Author: Nigel Bankes Page 18 of 87

Nigel Bankes is emeritus professor of law at the University of Calgary. Prior to his retirement in June 2021 Nigel held the chair in natural resources law in the Faculty of Law.

The Kenney government has now released the Report of the Fair Deal Panel. It is not a good read. Many sections are poorly written and poorly reasoned. But since ABlawg is a blog on legal developments, let’s start with the title to this post and the decision of the authors to refer to Canada’s founding constitutional document as the British North America Act (BNA Act) of 1867.

While the authors concede (at 13) that the BNA Act is also known as the Constitution Act, 1867, they consistently refer to the BNA Act throughout the report. This is simply wrong, and it has been wrong since 1982 when Canada adopted the Constitution Act, 1982. That Act includes a Schedule entitled “Modernization of the Constitution” (emphasis added) which serves to rename elements of the Constitution. In particular, item 1 in the Schedule renames the BNA Act of 1867 the Constitution Act, 1867. It repeals the title to the old BNA Act.

This may seem, especially to non-lawyers, a relatively trivial point (perhaps the Panel members just made an elementary mistake, despite having two lawyers on the Panel), but perhaps there is something deeper going on. Perhaps the Panel, consciously or unconsciously, is hearkening back to the “golden” days of Empire and reaffirming the institution of the Monarchy; or perhaps the Panel is somehow questioning the legitimacy of the patriation of the Constitution and its (Pierre) Trudeau Charter? But none of that makes any sense. As the statue topplers remind us, there was nothing especially golden about the Empire, and there is one element of the 1982 constitutional package that Alberta continues to rely on heavily. That is the addition of section 92A, the resources amendment, to the Constitution Act, 1982. That amendment afforded the provinces greater powers over the regulation of oil and gas, electricity, and other natural resources.

Oil Sands Approvals and Bill 22, the Red Tape Reduction Implementation Act, 2020

By Nigel Bankes

On June 15, 2020

In Energy, Oil & Gas

By: Nigel Bankes

PDF Version: Oil Sands Approvals and Bill 22, the Red Tape Reduction Implementation Act, 2020

Bill Commented On: Bill 22, Red Tape Reduction Implementation Act, 2020

This post deals with one aspect of this large omnibus bill, namely the proposed amendment to the Oil Sands Conservation Act, RSA 2000, c O-7 (OSCA). This amendment will remove the need to seek Cabinet authorization for the approval of new oil sands projects and related processing facilities. More specifically, this post assesses whether the amendment will have any implications for the Crown’s duty to consult First Nations and Métis communities, and to observe the honour of the Crown in its dealings with those communities. The main conclusion is that these proposed changes will not simplify or shorten the steps that the Crown needs to take to discharge its constitutional responsibilities. None of these responsibilities constitute “red tape.” Any shortening in project review timelines as a result of removing the opportunity for Cabinet review will be no more than a few months (a drop in the bucket in the time frame for characterizing and developing a new oil sands prospect), a steep price to pay for the loss of an opportunity to hit pause, or to impose additional terms and conditions to protect the public interest.

The Implementing Regulation for Bill 12: The Liabilities Management Statutes Amendments Act, 2020

By Nigel Bankes

On June 8, 2020

In Energy, Oil & Gas

By: Nigel Bankes

PDF Version: The Implementing Regulation for Bill 12: The Liabilities Management Statutes Amendments Act, 2020

Matter Commented On: Orphan Fund Delegated Administration Amendment Regulation, OC 174/2020

Bill 12, the Liabilities Management Statutes Amendments Act, 2020, amongst other things, authorized the delegation of additional responsibilities to the Orphan Well Association (OWA). I provided commentary on Bill 12 in a previous post here. The entry into force of Bill 12 is set for June 15, 2020, and this amendment to the Orphan Fund Delegated Administration Regulation, Alta Reg 45/2001 (Delegation Regulation), effective the same day, implements that incremental delegation and clarifies some additional issues.

This post draws attention to four elements of the amendment: (1) the definitions of “holder of the mineral rights” and of “person who has the right to win, work and recover a mineral”; (2) the limitation of liability provisions of the Delegation Regulation; (3) the applicability of the audit and inspection provisions of the Government Organization Act, RSA 2000 c G-10 (GOA); and (4) the enhanced authority of the OWA to enter into and expend funds pursuant to “agreements” with other parties.

