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.

The sky is falling, let’s blame the royalty review

PDF Version:  The sky is falling, let’s blame the royalty review

I have lived in Alberta and this city for nearly thirty years. During the fall of 2007 I thought that we had the best public policy debate that I have ever seen in this province. The subject of that debate was the province’s royalty review.

I think that it was a good debate because it was a well informed debate on a crucial public policy issue. It was a well informed debate because the province, for the first time in its history, struck a public review which articulated a set of principles that should govern royalty design. Prior to that, royalty reviews were essentially private affairs between government and industry.

Continue reading →

Adjudicating on waterflood enhanced recovery schemes: is it time for compulsory unitization in Alberta?

Cases Considered: Hunt Oil Company of Canada Inc: Applications to amend enhanced recovery scheme approval No. 10848 and Pool Delineation Kleskun and Puskwaskau Fields, December 23, 2008, ERCB Decision 2008-130, December 23, 2008.

PDF Version:  Adjudicating on waterflood enhanced recovery schemes: is it time for compulsory unitization in Alberta?

Hunt and Galleon (and perhaps others) have interests in the same small oil pool and indeed a series of oil pools that are all “in communication” by virtue of a common aquifer. But evidently they cannot agree on how best to develop the pool, or perhaps they cannot agree on how to share the costs and benefits of joint development including the allocation of resulting production. As a result, each of them operates separate waterflood schemes in the same pool. Each such enhanced oil recovery (EOR) scheme needs to be approved by the ERCB under s.39(1)(a) of the Oil and Gas Conservation Act (OGCA), R.S.A. 2000, c. O-6.

Continue reading →

Terminating a Long Term Gas Sales Contract on Account of a Material Adverse Change: The Continuing Fallout from the Collapse of the Enron Empire

Cases Considered: Marathon Canada Ltd v. Enron Canada Ltd, 2008 ABQB 408;
Marathon Canada Ltd v. Enron Canada Ltd, 2009 ABCA 31.

PDF Version: Terminating a long term gas sales contract on account of a material adverse change: the continuing fallout from the collapse of the Enron Empire

The Court of Appeal, in a memorandum of judgement authored by Justices Ellen Picard, Peter Costigan and Jack Watson, has affirmed the decision at trial of Justice Terence McMahon of the Alberta Court of Queen’s Bench. Justice McMahon held that Marathon Canada had lawfully terminated a natural gas purchase contract with Enron Canada. Marathon chose to terminate when Enron Canada’s US parent (Enron Corp) fell into serious financial difficulties. Both courts also held that: (1) Marathon was entitled to recover $560,000 damages for natural gas that it had delivered prior to contract termination, but that, (2) Enron Canada was not entitled to recover liquidated damages of some $126 million based on a counter-claim of wrongful termination and the estimated\guesstimated present value of Marathon’s future deliveries at the contract price.

Continue reading →

What Zones Were the Subject of a Unitization Agreement?

Cases Considered: Signalta Resources Limited v. Dominion Exploration Canada Limited, 2007 ABQB 636; Signalta Resources Limited v. Dominion Exploration Canada Limited, 2008 ABCA 437

PDF Version:  What zones were the subject of a unitization agreement?

I blogged the trial decision of Justice AG Park in this case and now the Court of Appeal has affirmed. Readers wanting a full statement of the facts should review that earlier blog.

There were, as the Court put it, “no grounds for appellate intervention” (at para. 2) and in particular the Court of Appeal agreed with Justice Park that the original inclusion of the Glauconite for the section 8 lands in the schedule to the unitization agreement was a mistake. It was a mistake for two reasons: (1) Dyco (Dominion’s predecessor in title) did not have rights to the Glauconite under its farmout with Husky and therefore could not contribute Glauconite rights, and (2) Husky (which did own the Glauconite rights) never contributed them and executed the relevant agreements as a royalty owner and not as a working interest owner.

Continue reading →

Comments on the Interim Report of the Alberta Carbon Capture and Storage Development Council, Accelerating Carbon Capture and Storage in Alberta

By: Nigel Bankes & Jenette Poschwatta

PDF Version: Comments on the Interim Report of the Alberta Carbon Capture and Storage Development Council, Accelerating Carbon Capture and Storage in Alberta

Report Commented On: Accelerating Carbon Capture and Storage in Alberta, dated September 30, 2008, released October 22, 2008; now Final Report released March 2009

In these comments we focus on three aspects of the interim report: (1) the treatment of the ownership of pore space, (2) the design of a provincial tenure system for geological sequestration, and (3) the treatment of liability issues. In each case we provide our understanding of what it is that the Council proposes and then we provide our comments. While we welcome the report and agree with the need to accelerate the adoption of Carbon Capture and Storage (CCS) in Alberta, we think that these sections of the report require further clarification before the Council issues its final report. In particular, we think that the report needs to do a much better job of, identifying the problems and providing reasoned arguments for the solutions that it advances.

Continue reading →