Author: Nigel Bankes Page 37 of 89

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.

An Operator of Gas Processing Facilities Does Not Have a Possessory Lien Under the Possessory Liens Act

By Nigel Bankes

On September 20, 2017

In Oil & Gas, Property

By: Nigel Bankes

PDF Version: An Operator of Gas Processing Facilities Does Not Have a Possessory Lien Under the Possessory Liens Act

Case Commented On: Cansearch Resources Ltd v Regent Resources Ltd, 2017 ABQB 535 (CanLII)

Cansearch and Regent jointly owned the Joffre Facility under the term of an agreement for the construction, ownership and operation (CO & O) of that facility (2008). Cansearch was appointed as operator. The CO & O agreement afforded Cansearch as operator an operator’s lien (cl 602(a)) in the following terms:

Effective from the Effective Date, Operator shall have a lien and charge, which is first and prior to any other lien, charge, mortgage or other security interest, with respect to the Function Unit Participations of each Owner in the Facility and such Owner’s share of Facility Products, to secure payment of such Owner’s proportionate share of the costs and expenses incurred by Operator for the Joint Account.

Cansearch never registered its Operator’s Lien pursuant to the Personal Property Security Act, RSA 2000, c P-7 (PPSA).

Abandonment Expenses are for the Joint Account

By Nigel Bankes

On September 6, 2017

In Oil & Gas

By: Nigel Bankes

PDF Version: Abandonment Expenses are for the Joint Account

Case Commented On: Spyglass Resources Corp v Bonavista Energy Corporation, 2017 ABQB 504 (CanLII)

In this decision Justice Jones rejected a series of technical arguments raised by the receiver of Spyglass (Ernst and Young) to resist payment of abandonment costs. The receiver had argued that Bonavista had abandoned co-owned assets for its own account rather than the joint account and that Bonavista was not able to set-off revenues attributable to Spyglass’s interest against Spyglass’s share of abandonment obligations.

The Effect of Well Abandonment and Reclamation Obligations for the Valuation of Matrimonial Property

By Nigel Bankes

On August 10, 2017

In Environmental, Family, Oil & Gas, Property

By: Nigel Bankes

PDF Version: The Effect of Well Abandonment and Reclamation Obligations for the Valuation of Matrimonial Property

Case Commented On: Walker v Walker, 2017 SKQB 195 (CanLII)

Judicial decisions on the legal nature of abandonment and reclamation obligations may arise in the strangest of ways. Take this matrimonial property case, for example, in which Mr. Walker (Darcy) was seeking to argue that his assets should be discounted on the basis that a small oil and gas company (Outback) that he controlled had net abandonment and reclamation liabilities. Part of the challenge that he faced in making this argument was of course that the liabilities in question were the liabilities of the corporation. While a director or controlling mind of a corporation might ordinarily take some comfort from this state of affairs, in this case counsel for Darcy tried to suggest that his client would inevitably face personal liability under the terms of Saskatchewan’s The Environmental Management and Protection Act, 2010, SS 2010, c E-10.22 [EMPA] and The Oil and Gas Conservation Act, RSS 1978, c O-2 [OGCA] and s 59 of The Oil and Gas Conservation Regulations, 2012, RRS c O-2 Reg 6 [OGCR]. Actually the argument was even stranger insofar as Mrs. Walker (Becky) was also a director of the company (Outback) and thus might face the same liability should Darcy be correct.

Liens Against Minerals Do Not Have Super Priority: Saskatchewan Court of Appeal Overrules Cenex

By Nigel Bankes

On August 8, 2017

In Property

By: Nigel Bankes

PDF Version: Liens Against Minerals Do Not Have Super Priority: Saskatchewan Court of Appeal Overrules Cenex

Case Commented On: National Bank of Canada v KNC Holdings Ltd., 2017 SKCA 57 (CanLII)

A unanimous five person panel of the Saskatchewan Court of Appeal has overruled the Court’s earlier decision in Canada Trust Co. v Cenex Ltd. (1982), 1982 CanLII 2651 (SK CA), 131 DLR (3d) 479 (Sask CA). Decided in 1982, Cenex concluded that s 12 of The Mechanics’ Lien Act, RSS 1978, c M-7, (then the relevant statute) created a super priority for mechanics’ liens filed against mineral interests and severed minerals on the basis that the lien was to attach to “all the estates and interests in the mineral concerned, other than the estate in fee simple in the mines and minerals …” (at para 11). Justice Hall writing for the Court in Cenex concluded that this language bound even the equity of the Royal Bank which held prior security under s 88 of the Bank Act, RSC 1970, c B-1 and debenture security. The effect of Justice Hall’s conclusion was to afford the lien holders a super priority.

Clyde River and Chippewas of the Thames: Some Clarifications Provided But Some Challenges Remain

By Nigel Bankes

On August 4, 2017

In Aboriginal, Energy

By: Nigel Bankes

PDF Version: Clyde River and Chippewas of the Thames: Some Clarifications Provided But Some Challenges Remain

Cases Commented On: Clyde River (Hamlet) v Petroleum Geo-Services Inc., 2017 SCC 40 (CanLII) and Chippewas of the Thames First Nation v Enbridge Pipelines Inc., 2017 SCC 41 (CanLII)

The Supreme Court of Canada has rendered judgment in two cases involving the National Energy Board (NEB) and the duty to consult Indigenous communities. One decision, Clyde River, involves an authorization granted to Petroleum Geo-Services Inc (PGS) to conduct marine seismic testing in Baffin Bay and Davis Strait under the terms of the Canada Oil and Gas Operations Act, RSC 1985, c O-7 (COGOA). The Supreme Court of Canada concluded that the Crown had failed to discharge its duty to consult and accommodate and that as a result the NEB authorization should be quashed. The second decision, Chippewas of the Thames First Nation (CTFN), involves an order by the NEB under s 58 of the National Energy Board Act, RSC 1985, c N-7 (NEBA) exempting Enbridge Pipelines Inc (Enbridge) from the need to obtain a certificate of public convenience and necessity under s 52 of NEBA and at the same time amending the operation of part of Line 9 (Line 9B), to authorize reversing the flow of the line, increasing its capacity and allowing for the transportation of heavy crude. The Supreme Court of Canada concluded that the Crown was entitled to rely on the procedures adopted by the NEB in engaging with CTFN to discharge the Crown’s duty to consult and accommodate and that those procedures in this case were adequate.