PDF version: Production in meaningful quantities: commercial realities should inform the interpretation of an oil and gas lease

Case commented on: Omers Energy Inc. v Alberta (Energy Resources Conservation Board), 2011 ABCA 251

In important and rare “reasons for judgement reserved” the Alberta Court of Appeal, in unanimous reasons authored by Justice Carol Conrad, affirmed the decision of the Energy Resources Conservation Board (ERCB) to the effect that a petroleum and natural gas lease had expired in its secondary term in accordance with its own terms when the gas well (the 100/05-4 well) on the lands was unable to produce for more than very short periods of time (minutes or hours) because of large volumes of produced water. The lease in question (the CAPL 91 form) provided for continuation beyond the end of its primary term by “operations”; the term “operations” was defined to include “the production of any leased substances” and was further extended by the language of the shut-in wells clause which defined the existence of a well “capable of producing the leased substances” to serve as “operations” for the purposes of the habendum. Both the Board and the Court concluded that the lease could not be continued. The words “capable of producing” did not mean just any production no matter how miniscule the quantities, and instead must be read to mean “production in meaningful quantities”. Since it followed from this that the lease had expired, Omers was not entitled to maintain well licences for two other wells that it had drilled on the leased properties since it could no longer meet the requirements of s 16 of the Oil and Gas Conservation Act, RSA 2000, c O-6 to the effect that:

16(1) No person shall apply for or hold a licence for a well
(a) for the recovery of oil, gas or crude bitumen, or
(b) for any other authorized purpose
unless that person is a working interest participant and is entitled to the right to produce the oil, gas or crude bitumen from the well or to the right to drill or operate the well for the other authorized purpose, as the case may be.

ERCB Decision 2009-037 is available here.

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PDF version: First Nation treaty obligations should inform the interpretation of discretionary powers under the Species at Risk Act 

Case commented on: Adam v Canada (Environment), 2011 FC 962

Woodland caribou are listed as threatened under the Species at Risk Act, SC 2002, c 29 (SARA). The species (and particular herds of the species) are threatened by the fragmentation of their habitat principally due to resource developments including coal mining (see West Moberly First Nation v British Columbia (Chief Inspector of Mines), 2011 BCCA 247), oil and gas exploration, oil sands projects (mining and in situ) and forestry projects, and by the linear land use disturbances often associated with these projects including seismic lines, roads, transmission lines and pipelines. The species is also negatively impacted by increased predation.

But what should we do about this? The answer of governments in Alberta, British Columbia and the federal government seems to be as little as possible and as slowly as possible - for fear that any real action to recover the various herds will be too disruptive of the governments’ shared resource development agendas.

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PDF version: The Court confirms that coalbed methane forms part of the natural gas title and not the coal title

Case considered: Encana Corporation v ARC Resources Ltd., 2011 ABQB 431

In 2010 the provincial legislature amended the Mines and Minerals Act, RSA 2000, c. M-17 (as am by SA 2010, c.20) (MMA) to declare that coalbed methane (CBM) is and always has been natural gas. In this case Justice Kent of the Court of Queen’s Bench applied the new s.10.1 to grant summary judgement in competing actions brought by the coal owners and the natural gas lessees seeking declaratory relief as to the ownership of CBM in certain lands. The actions in question had all been commenced before the amendment was introduced and passed. The Court held that s.10.1 was a complete answer to the competing claims and concluded that the natural gas lessees were entitled to a declaration that the coalbed methane had been granted to them under the terms of their natural gas leases.

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Case considered: Helalt First Nation v British Columbia, 2011 BCSC 945

In this case the Helalt First Nation (HFN) sought judicial review of an environmental assessment certificate issued under the terms of BC’s Environmental Assessment Act, SBC 2002, c 43 with respect to a project known as the Chemainus Wells Project on the grounds that the Crown had failed to discharge its constitutional obligations to consult and accommodate the HFN. The First Nation succeeded in its application. Justice Wedge held that the Crown failed to engage in adequate consultation and failed in its duty to accommodate. As a remedy, Justice Wedge ordered (in addition to granting relevant declarations) that the implementation of any actions or decisions pursuant to the certificate should be stayed pending adequate consultation and reasonable accommodation.

This post focuses on the Court’s treatment of aboriginal title and reserve rights in relation to groundwater.

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PDF version: The Full Implications of Demonstrable Integration: A Roundtable Discussion on West Moberley

Case considered: West Moberly First Nations v. British Columbia, 2011 BCCA 247

Summer at the law school provides faculty members with the opportunity to get on with some research and writing and, in particular, the larger projects that there isn’t the opportunity to tackle during the teaching terms. Law school is also a quieter place at this time with fewer LLB/ JD students around. But there is always a good number of summer students - some employed by Student Legal Assistance (SLA) for clinical duties and others employed by faculty members, the Alberta Law Reform Institute, the Alberta Civil Liberties Research Centre and Canadian Institute of Resources Law on various research projects. One of the other things that we try and do over the summer to enrich the research environment for summer students, graduate students and faculty members alike is to hold a number of roundtable discussions on recent important judicial decisions. Last year, for example, we had a discussion of Supreme Court of Canada freedom of expression decisions (R. v. National Post, 2010 SCC 16; Toronto Star v. Canada, 2010 SCC 21; Ontario (Public Safety and Security) v. Criminal Lawyers’ Association, 2010 SCC 23) and a discussion of the Advisory Opinion of the International Court of Justice on Kosovo. Our first roundtable discussion this year focused on the British Columbia Court of Appeal’s decision in West Moberly First Nations v. British Columbia, 2011 BCCA 247, a recent Treaty 8 consultation case which also deals with a SARA (Species at Risk Act, SC 2002, c 29) listed species (woodland caribou). The Attorney General of Alberta appeared as an intervenor on the appeal, undoubtedly because much of northern Alberta is covered by Treaty 8.

