Author Archives: Nigel Bankes

About Nigel Bankes

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.

Summary Judgment Not Available in a Farmout Case

By: Nigel Bankes

PDF Version: Summary Judgment Not Available in a Farmout Case

Cases commented on: (1) Teine Energy Limited v Audax Investments Ltd, unreported oral judgment delivered from the bench October 2, 2018 (Transcript of Proceedings), (2) Teine Energy Limited v Audax Investments Ltd, unreported oral judgment delivered from the bench March 21, 2019 (ABQB), and (3) Teine Energy Limited v Audax Investments Ltd, 2019 ABQB 334 (ABQB Ruling on Costs)

Teine and Audax entered into a farmout agreement on November 24, 2016. The agreement took the form of a proposal from Teine (as the farmor) to Audax as the proposed farmee, which proposal Audax accepted. The agreement contemplated that in return for drilling the commitment well (or wells), Audax would earn a 100% interest in Taine’s Saskatchewan Crown petroleum and natural gas lease, subject to a 17.5% gross overriding royalty in favour of Teine. The agreement incorporated by reference the 1997 Canadian Association of Petroleum Landmen Farmout and Royalty Procedure.

The case turns on clauses 3 and 4 of the farmout agreement: Continue reading →

Bill 12: a reprise

By: Nigel Bankes

PDF Version: Bill 12: a reprise

Legislation Commented On: Preserving Canada’s Economic Prosperity Act, SA 2018, c P-21.5

Case Commented On: British Columbia (Attorney General) v Alberta (Attorney General), 2019 ABQB 121 (CanLII)

I commented on Preserving Canada’s Economic Prosperity Act (PCEPA) when it was first introduced in the spring of 2018: see “A Bill to Restrict the Interprovincial Movement of Hydrocarbons: a.k.a. Preserving Canada’s Economic Prosperity [Act]” (18 April, 2018). At that time, I expressed doubts as to the constitutional validity of elements of Bill 12 as it then was, especially those provisions pertaining to refined products as well as any implementation measures that might involve discrimination by destination with respect to any exports. I remain of that opinion.

What has changed since then is that PCEPA has now been proclaimed (April 30, 2019); that is to say, it now has the force of law in Alberta. Prior to proclamation, PCEPA was of no legal significance. It was that absence of legal significance that led Justice Hall in his judgment in British Columbia (Attorney General) v Alberta (Attorney General) in February of this year to dismiss British Columbia’s challenge to the legislation. Justice Hall concluded that any such attack, at least by way of a declaration as to invalidity, was premature: Continue reading →

The Senate, the Oceans Act and Marine Protected Areas

By: Nigel Bankes

PDF Version: The Senate, the Oceans Act and Marine Protected Areas

Matter commented on: Bill C-55, An Act to amend the Oceans Act and the Canada Petroleum Resources Act, as passed by the House of Commons, April 20. 2018.

There is a lot of attention focused on the Senate these days, principally in relation to Bill C-69, An Act to enact the Impact Assessment Act and the Canadian Energy Regulator Act, to amend the Navigation Protection Act and to make consequential amendments to other Acts, (and the subject of numerous ABlawg posts); but, there are other Bills standing in a long and slowly moving line in that Chamber as well. These Bills include Romeo Saguenash’s private member’s Bill C-262 (also endorsed by the Liberals) to give application to the United Nations Declaration on the Rights of Indigenous Peoples in Canadian law (and the subject of an ABlawg post here), but also proposed amendments to the Oceans Act, SC 1996, c 31 to create an expedited process for establishing marine protected areas (MPAs). This blog post focuses on the latter.

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How Should We Assess Transmission Upgrades When They are Requested by the DFO?

By: Nigel Bankes

PDF Version: How Should We Assess Transmission Upgrades When They are Requested by the DFO?

Decisions Commented On: (1) AUC Decision 23339-D01-2019, Alberta Electric System Operator Needs Identification Document Application AltaLink Management Ltd. Facility Applications Provost Reliability Upgrade Project, and January 22, 2019; and (2) AUC Decision 23393-D01-2019, Alberta Electric System Operator Needs Identification Document Application AltaLink Management Ltd. Facility Application Fincastle 336S Substation Upgrade, February 14, 2019.

These two decisions deal with the Alberta Utilities Commission’s (AUC) assessment of a needs identification document (NID) to build new transmission in a situation where the NID was prepared on the basis of a system access service request (SASR) originating from the incumbent distribution facility owner (DFO) – in this case, FortisAlberta. Both cases triggered a dissenting opinion from AUC Vice Chair Anne Michaud. In each case the principal difference between the dissent and the majority turned on the Alberta Electric System Operator’s (AESO) responsibility to assess the reasonableness of the need for system access where the impetus to prepare the NID came from the DFO. In both cases, Vice Chair Michaud takes the view that if the AESO fails to properly scrutinize the need for the DFO’s SASR request then there is no public interest assessment of such a request. In both cases Vice Chair Michaud would have sent the NID back to the AESO with the suggestion “that the NID application incorporates an analysis of the need for the project that includes a weighing of the expected increase in reliability against the potential impacts of the project, having regard for the fact that the AESO is not required in all circumstances to respond to a SASR with a proposed transmission solution.” (Provost Decision at para 313).

The argument that greater scrutiny may be required in the case of a NID prepared in response to a SASR request from a DFO draws on the understanding that a DFO (unlike the AESO) does not have a public interest mandate and may therefore have an incentive to overbuild to increase its rate base – unless dis-incented from doing so by the new approach to capital investment in Phase II of performance based regulation – a doubtful proposition at best. New transmission is expensive and the cumulative effects on consumer bills significant. An important element of assessing the need to upgrade existing transmission facilities is the applicable reliability standard: the higher the reliability standard the greater the capital expense. What is that standard? Who gets to set that standard and should it be the same for all that are connected to the transmission system?

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English Court of Appeal Confirms that an Operator Entitled to be “held neutral”

By: Nigel Bankes

PDF Version: English Court of Appeal Confirms that an Operator Entitled to be “held neutral”

Case Commented On: Spirit Energy Resources et al Marathon Oil UK LLC, [2019] EWCA Civ 11.

In a decision that will be of interest to the energy bar in all oil and gas jurisdictions in the common law world, the English Court of Appeal, in a unanimous decision, has confirmed the principle that operations conducted by an operator under the terms of a joint operating agreement are conducted for the joint account and for the shared risk of all working interest owners and that an operator is not an insurer for those other working interest owners. The Court did so in the somewhat unusual context of a liability for unfunded defined pension benefits.

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