requiring Calgary-based Sunshine Oilsands Ltd. to suspend its wells, facilities and pipelines following a string of offenses dating back more than two years.

The order, issued Nov. 14, requires the operator to post a security deposit of more than $6.1 million, which is 100 percent of the company’s estimated dormant liability.

The order highlights a number of violations at the company’s West Ells facility, including broken turbines, leaking pipes and containment units that were at risk of spillage.

The SAGD (steam assisted gravity drainage) oil sands facility is located in the northwestern portions of the Athabasca oil sands, approximately 60 kilometers west of Fort McKay. It uses horizontal wells and injected steam to heat the bitumen and bring it to the surface.

The $6.1 million deposit was deemed necessary by the regulator because of the company’s poor compliance record and ongoing “financial difficulties”, the AER said in a report detailing a series of offenses dating back to May well over two years.

The operator must also provide the regulator with a series of “reasonable care measures” it will take to improve the operation of its sites.

“The company has repeatedly failed to comply with regulatory requirements and address compliance issues in a timely manner,” the regulator said in a statement.

Sunshine Oilsands – an oil sands exploration, development and production company – must immediately report any hazards that pose a risk to public safety or the environment, the regulator said.

“ARE issued this order to ensure that Sunshine Oilsands licensed sites will not pose a risk to public safety or the environment,” the regulator said in an advisory.

“Failure to comply with this order may result in the escalation of foreclosure, which could include an order to abandon.”

CBC News is awaiting comment from Sunshine Oilsands and Alberta Energy Minister Brian Jean. Federal Environment Minister Steven Guilbeault declined to comment.

Broken turbines, leaking pipes

According to the order, the turbines used to generate power at the site fell into disrepair.

One of them, known as the north turbine, was still in use despite being “inoperable”, the regulator said. The turbine’s heat recovery system was broken.

Another turbine also broke, but the operator told the regulator it would not be repaired because of the costs associated with the necessary repairs.

At the time the order was issued by the AER, none of the turbines had been repaired and the company continued to operate the broken north turbine.

Questionable limitation

Some secondary containment sites were also of concern to inspectors. Piling boots used to secure four tanks at the West Ells facility fell into disrepair, according to the order.

Pile boots are specialized attachments used in the installation of piles, which act at the base of such tanks, especially in swampy and uneven landscapes.

The problem with the containment tanks was reported to the AER in May 2023. The company told the regulator in November of that year that the ruptured tanks would be taken out of service to mitigate the risks of a leak.

On October 16 this year, an AER inspector discovered that one of the faulty tanks had been put back into service without repairs or additional measures to contain a potential leak.

On the same day, an inspector discovered that steam was actively leaking from a pipeline at three separate locations along the line.

According to the order, the inspector was told by a Sunshine operator that the company was aware of the problem as early as a week in advance.

Sunshine received a notice of non-compliance at the time for not immediately reporting the three separate versions.

The regulator also found that the company did not investigate emissions as required and did not have an adequate leak detection program.

A report from the AER details nearly 20 contraventions of Alberta’s Environmental Protection and Improvement Act and Water Act dating back to April 2022.

In nine of them, Sunshine blamed a lack of funds for operational problems, which ranged from a lack of environmental monitoring, missed audits, “out of control” calibration of equipment and delayed repairs to key on-site infrastructure.

The report also details nine outstanding operational issues discovered by provincial inspectors during field inspections.

The problems included a broken berm, which had not been repaired since it was discovered in June 2022, when an inspector found a pond had formed behind a pad. As of October, the pond was still present and no maintenance was done on the leaking retention pond.

Other outstanding offenses include the company’s lack of oversight of its pipelines. The company told the regulator it does not have a leak detection program. The regulator said it remains unclear how often the lines are patrolled for potential leaks.

The AER report also details 17 wells that were improperly abandoned by the operator, a lack of reporting and mounting debt that left the operator struggling to meet the demands of daily operations.

Increase in debt

Construction of the West Ells facility began in 2012. The AER found the operation struggling to meet its operational goals for years.

Sunshine is “very financially distressed,” the regulator said.

Because of Sunshine’s failure to perform maintenance and repairs necessary for normal operation, pay for services required to meet regulatory conditions, and “adequately fund expenses that are typical of normal operation,” the company failed to meet its potential production. , said ARE.

Instead of the estimated 5,000 barrels of oil per day it was expected to produce, the operation has instead averaged just 1,102 barrels per day over the past three years and 971 barrels per day in 2024.

According to the report, Sunshine failed to pay its debts to the AER for the orphan fund fee and a number of management fees.

The company made a repayment plan, but it was in short supply, and the operator’s total debts are now about $50,000 for the orphan fund and more than $70,000 for outstanding administration fees. As of September, Sunshine has about $34.8 million in municipal tax arrears, the regulator said.

“Sunshine lacks the ability to meet its regulatory and liability obligations,” the regulator said, adding that it “poses a risk to public safety and the environment.”