Author: Nigel Bankes Page 54 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.

By: Nigel Bankes

PDF Version: Gross Negligence and Set-off Rights under the 2007 CAPL Operating Procedure

Case Commented On: Bernum Petroleum Ltd v Birch Lake Energy Inc., 2014 ABQB 652; unreported transcript of reasons of Master Robertson, July 31, 2013

Bernum and Birch Lake held interests (60:40) in five sections of land (sections 3, 7, 8, 17 and 19) governed by the 2007 version of the CAPL operating procedure. Bernum was the operator. Birch Lake elected to participate in drilling two horizontal wells, the 4-3 well and the 6-19 well. The 4-3 well was a success and is still producing. The 6-19 failed and was subsequently abandoned. Birch Lake failed to meet cash calls under the authorizations for expenditure (AFEs) for the two wells; Bernum commenced an action and applied for summary judgement. Bernum also set off Birch Lake’s share of production against Birch Lake’s indebtedness.

Birch Lake defended Bernum’s application for summary judgement on the basis that Bernum had been grossly negligent in drilling the two wells. The 2007 CAPL provides that:

4.02 The Operator … will not be liable to any of the Non-Operators for any Losses and Liabilities resulting from or in any way attributable to or arising out of any act, omission or failure to act, whether negligent or otherwise, of the Operator or its Affiliates and their respective directors, officers, agents, contractors or employees in the performance of the Operator’s duties under this Agreement (including those in planning or conducting any Joint Operation), except insofar as:

(a) those Losses and Liabilities are a direct result of, or are directly attributable to the Gross Negligence or Wilful Misconduct of the Operator …;

The Uncertain Status of the Doctrine of Interjurisdictional Immunity on Reserve Lands

By Nigel Bankes

On October 28, 2014

In Aboriginal, Constitutional

By: Nigel Bankes and Jennifer Koshan

PDF Version: The Uncertain Status of the Doctrine of Interjurisdictional Immunity on Reserve Lands

Case Commented On: Sechelt Indian Band v. British Columbia (Manufactured Home Park Tenancy Act, Dispute Resolution Officer), 2013 BCCA 262, application for leave to appeal dismissed with costs, October 23, 2014

The Supreme Court of Canada has passed up the opportunity to clarify the application of the doctrine of interjurisdictional immunity (IJI) to reserve lands following its decisions in Tsilhqot’in Nation v. British Columbia, 2014 SCC 44 and Grassy Narrows First Nation v. Ontario (Natural Resources), 2014 SCC 48 (Keewatin) in June 2014 by denying leave to appeal in the Sechelt Indian Band case. It is unusual to comment on a decision to deny leave since such decisions are never supported by reasons and the Court has warned that we cannot infer much about the status of an appellate decision on which leave was denied for the very good reason that there may be all sorts of considerations that might lead the Court to deny leave in any particular case. We are commenting on the leave issue in this case because in our view by missing the opportunity to clarify the scope of Tsilhqot’in and Keewatin the Court has left outstanding uncertainty as to the scope of these decisions that it could usefully have resolved. We also include a postscript referring to a recent decision out of Saskatchewan that seems to extend Tsilhqot’in to render IJI inapplicable to provincial limitations legislation applying to reserve lands.

The Federal Renewable Fuels Regulations Survive an Aggressive and Comprehensive Challenge from Syncrude

By Nigel Bankes

On September 11, 2014

In Climate Change, Environmental

By: Nigel Bankes

PDF Version: The Federal Renewable Fuels Regulations Survive an Aggressive and Comprehensive Challenge from Syncrude

Case Commented On: Syncrude Canada Ltd. v Attorney General of Canada, 2014 FC 776

In the dog days of summer (August 6, 2014) Justice Russel Zinn of the Federal Court of Canada handed down his judgement in a case in which Syncrude sought to challenge the validity of the federal Renewable Fuels Regulations, SOR/2010/189 (RFR) on both constitutional and administrative law grounds. The judgment seems to have passed almost without comment in the media. The RFR require that diesel fuel produced, imported or sold in Canada must contain renewable fuel of at least 2% by volume. This requirement can be met by blending diesel with biodiesel (although this can be challenging at cold temperatures). Failure to comply with the RFR is an offence although a regulated entity can achieve compliance by purchasing compliance units from other regulated entities who have exceeded their own compliance targets. See the judgement at para 4.

What happens when A sells B a Working Interest in the Thermal or Enhanced Production from an Oil and Gas Property and A or its Successors in Interest Continue with Primary Production?

By Nigel Bankes

On August 18, 2014

In Oil & Gas

By: Nigel Bankes

PDF version: What happens when A sells B a working interest in the thermal or enhanced production from an oil and gas property and A or its successors in interest continue with primary production?

Case Considered: IFP Technologies (Canada) v Encana Midstream and Marketing, 2014 ABQB 470

What happens when A sells B a working interest in the thermal or enhanced production from an oil and gas property and A or its successors in interest continue with primary production? This was the issue at the heart of this decision. The answer is that B gets shafted; B should have taken better steps to protect itself rather than simply assuming that all future production from the property would take the form of enhanced or thermal production.

In the course of his lengthy 73 page judgement Chief Justice Neil Wittmann (acting in place of Justice Ron Stevens (deceased)) addressed a number of questions of oil and gas law which will be of interest to the energy bar including the following: (1) What property interest did IFP acquire? (2) What is the test for determining whether a working interest owner has reasonable grounds for refusing consent to an assignment of shared interest lands under the 1990 CAPL Operating Procedure? (3) What is the legal position where a working interest purports to withhold consent and the Court subsequently determines that the withholding of consent was unreasonable? (4) Did the development of the property through primary production techniques substantially nullify the benefit for which IFP (B) had bargained so as to amount to a breach of contract? (5) Assuming that there was a breach of contract how should damages be assessed? (6) Assuming liability should any claim for damages be capped by a contractual agreement between the parties?

Grassy Narrows, Division of Powers and International Law

By Nigel Bankes

On August 6, 2014

In Aboriginal, Constitutional, International Law

By: Nigel Bankes

PDF Version: Grassy Narrows, Division of Powers and International Law

Case commented on: Grassy Narrows First Nation v Ontario (Natural Resources), 2014 SCC 48

This post discusses two issues arising from the Supreme Court’s decision in Grassy Narrows. The post first considers the implications of the Court’s conclusion that the doctrine of interjurisdictional immunity does not apply in a case where a province infringes the treaty right to hunt leaving the treaty party with no meaningful right to hunt. Second the post argues that the Court’s conclusion that a provincial government may be able to justify an infringement of hunting rights of this nature is inconsistent with Canada’s obligations under international law.