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PDF version: Saskatchewan oil and gas land titles case confirms the basic principles: a volunteer cannot take the benefit of a registrar’s error 

Case commented on: Ronald Olney (Executor of the estate of Kenneth Olney) v Great-West Life Assurance Company and the Registrar of Land Titles, 2011 SKQB 186

This case applies basic Torrens title law to resolve the competing claims of a mineral owner whose title was cancelled by the Registrar’s error and the claim of the current registered owner. It would have been a nice problem for a first year property exam except that it is a tad too easy - just a straightforward application of Canadian Pacific Railway Co. v Turta, [1954] SCR 427 that any first year property law student should have nailed!

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PDF version: The Alberta Law Reform Institute (ALRI) launches its new website: a valuable source for researching the law of Alberta 

Website commented on: The Alberta Law Reform Institute (ALRI), http://http://www.alri.ualberta.ca/

The Alberta Law Reform Institute (ALRI) is the official law reform agency of the province of Alberta. It provides independent comprehensive advice to the Government of Alberta and other agencies. Lawyers and researchers will be interested to learn that ALRI has launched its new website. You might want to take a moment to click on the http://http://www.alri.ualberta.ca/ site and familiarize yourself with the wealth of information that is available here including all of ALRI’s reports going back to its formation in 1967. Out of print reports are available in pdf format. The reports are organized on the website by subject matter and by report type: issues paper, consultation memoranda, reports for discussion and final reports. All of the material is fully searchable. ALRI will also provide hard copies of in print reports on request.

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PDF version: Compensation for cancelled oil sands rights under the terms of the draft Lower Athabasca Regional Plan 

Documents commented on: Draft Lower Athabasca Regional Plan 2011 - 2021, Strategic Plan and Implementation Plan; Proposed Lower Athabasca Integrated Regional Plan Regulations

In an earlier blog on a draft version of the Lower Athabasca Regional Plan (LARP) under the Alberta Land Stewardship Act, SA 2009, c.A-26.8 (ALSA) I suggested that I might provide a further blog on the implications of the Plan (if implemented) for existing property interests. This is that blog but with a focus on oil sands rights that will be cancelled if the Plan is implemented as proposed. The Draft LARP also addresses other Crown resource interests that might be affected including timber harvesting interests.

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PDF version: A single window for the permitting of energy projects in Alberta: who will look out for the chickens? 

Report commented on: Enhancing Assurance: Developing an integrated energy resources regulator, a discussion document, May 2011

In a discussion paper released on May 9, 2011 under a covering message from Premier Stelmach, the provincial government has announced its intention to create a single window for the permitting of energy projects in the province. The proposal envisages a single new board that will have all of the current responsibilities of the Energy Resources Conservation Board (ERCB) plus the following additional responsibilities (as they pertain to energy projects including conventional oil and gas, oilsands, and coal - and in the future perhaps mining):

1. The responsibilities currently vested in Alberta Environment under the terms of the Environmental Protection and Enhancement Act, (EPEA) RSA 2000c. E-12, and the Water Act, RSA 2000, c.W-3 to conduct EIAs, issue licences and authorizations under the Water Act and EPEA and to deal with reclamation and remediation on private land.

2. The responsibilities currently vested in Sustainable Resource Development (SRD) to issue public land dispositions including mineral surface leases, and to deal with reclamation and remediation on public land.

Does this make sense?

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PDF version: Alberta’s CCS Disposition Scheme: the Carbon Sequestration Tenure Regulation 

Regulation commented on: Carbon Sequestration Tenure Regulation, A.R. 68/2011

The provincial government is making steady progress in implementing its plan to put in place a legal and regulatory framework for carbon capture and storage projects. The province passed legislation in the fall of 2010 (Bill 24, Carbon Capture and Storage Statutes Amendment Act, which I blogged here) to deal with pore space ownership issues and to provide a framework for granting agreements to sequester captured carbon dioxide (CO2) in that pore space; and in March 2011 it launched a Regulatory Framework Assessment (RFA) to review the current regulatory rules.

The most recent step is the promulgation (at the end of April) of the Carbon Sequestration Tenure Regulation, Alta. Reg. 68/2011. This regulation puts some meat on the framework established by the new Part 9 of the Mines and Minerals Act (RSA 2000, c. M-17 (MMA)). In particular, it describes in greater detail the elements of the two new forms of agreement (evaluation permits and carbon sequestration leases) and some of the content of monitoring, measuring and verification plans (MMV) and closure plans. The regulations also go some way towards clarifying the relationship between the Department of Energy and the Energy Resources Conservation Board in relation to some of the more technical aspects of MMV programs and closure plans.

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