Different Uses of Subsurface Storage Space: Natural Gas Storage or Compressed Air Energy Storage?

By Nigel Bankes

On May 28, 2020

In Energy

By: Nigel Bankes

PDF Version: Different Uses of Subsurface Storage Space: Natural Gas Storage or Compressed Air Energy Storage?

Decision commented on: OEB Decision and Order EB-2019-0287, Tribute Energy Storage Inc., Application for an order to revoke the designation of the natural gas storage areas known as the Bayfield Pool and the Stanley 4-7-XI Pool, in the County of Huron, April 9, 2020

This post focuses on an application by the project proponent and licensee (Tribute or TESI) to have the Ontario Energy Board (OEB) revoke an existing designation of a depleted gas reservoir as a natural gas storage area, with a view to potentially having the same reservoir re-licensed as a site for compressed air energy storage (CAES).

While the application to revoke the designation is the focus of this post, there are two other underlying themes. The first is the question about how we make decisions on the competing uses of underground (storage) space or pore space. I have commented on this issue before on ABlawg; the most recent post is here, with links to earlier posts. A second theme relates to the importance of establishing appropriate rules for energy (electricity) storage projects, whether these projects are battery projects, pumped hydro or, compressed air energy storage. These rules include not only the necessary tenure and licensing rules for the physical project, which is the focus here, but also, in some cases, the appropriate market rules. Should a storage project be treated as generation to the extent that it supplies energy? Should it be treated as load to the extent that it draws energy to pump water upstream or to inject compressed air? Should it be treated as transmission to the extent that it might avoid the need to reinforce transmission to an in isolated community? And how should storage be able to participate in the different ancillary markets? The appropriate characterization is important because characterization affects how the provider is compensated – either by market rules or cost of service.

Considerations in the Design of a Royalty Regime for Helium

By Nigel Bankes

On May 21, 2020

In Energy, Oil & Gas

By: Nigel Bankes

PDF Version: Considerations in the Design of a Royalty Regime for Helium

Matters commented on: Press Release, “New royalty rate responds to soaring helium interest” Minister of Energy, May 13, 2020; Department of Energy, Information Letter IL 2020-22 , Helium Royalty Rate, May 13, 2020; Natural Gas Royalty Regulation, 2009 (AR 221/2008) as amended by OC 154/2020; and Natural Gas Royalty Regulation, 2017 (AR 211/2016) as amended by OC 155/ 2020.

On May 13, 2020 Minister Sonya Savage announced the establishment of a new royalty rate for helium produced from Crown lands. The new rate (5% minus a 0.75% helium royalty adjustment factor, for an effective rate of 4.25%) replaces a zero royalty rate for helium production. The press release suggests that the proposed royalty structure “helps set the stage for investment” by providing some certainty while “ensuring a fair price for Albertans.” (This is misleading. The market will set the price not the royalty.) The press release goes on to indicate that, “[t]his effective royalty rate is set for an initial period of five years. At that time, the rate will be reviewed to ensure it remains competitive and allows for any necessary adjustments.” The accompanying Information Letter issued by the Department (IL 2020-22) suggests that the review is to be limited to the appropriateness of the 0.75% adjustment factor, not the entire rate.

The new royalty is implemented by amendments to the Natural Gas Royalty Regulations of 2009 and 2017 (each applies to different ‘vintages’ of production) and made retroactive to April 1, 2020. (Prior to these amendments there was a requirement (see IL 2018-25, now revoked), that “operators producing and selling helium must report monthly helium production volumes and monthly average selling prices ….”) The new royalty will only apply to helium produced from lands where the mines and minerals are vested in the Crown. If helium is produced, saved and sold from private mineral lands, the applicable royalty will be established by the terms of the lease between the owner of the mines and minerals and the working interest owners.

Author: Nigel Bankes Page 18 of 87

The Fair Deal Panel Report – and the British North America Act?

Oil Sands Approvals and Bill 22, the Red Tape Reduction Implementation Act, 2020

The Implementing Regulation for Bill 12: The Liabilities Management Statutes Amendments Act, 2020

Different Uses of Subsurface Storage Space: Natural Gas Storage or Compressed Air Energy Storage?

Considerations in the Design of a Royalty Regime for Helium