Varcoe: Province to appoint new chair, three other board members to AER amid stormy times for regulator

As the AER takes on new and expanding areas of oversight and continues to face the daunting issue surrounding the cleanup of Alberta’s aging wells, a hard look at its capacity will be required

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The Alberta Energy Regulator, an agency at the centre of sweeping industry change — and frequent turmoil — is about to add four new members to the board, with longtime industry veteran Duncan Au set to become its chair later this summer.

The UCP government will also appoint three other board members with a long history working in the sector, including the premier’s new special adviser, David Yager, who recently completed a review of the AER — and his appointment is likely to raise eyebrows.

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The other new members include Theresa Watson, a professional engineer who previously served as a board member with the predecessor Energy Resources Conversation Board last decade, and Carey Arnett, previous CEO of pipeline construction business Arnett & Burgess Pipeliners.

Au, previously the chief executive of Calgary-based CWC Energy Services Corp. before its acquisition by Precision Drilling last year, said the AER is at the forefront of an evolving energy landscape.

As the AER takes on new and expanding areas of oversight — such as the development of lithium, geothermal, and carbon capture and storage — and continues to face the daunting issue surrounding the cleanup of Alberta’s aging wells, a hard look at its capacity will be required.

“The AER has had a lot of things put onto their plate,” Au, who is a chartered professional accountant, said in an interview.

“You need to have the right types of people to understand what those project proponents are looking to do. That’s one of the things we’re going to need to take a look at and say, ‘Do we have the right people at the AER’ . . . so we can make decisions on a timely basis and do what the regulator is supposed to do for all Albertans.”

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The AER has grappled with a series of big challenges in the past decade, such as the ongoing development and oversight of the oilsands, the reclamation of thousands of inactive wells — and growing liability concerns surrounding them — and even helping municipalities deal with the non-payment of property taxes by energy companies.

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The sector is under pressure to decarbonize, and the widespread deployment of carbon capture, utilization and storage technology is advancing in the province.

The AER has also been in the middle of its own controversies over the years, including Alberta’s ethics commissioner finding late last decade that its former CEO breached the Conflict of Interest Act, and the removal of the previous board of directors by the UCP government in 2019.

The regulator also saw about 200 jobs cut during a reorganization process the following year.

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More recently, the regulator’s shortcomings in communicating with Indigenous communities — after the AER learned of seepage and a spill of industrial wastewater at the Kearl oilsands mine — prompted current CEO Laurie Pushor to apologize at a parliamentary committee hearing a year ago.

In November, Chief Allan Adam of the Athabasca Chipewyan First Nation called for the regulator to be overhauled, and it later launched a lawsuit against the regulator.

A tailings pond at Imperial Oil’s Kearl Lake oilsands operation north of Fort McMurray on Feb. 25, 2023. Courtesy Nicholas Vardy, Athabasca Chipewyan First Nation

A review of the organization was conducted last year by Yager, who in March took on the contract role of special adviser to the premier in executive council.

The AER review determined the board needed more technical expertise, he said, noting the regulator has been handed more issues over the years.

“It’s just been, let’s give them more things to do with finite resources,” Yager said.

“The easy change to make is to add some more technically based board members with a lot of industry experience to get things done. The question will be . . . do we do fewer things, or do we add capacity? And those are the issues that we’ll deal with as a group.”

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Yager is a former oilfield services company executive, a one-time chair of the Petroleum Services Association of Canada, writer, and recent chair of the premier’s advisory council on Alberta’s energy future.

His appointment is sure to attract attention and criticism — he was the Wildrose Party president at one time — but Yager stressed he will be a non-voting board member, appointed for a two-year term, instead of the usual five-year period.

“It is basically to just be there for the orientation and transition process and then go on to my next assignment,” he said.

“I asked to go on the board . . . so I can work directly with the new board and the old board and the organization to see if I could help.”

David Yager Wildrose
Then-Wildrose candidate David Yager on Tuesday, April 17, 2012. Darren Makowichuk/Postmedia

Yager said his job in government will be to work with multiple groups and government departments on complex files across multiple industries, noting he won’t be paid to be on the AER board.

Neil McCrank, who chaired Alberta’s Energy Resources Conservation Board from 1998 until 2007, said it makes sense to have technical expertise at the AER at all levels.

However, McCrank also said he’s not seen a member of executive council have a board role in the past, even a non-voting position.

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“The board has to be independent of the political environment, so it can balance the decisions between the industry, the public and government,” said McCrank.

“This is the first time I have heard of this concept. And I’m not saying it’s a problem, but I hope they thought it through.”

With the pending appointment of the new board members, several board members have recently left. Current chair David Goldie announced this month that he will step down this fall after almost five years in the post.

Three other board members — Gary Leach, Allison Rippin Armstrong and Corrina Bryson — will remain in their roles.

Chris Varcoe is a Calgary Herald columnist. 

[email protected]

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