With business leaders like these, who needs enemies?

If you ran an oil and gas company into the ground while also helping dump hundreds of millions of dollars in environmental liabilities onto the Orphan Well Association, you’d think it would be cause for a bit of embarrassment. In Alberta, it’s apparently worthy of celebration. 

On Sept. 18, the Canadian Chamber of Commerce honoured Perpetual Energy CEO Sue Riddell Rose as its “Canadian Business Leader of the Year” at a Calgary gala sponsored by oil and gas lobby groups, banks, and a wide variety of oil and gas companies. According to the description, “the evening was marked by heartfelt tributes, smooth jazz, and a room full of distinguished guests eager to celebrate these remarkable individuals.” 

Notably absent from the evening's festivities was the truth. Perpetual’s share price is down 99.9 per cent since its debut on the Toronto Stock exchange in 2002, a performance that doesn’t exactly scream “leadership” to me. But as new reporting by the CBC’s Kyle Bakx makes clear, it’s not just her shareholders who have borne the brunt of her management decisions over the years. And maybe, just maybe, that’s the leadership the dinner’s organizers set out to honour.

Let’s all flash back to 2016, when Perpetual, under the guidance of Riddell Rose, struck a deal with a company called Sequoia Resources that included transfering almost 2,000 old gas wells with environmental liabilities worth an estimated $225 million to it for the princely sum of $1. That wasn’t the only red flag. As a case summary by the law firm Osler notes, the deal “was structured such that the legacy assets could be transferred without triggering a regulatory review process from the Alberta Energy Regulator (AER).” 

Sure enough, Sequoia Resources filed for bankruptcy 18 months later, leaving the Orphan Well Association — and by extension, the public — holding the bag on all of those old wells. The company’s court-appointed bankruptcy trustee, PwC, sued Perpetual for its conduct, alleging that it knew the very nature of the deal would inevitably sink the buyer under the weight of the liabilities it had taken on. As Drew Yewchuk, a staff lawyer with the University of Calgary’s Public Interest Law Clinic, wrote back in 2022, “The Trustee takes the position that the Perpetual Group transferred non-producing wells to Sequoia knowing that Sequoia would carry the Perpetual Group’s ARO [asset retirement obligations] into bankruptcy, allowing the surviving members of the Perpetual Group to evade the ARO management system.”

As if to add even more insult to this financial injury, Perpetual shifted most of its remaining assets into a new company called Rubellite Energy in 2021 that just happened to share the same employees and office space as Perpetual. As both the Orphan Well Association and PwC argued in court, this amounted to an attempt to shield them from any potential court judgments. “The Rubellite transactions and the proposed arrangement represent a radical solution to Perpetual's overwhelming financial problems: the establishment of Rubellite as a successor entity, free of Perpetual's obligations, to its creditors and other stakeholders," PwC submitted in a court filing. 

Eventually, after a series of court decisions, the trustee and the company settled the case in March of this year. Perpetual agreed to pay $30 million to PwC “without any party admitting liability, wrongdoing or violation of law, regulations, public policy or fiduciary duties.” In what is surely just a coincidence, Perpetual and Rubellite were merged back into one entity after the settlement was reached.

Why did the plaintiffs settle the case? Because, it seems, bringing it to trial wasn’t worth the legal costs the bankruptcy trustee and other plaintiffs would continue to incur, given that the settlement amount was already equivalent to Perpetual’s market value. “Even if the trustee is successful ultimately, the Perpetual defendants are unlikely to be able to pay any significant monetary judgment in favour of the trustee,” PwC senior vice president Paul Darby said in an affidavit. “Any attempt to enforce a monetary judgement against (Riddell) Rose personally would likely mean significant further delay and expense.”

It’s tempting to suggest that folks like Riddell Rose have learned their lesson here, but it’s just as likely that her peers in the oil and gas industry have learned that there’s no real punishment — legal or social — attached to her sort of failure. As Energy Minister Brian Jean hinted at last month, the public will end up covering a  larger share of the cost associated with addressing Alberta’s growing pool of reclamation liabilities, whether it’s through direct incentives to companies or some other form of carrot-based encouragement. That’s on top of the $1.7 billion Ottawa already sent to Alberta, BC, and Saskatchewan to help them clean up the old wells left behind by failed oil and gas companies like Sequoia. 

And as the Globe and Mail’s Emma Graney reported on last week, the government won’t be asking oil sands companies to put more money up to cover the multi-billion dollar bill on cleaning up their massive messes either. “Liabilities have skyrocketed by billions of dollars since 2010,” Graney writes, “even though oil companies have added just a single dollar into the province’s cleanup coffers.”

Less than a dollar, actually. But in time, and perhaps not that much of it, the cleanup costs Perpetual Energy helped foist onto the Orphan Well Association (and by extension, the public) may seem like a mere rounding error compared to what the oil sands has in store for us. The CEOs who helped create these messes will probably continue to be feted as great business leaders, all evidence to the contrary notwithstanding.