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.

Alberta Decision on Knock-for-Knock Allocation of Liability in a Standard Form Drilling Contract

By: Nigel Bankes

PDF Version: Alberta Decision on Knock-for-Knock Allocation of Liability in a Standard Form Drilling Contract

Case Commented On: Precision Drilling Canada Limited Partnership v Yangarra Resources Ltd, 2015 ABQB 433

This case involves the interpretation of a standard form drilling contract. Under that contract, said (at para 5) to be negotiated between the Canadian Association of Oilwell Drilling Contractors and the Canadian Association of Petroleum Producers, the drilling contractor (here Precision) and the oil and gas operator (here Yangarra) agreed to accept an allocation of risks and liabilities based essentially on ownership interests rather than fault. Thus, Article 10.1 of the contract, subject to some listed exceptions, provided that:

Precision shall at all times assume all of the risk of and be solely liable for any damage to, loss of, or destruction of Precision’s Surface Equipment, regardless of the negligence or other fault of Yangarra or howsoever arising and Precision specifically releases Yangarra in regard to any claims that Precision may otherwise have in regard thereto.

By the same token, Yangarra (Article 10.3 and 10.4) agreed to accept risks and provide an indemnity in relation to any downhole issues:

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The SGER Amendments and the New Treatment of Cogeneration

By: Nigel Bankes

PDF Version: The SGER Amendments and the New Treatment of Cogeneration

Regulation Commented On: Specified Gas Emitters Amendment Regulation, Alta Reg 104/2015

In a previous post I reported on the Minister’s speech announcing a two-step procedure for developing a new climate change policy for Alberta. The first step involved changes to two of the key variables in the current Specified Gas Emitter Regulation (SGER), Alta Reg 139/2007 while the second step is the more comprehensive review to be conducted by Dr Andrew Leach to assess the full range of options for the management of greenhouse gas emissions in the province. At the time I wrote that post I had not examined the details of the amendments to the SGER to see what other changes (if any) were being proposed. This post picks up where the last left off.

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Province of Alberta Announces a Two-Step Process for Developing a New Climate Change Policy

By: Nigel Bankes

PDF Version: Province of Alberta Announces a Two-Step Process for Developing a New Climate Change Policy

Matter Commented On: Minister Shannon Phillips’ Press Conference on Alberta’s climate change strategy, June 25, 2015

A central element of Alberta’s climate change strategy is the Specified Gas Emitter Regulation (SGER), Alta Reg 139/2007. The SGER imposes greenhouse gas emissions intensity reduction obligations (ultimately 12%) on regulated emitters (facilities that emit in excess of 100,000 tonnes of CO2e per year). A facility may achieve compliance in one of four ways: (1) meeting its target by producing its product with lower carbon inputs, (2) Alberta based offset credits (emission reductions over a business as usual scenario achieved by a non-regulated entity in accordance with an approved protocol), (3) emission performance credits (credits achieved by a regulated facility which beats its compliance target), or, (4) contribution of $15 per tonne (for excess emissions over the compliance target) to the Climate Change and Emission Management Fund (the so-called compliance price).

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The Social Licence to Operate: Mind the Gap

By: Nigel Bankes

PDF Version: The Social Licence to Operate: Mind the Gap

This post is based on an invited presentation that I gave at the Canadian Energy Law Forum on May 14, 2015 in Lake Louise. I began my remarks by looking at the three elements of the social licence to operate and then offered a summary of a lecture given by Rowland Harrison at the University of Alberta on March 10, 2015 from his position as the TransCanada Chair in Administrative and Regulatory Law, entitled “Social Licence to Operate: The Good, the Bad and the Ominous.” Mr. Harrison is a former member of the National Energy Board. I concluded my remarks by reflecting on four issues: (1) the normative context for thinking about the social licence to operate, (2) why it is that industry itself uses the term “social licence to operate”, (3) the need to narrow the gap between the legal licence and the idea of the social licence, and (4) the implications of allowing the social licence to operate as a veto.

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Court of Appeal Confirms ISO Rule on the Allocation of Intertie Capacity

By: Nigel Bankes

PDF Version: Court of Appeal Confirms ISO Rule on the Allocation of Intertie Capacity

Case Commented On: Saskatchewan Power Corporation v Alberta (Utilities Commission), 2015 ABCA 183

With the commissioning of the Montana/Alberta intertie – a transmission line for electric energy connecting neighbouring transmission systems and allowing the transfer of electricity between jurisdictions – the Independent System Operator (ISO), operating under the name of the Alberta Electric System Operator (AESO), concluded that its existing last-in-first-out rule for the allocation of available transfer capability (ATC) on interties operated unfairly. It therefore engaged in a rule-making exercise as provided for under ss.20 – 20.4 of the Electric Utilities Act, SA 2003, c E-5.1 (EUA) resulting in the adoption of a proposed new ISO Rule on Available Transfer Capability and Transfer Path Management. The new Rule adopts a pro-rata methodology for allocating ATC. Section 20.2(1) of the EUA requires the ISO to file the proposed rule with the Alberta Utilities Commission (AUC) so as to give market participants (MPs) the opportunity to object in s.20.4(1):

20.4(1) A market participant may object to an ISO rule that is filed under section 20.2 on one or more of the following grounds:

(a) that the Independent System Operator, in making the ISO rule, did not comply with Commission rules made under section 20.9;

(b) that the ISO rule is technically deficient;

(c) that the ISO rule does not support the fair, efficient and openly competitive operation of the market;

(d) that the ISO rule is not in the public interest.

Several MPs availed themselves of this opportunity but the AUC ultimately concluded in AUC Decision 2013-025 that (at para 1) it had “not been persuaded that the rule is against the public interest or the fair, efficient and openly competitive operation of the electricity market in Alberta or that the rule is technically deficient.” Several MPs thereupon sought and were granted leave to appeal the AUC’s decision on two grounds: (1) did the AUC err in law in its interpretation of s.29 of the EUA by finding that the Operator was required by statute to provide system access service to intertie operators; and (2) did it err in law in its interpretation of s.16 and/or s.27 of the Transmission Regulation, Alta Reg 86/2007 (TReg)? In this decision the Court of Appeal dismissed those appeals thereby confirming both the AUC Decision and the ISO Rule. Both grounds of appeal seem to have been argued under s.20.4(d) of the EUA and on the basis that an unreasonable interpretation of any of the above provisions would necessarily result in a conclusion that was not in the public interest. There was also a more general public interest argument which is discussed in the final paragraphs of this post.

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