Author: Nigel Bankes Page 81 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.

Very few oil and gas contract matters come before the Provincial Court, principally because of the cap of $25,000 on monetary awards (Provincial Court Act, R.S.A. 2000, c. P-31. s.9.6 and Provincial Court Civil Division Regulation, Alta. Reg. 329/1989, s.1.1). In this case the plaintiff claimed a gross overriding royalty (GORR) and sought to recover from the defendant the difference between a 3% royalty paid on 7.5% of production from a property and 3% royalty paid on 100% of production. According to the plaintiff, the difference amounted to some $17,000 between 2006 and November 2008. Presumably, the plaintiff would also use any judgement from the Provincial Court in their favour to argue (absent the right to obtain a declaration from that Court) that future payments should also be based upon the terms of the judgement. The case was complicated by the fact that there was no direct privity between the parties. Judge J.T. McCarthy ruled in favour of the plaintiffs.

ERCB Decision on an Acid Gas Disposal Scheme: Further Lessons for the Regulation of Carbon Capture and Storage Schemes

By Nigel Bankes

On January 8, 2010

In Carbon Capture and Storage, Oil & Gas

By: Nigel Bankes & Trevor Ference

PDF version: ERCB Decision on an Acid Gas Disposal Scheme: Further Lessons for the Regulation of Carbon Capture and Storage Schemes

Case Commented On: Re: AltaGas Ltd, Applications for Two Pipeline Licences, An Amendment to a Facility Licence, and Approval for an Acid Gas Disposition Scheme, Pouce Coupe Field, ERCB Decision 2009-073

During the fall of 2009 the province of Alberta signed letters of intent for funding with four proponents for carbon capture and storage schemes (CCS): (1) Swan Hills Synfuel for an in situ goal gasification and enhanced oil recovery (EOR) project, (2) Enhance Energy and Northwest Upgrading for a CO2 trunkline, (3) Shell for the Quest project and (4) TransAlta for Project Pioneer. As these proponents move to implement their projects we will start to see how the existing and proposed regulatory scheme accommodates CCS projects. There are perhaps four types of legal and regulatory issues that project proponents face in relation to the storage elements of any project: (1) property issues (e.g. pore space ownership); (2) regulatory issues (Energy Resources Conservation Board (ERCB) approvals); (3) liability issues (will long term liability for storage sites transfer to the province?), and (4) crediting issues (how will CCS projects be treated within the context of Alberta’s Specified Gas Emitters Regulation, Alta. Reg. 139/2007; will CCS projects create emission performance credits or offset credits?). The Carbon Capture and Storage Development Council (Accelerating Carbon Capture and Storage Implementation in Alberta, Final Report, March 2009) has urged the province to provide guidance and regulatory certainty on these issues but, by and large, the province has yet to act.

The Supreme Court of Canada Denies Leave in Brookfield

By Nigel Bankes

On November 20, 2009

In Oil & Gas, Supreme Court of Canada

Cases considered: Brookfield Bridge Lending Fund Inc. v. Vanquish Oil and Gas Corporation, 2008 ABQB 444, reversed 2009 ABCA 99, leave to appeal denied November 19, 2009

The Supreme Court of Canada has denied leave to appeal to the joint operators in the Brookfield Bridge case. The case involves the circumstances under which a joint operator might be able to establish a constructive trust over assets of the operator other than those already impressed with an express trust by the language of clause 507 of the CAPL Operating Procedure in a situation where the operator expends monies from the commingled account for its purposes.

When, if at all, does a Pooling Agreement Trigger an Area of Mutual Interest Obligation?

By Nigel Bankes

On November 10, 2009

In Oil & Gas

Case considered: Hunt Oil Company of Canada Inc v. Shell Canada Limited, 2009 ABQB 627

PDF Version: When, if at all, does a pooling agreement trigger an area of mutual interest obligation?

In a 1994 decision, Luscar v Pembina Resources Ltd (1994), 162 AR 34, the Alberta Court of Appeal cast doubt on the proposition that Y, a lessee of a tract within a drilling spacing unit (DSU), who enters into a cross conveyance pooling agreement with Z, a lessee of a different tract within the same DSU, will invariably trigger an area of mutual interest (AMI) obligation that Y owes to X with respect to the undivided interest that Y acquired within Z’s tract by virtue of the pooling agreement.

In this decision, Justice Alan Macleod has extended that line of reasoning and has decided (subject to the language used in any particular case) that Y will not trigger an AMI obligation, not only in the narrow situation described above but also in the situation where Y and Z, holding adjacent lands, enter into a pooling agreement to improve project economics and not for the purpose of forming a drilling spacing unit.

The role of a limitations defence in a judicial review application involving the Crown’s duty to consult

By Nigel Bankes

On October 26, 2009

In Aboriginal, Civil Procedure

Case considered: Athabasca Chipewyan First Nation v Alberta (Minister of Energy), 2009 ABQB 576

PDF version: The role of a limitations defence in a judicial review application involving the Crown’s duty to consult

Oil sands developments in Alberta are taking place in the traditional territories of First Nations in areas of the province that are subject to Treaty 8. As with the other numbered treaties, Treaty 8 contains a hunting clause with a “lands taken up” proviso which reads as follows:

And Her Majesty the Queen HEREBY AGREES with the said Indians that they shall have right to pursue their usual vocations of hunting, trapping and fishing throughout the tract surrendered as before described, subject to such regulations as may from time to time be made by the Government of the country, acting under the authority of Her Majesty, and saving and excepting such tracts as may be required or taken up from time to time for settlement, mining, lumbering, trading or other purposes.

The Supreme Court examined the implications of this clause for Crown disposition policies in Mikisew Cree First Nation v. Canada (Minister of Canadian Heritage), 2005 SCC 69 (Mikisew Cree). I commented on that decision in a short note in Resources: “Mikisew Cree and the Lands Taken Up Clause of the Numbered Treaties” (2006), 92/93 Resources 1 – 8.

Author: Nigel Bankes Page 81 of 88

Provincial Court Royalty Calculation Decision

ERCB Decision on an Acid Gas Disposal Scheme: Further Lessons for the Regulation of Carbon Capture and Storage Schemes

The Supreme Court of Canada Denies Leave in Brookfield

When, if at all, does a Pooling Agreement Trigger an Area of Mutual Interest Obligation?

The role of a limitations defence in a judicial review application involving the Crown’s duty to consult