Author: Nigel Bankes Page 88 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.

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.

The Independent Operation Of The Shut-in Clause Of An Oil And Gas Lease

By Nigel Bankes

On May 10, 2008

In Natural Resources, Oil & Gas

Cases Considered: Kensington Energy Ltd v. B & G Energy Ltd 2008 ABCA 151

PDF Version: The Independent Operation Of The Shut-in Clause Of An Oil And Gas Lease

In this important decision (hereafter “Kensington”) the majority of the Alberta Court of Appeal (Hunt and Slatter JJA; Romaine JA dissenting) concluded that the third proviso to the habendum of an oil and gas lease does not establish a set of conditions precedent that the lessee must fulfill before it can rely upon the shut-in wells clause and shut-in well payment to deem production, thereby continuing the lease – at least, and this is an important caveat – where the language of the shut-in wells clause does not track that of the third proviso. In reaching this conclusion the Court effectively distinguished its earlier decision in Freyberg v. Fletcher Challenge Oil and Gas Inc, 2005 ABCA 46 (“Lady Freyberg”).

The relationship between the well licence jurisdiction of the Energy Resources Conservation Board and the jurisdiction of the Surface Rights Board

By Nigel Bankes

On May 9, 2008

In Natural Resources, Oil & Gas

Cases Considered: EnCana Corporation v. Campbell, [2008] ABQB 234

PDF Version: The relationship between the well licence jurisdiction of the Energy Resources Conservation Board and the jurisdiction of the Surface Rights Board

Justice Crighton’s decision in EnCana v. Campbell suggests that land owners may be able to use the Surface Rights Board (SRB) to require an oil and gas operator to follow more stringent conditions in relation to surface access and related matters such as weed control and water quality protection and testing than may be prescribed in the terms of a well licence or the Energy Resources Conservation Board (ERCB)’s Oil and Gas Conservation Regulations. Given the potential surface impacts of coal bed methane (CBM) development in the province and the uncertainties associated with the effect of CBM operations on ground water quality this is an important development. But while it offers additional protection for surface owners it also has the potential for a patchwork of environmental requirements etc. which may vary from property to property. This may well be a case where the re-born ERCB needs to be more proactive and precautionary so as to reflect the concerns of and uncertainties faced by landowners especially with respect to such an important matter as water quality.

The Federal Government’s Climate Change Policy and the Role of Carbon Capture and Storage

By Nigel Bankes

On March 24, 2008

In Carbon Capture and Storage, Climate Change, Natural Resources

PDF Version: The Federal Government’s Climate Change Policy and the Role of Carbon Capture and Storage

In April 2007 the federal government introduced a new greenhouse gas policy, Regulatory Framework for Air Emissions. On March 10, 2008, it tabled a series of additional documents: (1) Taking Action to Fight Climate Change, (2) Regulatory Framework for Industrial Greenhouse Gas Emissions, (3) Canada’s Offset System for Greenhouse Gases, (4) Canada’s Credit for Early Action Program, and (5) Detailed Emissions and Economic Modelling (all available here). These documents provide further guidance and detail on the implementation of the April 2007 proposals. Further details will be provided when the promised regulations appear in draft form but that will not happen before the fall of 2008.

Calculating the Price of Gas: Wet or Dry?

By Nigel Bankes

On February 20, 2008

In Natural Resources, Oil & Gas

Cases Considered: Cargill Gas Marketing Ltd. v. Alberta Northeast Gas Limited, 2008 ABQB 59

PDF Version: Calculating the Price of Gas: Wet or Dry?

When gas is sold on the basis of its thermal or heating value it is necessary to provide a formula for converting delivered volumes (Mcf) into British thermal units or equivalent. And it makes a difference whether the formula uses an assumption of wet gas or dry gas. Wet gas will have a lower heating content than dry. But what happens if the formula prescribes the use of wet gas but in fact actual deliveries under the contract have always been dry gas? This was the issue before Justice T.F. McMahon in the present case.

Author: Nigel Bankes Page 88 of 89

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

The Independent Operation Of The Shut-in Clause Of An Oil And Gas Lease

The relationship between the well licence jurisdiction of the Energy Resources Conservation Board and the jurisdiction of the Surface Rights Board

The Federal Government’s Climate Change Policy and the Role of Carbon Capture and Storage

Calculating the Price of Gas: Wet or Dry?