Facing losses, US Oil Sands mining company goes into receivership

Mining company US Oil Sands announced the appointment of a receiver on Sept. 14, a sign of the company’s poor financial standing. The company owns the controversial PR Springs tar sands extraction facility in Uintah County, near the border with Grand County and has been working towards commercial oil production.

Receivership is an option for Canadian companies like US Oil Sands that cannot meet their financial obligations. In this case, the Belgian company, ACMO S.à R.L., which has given loans to US Oil Sands, requested the appointment of a receiver to supervise the liquidation of the company’s assets.

The move into receivership is no surprise according to John Weisheit, director of Living Rivers. The river restoration advocacy group sued US Oil Sands in 2014, saying that the company did not have a required water discharge permit. The ruling on the case has yet to happen.

“It doesn’t surprise me at all … If they really had financial backing they would have started [commercial production] a long time ago,” Weisheit said. “They have too many hurdles to jump still. They have more expenses than they realize and the price of oil is stagnant … There’s been an oil glut and they can’t compete with it.”

Weisheit said a similar case occurred with the Asphalt Ridge tar sands deposits. The Korea Technology Institute of America (KTIA) filed for Chapter 11 bankruptcy in 2012. As a result, the company’s assets were sold off. Another possibility is that an outside company could buy the operation and restart mining activity, Weisheit said.

“Here’s a company that fought tooth and nail to make it happen and in the end they failed. My advice to the tar sands industry is, leave it in the ground and find different ways to produce energy that don’t ruin landscapes and watersheds,” Weisheit said.

US Oil Sands was leasing mining rights from the State and Institutional Trust Lands Administration (SITLA). The Grand Junction Sentinel reported that US Oil Sands has paid SITLA $1.3 million in lease rental income.

“We also got the notice of receivership and have been looking at Canadian bankruptcy law to try to compare it to American law, and what it appears is that this is the equivalent of a U.S. Chapter 11 (bankruptcy proceeding), where the project will be packaged for sale to a new bidder to satisfy the secured creditors’ interests … I don’t have a lot of insight into their internal financing issues but we will see as the restructuring goes forward.” Andrews told the Sentinel.

Meanwhile, activists continue to protest the tar sands mine.

On Tuesday, the organization Elders Rising engaged in a “Rocking Chair Action” at the PR Springs mine with support from Canyon Country Rising Tide, Wasatch Rising Tide and Seeds of Peace.

“We knew that the company was potentially in trouble,” said Elders Rising member Jill Merritt. “… Whether they were still operating and trying to go forward or not, we wanted to go down to say, this all has to stop and we want the place cleaned up, put back as near to the way it was as possible and we don’t want some other company trying to come in and do the same nonsense.”

“They feel like doing this action sends an important message to SITLA … that SITLA should be focused on restoring and reclaiming that land since it hasn’t proven economically viable to mine tar sands,” said Brooke Larson, a member of Wasatch Rising Tide.

Neither US Oil Sands nor their appointed receiver, FTI Consulting, responded to requests for comment.

ByBy Rose Egelhoff

The Times-Independent