Employer must pay $1.6 million security deposit, submit plan for compliance, says report
The Alberta Energy Regulator (AER) has ordered Rally Canada Resources—an Alberta oil and gas exploration company—to pay a $1.6 million security deposit and bring its operations into compliance or face a shutdown, according to a report.
The order, issued on June 27, gives Rally Canada three months to pay the security deposit and two weeks to submit a plan for compliance, noted CBC.
The company must also address pipeline rupture risks and provide a timeline for improving its field inspection rating to the industry average of 75 per cent. Rally Canada’s current rating is 23.1 per cent, the AER said in the report.
According to CBC, Rally Canada has a history of safety and environmental infractions, including toxic gas leaks, neglected pipelines, missing financial statements, and repeated refusals to co-operate with regulators. About 70 per cent of the company’s wells are inactive, and 71 per cent of those are not compliant with suspension requirements, meaning they have not been safely shut down.
The company’s production has dropped to 423 barrels per day in 2025, down from 678 barrels per day in 2022. Rally Canada has also failed to meet its mandatory closure spend quota for three consecutive years, falling short on payments required for the remediation and reclamation of inactive sites.
Since March 2020, Rally Canada has been under limited licence eligibility, a status for companies considered to pose an “unreasonable risk,” noted CBC.
The company is currently prohibited from obtaining new well, facility, or pipeline licences and has been on “Global Refer” status since 2023, meaning the regulator no longer believes Rally Canada is willing or able to comply with regulatory requirements.
The AER order is the latest in a series of more than 20 sanctions or warnings issued to Rally Canada since 2016, according to CBC. Previous incidents include a $5,000 fine in 2021 for a pipeline infraction that resulted in a sour gas leak, exposing nearby residents to hazardous odours and health effects. Investigations have also found systemic issues, such as the company’s failure to track inactive pipelines and lack of internal corrosion mitigation measures, leaving pipes at risk of rust and leaks.
Rally Canada has not responded to requests for comment. The AER has stated that companies unable to comply with regulatory requirements may face restrictions on their ability to hold or access licences or approvals.
