Declaration under Section 106 of the Oil and Gas Conservation Act
On October 30, 2017, the AER notified Richard J. Nixon and Dale Brand of the AER’s intention to name them in a declaration pursuant to section 106 of the Oil and Gas Conservation Act (“OGCA”).
In this decision, the AER issued declaration under section 106(1) of the OGCA naming Richard J. Nixon and Dale Brand as persons in direct or indirect control of Midlake Oil & Gas Limited (“Midlake”), a company that contravened or failed to comply with orders of the AER and had a debt to the AER.
Declaration under Section 106 of the OGCA
The AER explained that OGCA section 106 applies where the AER considers it in the public interest to make a declaration naming one or more directors, officers, agents, or other persons who, in the AER’s opinion, were directly or indirectly in control of a licensee, approval holder, or working interest participant that has (i) contravened or failed to comply with an order of the AER; or (ii) has an outstanding debt to the AER, or to the AER to the account of the orphan fund, in respect of suspension, abandonment, or reclamation costs.
Mr. Nixon had acted as a director, president, chief executive officer and shareholder of Midlake, and Mr. Brand had acted as the company’s executive vice-president.
On November 25, 2015, Mr. Nixon notified the AER on behalf of Midlake that the company had deemed all of its assets to be under the sole care and custody of the AER and that the company was effectively “walking away” from its licensed properties.
Midlake contraventions of AER orders and outstanding debts
The AER found that Midlake subsequently failed to:
(a) comply with an order to pay a security deposit;
(b) comply with a closure and abandonment order; and
(c) pay the AER its 2016 Administrative Fees Levy in the amount of $56,220.49 and money owing to (i) the Orphan Fund for rentals associated with its public lands dispositions; and (ii) the Orphan Well Association for work completed by the OWA in respect of its licensed properties, totalling $ 89,000.
Person in control
The AER found that:
(a) Mr. Nixon was a director or person directly or indirectly in control of the company for the purposes of section 106 of the OGCA; and
(b) Mr. Brand was a person in direct or indirect control of the company for the purposes of section 106 of the OGCA.
Section 106 declaration
The AER confirmed its findings from previous decisions that:
(a) the purpose of a section 106 declaration is to prevent a licensee or person in control from continuing to breach requirements or incur new breaches or debts, thereby safeguarding the public interest; and
(b) continued confidence in the regulatory system is best assured when licensees comply with AER requirements.
In this case, the AER found:
Midlake’s decision to “walk away” from its licensed properties and the company’s ongoing failure to comply showed a blatant disregard for AER requirements.
Midlake’s actions undermined the regulatory system and posed an unacceptable risk to public safety and the environment.
The AER concluded that issuance of a declaration was necessary to deter future noncompliance and uphold the credibility of the regulatory system and AER enforcement processes.