Alberta regulator orders oilsands operator to abandon its mining assets 

An Alberta oilsands company has been ordered to abandon its operations after repeatedly failing to address a string of problems — including cracked pipelines, leaking tanks and other critical repairs — over almost three years.

The abandonment order, issued this week by the Alberta Energy Regulator against Sunshine Oilsands Ltd., said its operations pose a risk to public and environmental safety and must be fully decommissioned. Sunshine operations include a long list of well sites in the Athabasca oilsands.

The regulator said Sunshine had failed to comply with operational requirements and demonstrated that it lacked the capability — and financial wherewithal — to comply with federal and provincial environmental laws.

Despite repeated assurances that the company would soon have the cash flow needed to fix its problems, "the funding has not materialized," wrote Colin Woods, an AER manager of field operations.

"Sunshine has been unable to provide the AER with substantive evidence that any future funding is assured and will be sufficient to enable Sunshine to come into, and to maintain, compliance."

Sunshine Oilsands is the latest in a string of financially distressed oilsands companies ordered to abandon their inventories due to concerns over operational safety, including Tallahassee Exploration Inc. in June 2024 and Revitalize Energy in November 2024. 

Sunshine Oilsands did not respond to requests for comment. 

Regulatory documents paint a picture of an operation in chronic disrepair and an operator under financial duress. 

The abandonment order follows previous orders dictating Sunshine needed to shut down and surrender its assets, which include its West Ells project, located 115 kilometres north of Fort McMurray, Alta. The in-situ oilsands plant relies on horizontal wells and injected steam to extract bitumen from deep below the surface. 

Previous infractions at the site, which has been operational since 2017, include broken turbines, leaking pipelines and containment units that were at risk of spilling over.

On Nov. 14, 2024, citing a history of non-compliance and ongoing financial distress, the AER ordered Sunshine to suspend all operations.

The order required the operator to post a security deposit of more than $6.1 million and provide a series of "reasonable care measures" that it would adopt to improve operational safety. 

However, Sunshine's plan was deemed "deficient," and the company never came up with an acceptable strategy for how it would come into compliance, regulatory documents said. 

In January, as the company continued to falter, Sunshine officials told the AER in writing that it was still struggling to secure $1.3 million in financing required to provide staffing, fuel and critical repairs at West Ells. It told the AER the funds would not be available until June or July.