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Author: Nigel Bankes Page 20 of 88

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.

Two Manitoba Oil and Gas Lease Termination Cases

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On April 14, 2020

In Energy, Oil & Gas

By: Nigel Bankes

PDF Version: Two Manitoba Oil and Gas Lease Termination Cases

Cases Commented On: Corex Resources Ltd. et al. v 2928419 Manitoba Ltd., 2020 MBQB 47 (CanLII) and 6660894 Canada Ltd. v 57110 Manitoba Ltd., 2020 MBQB 50 (CanLII)

Two Manitoba oil and gas lease termination cases; two days apart – March 10, 2020 and March 12, 2020; same judicial district (Brandon); same outcome (leases terminated); but different judges and significantly different analytical and doctrinal approaches. The Corex decision is grounded in the specialized body of case law which recognizes that oil and gas leases can terminate automatically in accordance with their terms. The 6660 decision takes a contractual approach and frames the case in terms of fundamental breach and repudiation. While both decisions get to the same point (the lease in each case had terminated), the reasoning in Corex is far more consistent with the relevant authorities.

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Bill 12: A Small Step Forward in Managing Orphan Liabilities in Alberta

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On April 9, 2020

In Energy, Environmental

By: Nigel Bankes

PDF Version: Bill 12: A Small Step Forward in Managing Orphan Liabilities in Alberta

Matter Commented On: Bill 12, Liabilities Management Statutes Amendment Act, 2020

Bill 12 addresses some issues related to the province’s orphan fund and the responsibilities of the Orphan Well Association (OWA). While my overall conclusion is that the Bill is to be welcomed, the procedure under which the Bill was adopted was unfortunate. Furthermore, while the Bill does plug some gaps and extends the authority of the OWA and the orphan fund in helpful ways, the Bill is most notable for what it doesn’t address. In particular, it does not address the systemic drivers of the growing orphan liability problem in the province.

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More Competition For Underground Disposal Space

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On April 3, 2020

In Energy, Environmental

By: Nigel Bankes

PDF Version: More Competition For Underground Disposal Space

Decisions Commented On: 2020 ABAER 005, Pure Environmental Waste Management Ltd. Applications for the Hangingstone Project February 27, 2020 and 2020 ABAER 004, Pure Environmental Waste Management Ltd. Regulatory Appeal of Approval WM 211 for Pure Environmental Waste Management Ltd.’s Hangingstone Facility February 27, 2020

Conventional and non-conventional oil and gas operations frequently seek to dispose of liquid oilfield waste in underground formations that have suitable injectivity and sealing properties. Not all formations are suitable for injection purposes and even those that are suitable may have limited capacity, especially where the characteristics of the formation limit opportunities for pressure leakoff. Locally limited capacity or scarcity may lead to competition for the available disposal capacity.

These two decisions (and especially 2020 ABAER 005) address the licensing of disposal wells in such a competitive setting. These are not the first such examples we have seen in Alberta. I commented on an earlier AER decision (2014) on a disposal well application here. See also Bankes, “Disputes between the owners of different sub-surface resources” in Don Zillman et al (eds), The Law of Energy Underground (Oxford University Press, 2014) p 433.

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Alberta Court of Appeal Opines That Federal Carbon Pricing Legislation Unconstitutional

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On March 17, 2020

In Constitutional, Energy, Oil & Gas

By: Martin Olszynski, Nigel Bankes and Andrew Leach

PDF Version: Alberta Court of Appeal Opines That Federal Carbon Pricing Legislation Unconstitutional

Decision Commented On: Reference re Greenhouse Gas Pollution Pricing Act, 2020 ABCA 74

Last month, the Alberta Court of Appeal released its decision in Reference re Greenhouse Gas Pollution Pricing Act, 2020 ABCA 74, Alberta’s challenge to the constitutionality of the federal government’s Greenhouse Gas Pollution Pricing Act, SC 2018, c 12 (GGPPA). Writing for a majority of three judges, Chief Justice Catherine Fraser concluded that the GGPPAcould not be upheld on the basis of Parliament’s residual power over matters of “peace, order, and good government” (POGG), nor any other potentially relevant federal head of power. Concurring in the result but not the analysis, Justice Wakeling also held that the GGPPA was unconstitutional. Justice Feehan, dissenting, would have upheld the law on the basis of POGG, and the “national concern” branch of that power in particular. The Alberta Court of Appeal’s decision thus stands in contrast to the earlier decisions of the Courts of Appeal of both Saskatchewan (Reference re Greenhouse Gas Pollution Pricing Act 2019 SKCA 40) (Saskatchewan Reference) and Ontario (Reference re Greenhouse Gas Pollution Pricing Act, 2019 ONCA 544) (Ontario Reference), where a majority of judges in each court upheld the law as a valid exercise of the national concern branch of the POGG power.

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Net Profits Interest Decision

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On March 11, 2020

In Energy

By: Nigel Bankes

PDF Version: Net Profits Interest Decision

Case Commented On: Hudson King v Lightstream Resources Ltd, 2020 ABQB 149 (CanLII)

William Hudson (WH) of Texas discovered hydrocarbons in a reservoir near Rocanville, Saskatchewan. Lacking the resources to develop the discovery WH assigned the Rocanville properties to Triton (a Texas based corporation) in 1977 in return for $900,000 and a net profits interest (NPI). The NPI Agreement was executed in favour of a trust that WH and his wife had established for the benefit of their three children EHK, AH and CH. The trust was collapsed in 1986 when the youngest child reached 21 and the three children became the counterparties to the NPI Agreement. AH assigned his interest to ACH Holdings in 2009. I refer to EHK, AH, CH and ACH Holdings as the Hudson parties or as the plaintiffs. On the Triton side of the NPI Agreement the interests in the Rocanville properties passed through several hands including TriStar which continued as Petrobakken Energy which changed its name to Lightstream Resources. In September 2014 Lightstream sold and assigned its entire interest to Crescent Point. Lightstream, Crescent Point and the Hudson parties entered into an assignment and novation agreement (reproduced and discussed further below). In what follows, I sometimes refer for the sake of simplicity to the party from time to time holding the Triton interest in the NPI Agreement as the operator.

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