Author: Nigel Bankes Page 86 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.

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

By Nigel Bankes

On November 7, 2008

In Carbon Capture and Storage, Climate Change

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.

When is a Non-Operator Entitled to a Constructive Trust over the Operator’s Own Assets?

By Nigel Bankes

On October 11, 2008

In Oil & Gas, Remedies

Cases Considered: Brookfield Bridge Lending Fund Inc. v. Vanquish Oil and Gas Corporation, 2008 ABQB 444

PDF Version: When is a non-operator entitled to a constructive trust over the operator’s own assets?

In this case Justice Bruce McDonald ruled that a joint operator may be entitled to a constructive trust remedy over the assets of an operator, where the operator is in receipt of production revenues attributable to the joint operator and where the operator fails to preserve an amount representing those monies in its commingled bank account. As a result, the joint operator was allowed to take priority over the interests of both secured and unsecured creditors.

When Does a “Participant” Earn Under the Terms of a Farmout and Participation Agreement?

By Nigel Bankes

On October 9, 2008

In Contracts, Oil & Gas

Case Considered: Solara Exploration Ltd v. Richmount Petroleum Ltd., 2008 ABQB 596

PDF Version: When does a “participant” earn under the terms of a farmout and participation agreement?

In this decision Justice Sheilah Martin concluded that a participant in a farmout and participation agreement did not earn an interest in the farmout property when it elected to go non-consent on an operation to frac a particular formation, even when that operation was proposed after the parties had already installed a well head, outlet valve and production tubing. However, Justice Martin went on to hold that the farmor was estopped from denying that the participant had earned in the circumstances of the particular case. The decision is an important one for several reasons. It is a first decision on the definition of “completion” in the 1990 CAPL operating procedure, but it also serves to draw attention to the vulnerability of a “participant” in a farmout and participation agreement, especially where the farmor (as here) is wearing multiple hats and serving as both farmor and as operator for the purposes of the test well to which the participant is contributing. The case also highlights some of the difficulties associated with borrowing definitions from other agreements.

Water management planning and the Crown’s duty to consult and accommodate

By Nigel Bankes

On October 8, 2008

In Aboriginal, Administrative Law, Constitutional, Water Law

Cases Considered: Tsuu T’ina First Nation v. Alberta, 2008 ABQB 547

PDF Version: Water management planning and the Crown’s duty to consult and accommodate

*Thanks to Christina Smith and Monique Passelac-Ross for comments on an earlier draft.

Alberta’s new Water Act (R.S.A. 2000, c. W-3) calls for the development of water management plans (Part 2(1) of the Act). Once adopted, a water management plan will guide decision-making within the area of the plan on a range of matters, including the issuance and transfer of water licences. Because of concerns that the waters in parts of the South Saskatchewan River Basin (SSRB) were already over-allocated, the Government put a priority on developing a plan for the SSRB. The first phase of the plan was approved in June 2002 and the second and final phase was approved by Cabinet in August 2006 (http://environment.alberta.ca/documents/SSRB_Plan_Phase2.pdf).

When Does a Royalty Owner not have to Pay for a Share of Processing Costs?

By Nigel Bankes

On August 14, 2008

In Natural Resources, Oil & Gas

Case Considered: 570495 Alberta Ltd. v. Hamilton Brothers Exploration Company, 2008 ABQB 413

PDF Version: When does a royalty owner not have to pay for a share of processing costs?

When does a royalty owner not have to pay for a share of processing costs? The answer of course should be that the royalty owner does not have to pay unless it is required to do so by the terms of the agreement that created the royalty. And that in fact is exactly what Justice Alan Macleod concludes in this judgement. Just as there is no rule of law that precludes an oil and gas lease from being kept in force beyond the end of its primary term by the mere existence of a shut-in well in “accordance with oil field practice” (see Kensington Energy Ltd v. B & G Energy Ltd 2008 ABCA 151 and my post on this decision), so too there is no rule of law that requires a royalty owner to pay a share of post-severance processing costs. This judgement confirms that processing costs are issues of contract between the parties and that the job of the court is to give effect to the terms of the agreement that the parties have negotiated.