Troubled Alberta oil and gas company faces regulatory ultimatum

Wallis Snowdon · CBC News

· Posted: Jul 10, 2025 7:00 AM EDT | Last Updated: 5 hours ago

An Alberta lipid and state exploration institution with a astir decade-long past of information and biology infractions is present facing an ultimatum from the province's vigor regulator.

If the Calgary-based Rally Canada Resources Ltd. fails to get its operations into compliance and station a information deposit of $1.6 million, it volition beryllium forced to suspend each operations, according to an Alberta Energy Regulator order issued June 27.

Under the order, Rally Canada has been fixed 3 months to wage up, and conscionable 2 weeks to taxable a program to bring its operations into compliance. 

The latest bid sheds caller airy connected a institution that has repeatedly been sanctioned for neglecting its operational requirements.

Infractions, dating backmost much than a decade, see toxic state leaks, forgotten pipelines, missing fiscal statements and repeated refusals to co-operate with regulatory investigators.

The latest bid raises questions about the aboriginal of Rally Canada's assets, which see a immense web of pipelines, 300 airy lipid wells and astir 50 airy lipid facilities adjacent Bashaw in cardinal Alberta, arsenic good arsenic Redwater and Utikuma Lake to the north.

The institution has not responded to repeated requests for comment. 

'Unreasonable risk'

According to the latest order, the institution has suffered some fiscal and operational declines. Areas of interest identified successful the AER bid see its oversized portfolio of inactive wells, escalating fiscal liability and progressively mediocre tract performance.

The regulator recovered that the bulk of the company's wells, facilities and pipelines person turned sour owed to the beingness of hydrogen sulphide — a flammable state known for its pungent rotten ovum odor — which is hazardous to humans and the environment.

The immense bulk of Rally Canada's wells — astir 70 per cent — are inactive and astir 71 per cent of them are not compliant with suspension requirements, meaning they person not been safely unopen down.

The company's tract inspection standing has plummeted to 23.1 per cent, compared to the manufacture mean of 75 per cent, the bid states. 

Production has besides waned, down to an mean of conscionable 423 barrels per time successful 2025 from 678 barrels per time successful 2022.  The institution has failed to conscionable its mandatory closure walk quota for 2022, 2023 and 2024 —  an yearly sum lipid and state operators indispensable wage to the AER for the remediation and reclamation of inactive concern sites.

Under the order, the institution has 90 days to wage each outstanding biology payments. The $1.6 cardinal information deposit is owed by Oct. 25.

A program to bring its operations into compliance indispensable beryllium submitted by July 11, and indispensable see a program to trim the hazard of pipeline ruptures and timeline for erstwhile Rally Canada's tract inspection standing volition beryllium brought up to the manufacture mean of 75 per cent.

The institution has been placed connected a constricted licence eligibility since March 2020 erstwhile AER determined that the company's operations posed an "unreasonable risk."

Limited eligibility rules are designed to guarantee that lone liable companies are granted the close to run successful Alberta.  

Companies recovered incapable of compliance tin look restrictions connected their quality to clasp oregon entree definite types of licenses oregon approvals.

As sanctions against the institution person piled up, truthful excessively person the restrictions placed connected Rally Canada. Today, the institution remains prohibited from obtaining immoderate caller well, installation oregon pipeline license.

The bid is among much than 20 ceremonial sanctions oregon letters of informing the institution has faced for breaches since 2016. 

Most recently, past September, the institution was issued a announcement of non-compliance for conducting unsafe excavation enactment adjacent to 1 of its pipelines and for failing to study the infraction to the AER. 

Corrosion concerns

In 2020, it faced different announcement of non-compliance successful Strathcona County, for operating discontinued metallic pipelines. 

The probe recovered the institution did not analyse the request for interior corrosion mitigation measures wrong their metallic pipes, leaving them susceptible to rusting from the wrong out.

The institution was issued different informing missive successful 2020 for its installation adjacent Bashaw.  

The probe began pursuing a ailment from the nationalist successful April 2018 astir however the tract had been flaring, uninterrupted, for 2 weeks.

The probe recovered that the institution had flared hydrogen sulphide state from its sites repeatedly astatine concentrations supra allowed limits.

Rotten eggs, neglected lines

In 2021, the institution was fined $5,000 for a pipeline infraction astatine a tract successful Lacombe County successful October 2019. 

For implicit a year, the institution had neglected to unopen down a pipeline, and it had begun to leak sour gas. 

The probe followed a nationalist ailment and recovered that adjacent residents were being exposed to beardown and hazardous sour state odours, resulting successful burning eyes, cough and runny noses. 

"However, the quality of these reported impacts appears airy successful examination to the imaginable for nonaccomplishment of damage," the bid reads.

Investigators recovered that the institution intended to reactivate the defunct pipeline, but portion the institution underwent a absorption change, the pipeline was simply forgotten about.

Rally Canada did not person a strategy to support way of which pipelines were not successful progressive service, the probe found.

The institution was ordered to code 26 pipelines that were successful a akin authorities of neglect. The AER recovered that issues were "systemic" and admonished the institution for a deficiency of owed diligence. 

Rally Canada has been placed connected "Global Refer" presumption since 2023, signifying that the regulator nary longer believes the institution is consenting oregon capable to comply with regulatory requirements.