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 ERCB asserts its jurisdiction to determine the validity of an oil and gas lease

Cases Considered: In re Desoto Resources, Joffre Field, ERCB Decision 2008-47

PDF Version:   The ERCB asserts its jurisdiction to determine the validity of an oil and gas lease

In an unusual decision the ERCB has asserted its jurisdiction to determine the validity of an oil and gas lease. While the Board has in recent years been forced to make rulings on complex questions of property law such as the competing rights of coal owners and natural gas owners to coal bed methane (In re Bearspaw Petroleum, EUB Decision 2007-24) as well as the competing interests of bitumen producers and natural gas producers (Alberta Energy Company Ltd. v. Goodwell Petroleum Corporation Ltd., 2003 ABCA 277, reviewing EUB Decision 2000-21) this is, so far as I am aware, the first reasoned decision of the Board in which it has passed on the validity of an oil and gas lease. Desoto’s application in the Court of Queen’s Bench for a declaration as to the validity of the leases was pending at the time of the Board’s decision.

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What Happens when Parties Operate an Oil Battery Without a Formal Agreement?

Cases Considered: Husky Oil Operations Limited v. Gulf Canada Resources Limited 2008 ABQB 390

PDF Version: What happens when parties operate an oil battery without a formal agreement?

Husky Oil has complicated facts, some complex law (unjust enrichment, fiduciary obligation, rectification) and a confusing judgment, but surely only one possible result. Indeed, we wonder why it ever went to court at all.

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What Happens When the Deep Rights You Just Purchased are being Drained by the Vendor’s Shallow Rights Well?

Cases Considered: Nexxtep Resources Ltd. v. Talisman Energy Inc et al, 2007 ABQB 788; aff’d 2008 ABCA 246

PDF Version: What happens when the deep rights you just purchased are being drained by the vendor’s shallow rights well?

What happens when a purchaser obtains the deep rights under certain oil and gas leases (along with a producing horizontal well) and the parties exclude another vertical well on the basis that it is producing from the shallow rights retained by the vendor and later the purchaser forms the view that the well is producing from the deep rights and not the shallow rights? That is the issue on the merits in Nexxtep – barring disagreements as to just where the vertical well was producing from. At present the case is reported only on certain preliminary matters, Nexxtep’s request for an injunction and Talisman’s request for summary judgment.

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The Legal Implications of Failing to Continue a Crown Oil and Gas Lease: The Duty of the Operator to its Joint Operators and to the Holder of a Royalty Interest

Cases Considered: Adeco Exploration Company Ltd. v. Hunt Oil Company of Canada Inc. 2008 ABCA 214, varying unreported oral reasons for judgement of May 3, 2007.

PDF Version: The legal implications of failing to continue a Crown oil and gas lease: the duty of the operator to its joint operators and to the holder of a royalty interest

One of the most important events in the life of a Crown oil and gas lease or licence in Alberta is the point of continuation at the end of the primary term (a lease) or at the end of the intermediate term (a licence). It is important because a lease or licence lapses at the end of its primary or intermediate term except to the extent that it is continued (Mines and Minerals Act, R.S.A. 2000, c. M-17, s.82(1)). And when a lease lapses as to some or all of the leased area so too will any royalty interests with respect to that area of the lease.

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Royalty Changes in Alberta: Why are we waiting? (to the tune of “O Come All ye Faithful”)

PDF Version: Royalty Changes in Alberta: Why are we waiting? (to the tune of “O Come All ye Faithful”)

One of the most damning indictments contained in the Report of the Royalty Review Panel in the fall of last year was the revelation that the current royalty regime for conventional oil and gas loses any sensitivity to increased prices at extraordinarily low levels. The Government itself acknowledged this deficiency in its own proposal for a new Royalty Framework where it states that sensitivity is lost for oil at about $30 per barrel and for natural gas at about $3.70/GJ.

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