Category Archives: Energy

The Sequoia Bankruptcy Part 1: The Motion to Strike and the Interveners

PDF Version: The Sequoia Bankruptcy Part 1: The Motion to Strike and the Interveners

Cases Commented on: PricewaterhouseCoopers Inc v Perpetual Energy Inc, 2020 ABQB 6 (CanLII) and PricewaterhouseCoopers Inc v Perpetual Energy Inc, 2020 ABCA 417 (CanLII)

The Orphan Well Association (OWA) was back in court on December 10, 2020 for the appeal of PricewaterhouseCoopers Inc v Perpetual Energy Inc, 2020 ABQB 6 (CanLII). The OWA is concerned about the interpretation of the Supreme Court’s decision in Orphan Well Association v Grant Thornton Ltd, 2019 SCC 5 (CanLII) (Redwater), and specifically whether the finding that abandonment and reclamation obligations (ARO) are not “provable claims” in bankruptcy implies that ARO are not “liabilities” for the purposes of determining the financial situation of a corporation and hence whether a corporation is solvent.

The Redwater decision concluded that a trustee for a bankrupt oil and gas company had to use the bankrupt estate’s assets to pay for the ARO of non-producing wells, and could not “disclaim” them. Redwater started as a bankruptcy case under the name Redwater Energy Corporation (Re), 2016 ABQB 278 (CanLII). (I recommend Nigel Bankes’ earlier posts on the Queen’s Bench decision and the Court of Appeal decision in Redwater, and Jassmine Girgis’s post on the Supreme Court decision for a complete background.)

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“Textbook Climate Denialism”: A Submission to the Public Inquiry into Anti-Alberta Energy Campaigns

By: Martin Olszynski

PDF Version: “Textbook Climate Denialism”: A Submission to the Public Inquiry into Anti-Alberta Energy Campaigns

Matter Commented On: Public Inquiry into Anti-Alberta Energy Campaigns

After two deadline extensions and an additional $1 million dollars, Premier Jason Kenney’s Public Inquiry into Anti-Alberta Energy Campaigns is entering its final stretch (for previous ABlawg posts, see here, here, here, and here). Back in October of 2020, I decided to seek, and was granted, standing to participate in the Inquiry. As has been my practice in such matters, what follows is my submission, dated December 15, 2020, modified only for formatting purposes. Links to reports provided to me by the Commissioner are to the Inquiry’s website, which has recently been updated.

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Water for Coal Developments: Where Will It Come From?

By: Nigel Bankes and Cheryl Bradley

PDF Version: Water for Coal Developments: Where Will It Come From?

Matters Commented On: A Coal Development Policy for Alberta (1976, rescinded June 1, 2020); Oldman River Basin Water Allocation Order, Alta Reg 319/2003

The Government of Alberta (GoA) is hell-bent on facilitating the development of new coal mines in the Province. To that end, it purported to rescind the long-standing Coal Development Policy (CDP) of 1976 effective June 1, 2020. The CDP prevented development of coal resources in Category I lands on the eastern slopes of the Rockies and only permitted the development of new underground mines (rather than open-pit mines) in Category II lands (see Figure 1, below, also available here).

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A Legal Regime for the Development of Geothermal Resources in Alberta

By: Nigel Bankes

PDF Version: A Legal Regime for the Development of Geothermal Resources in Alberta

Bill Commented On: Bill 36, Geothermal Resources Development Act, 2nd Sess, 30th Leg, Alberta, 2020 (first reading 20 October 2020)

The recognition of a “new” resource, whether that be the use of pore space for sequestering carbon dioxide or in this case the exploitation of geothermal energy (for a primer on geothermal energy see David Roberts, “Geothermal Energy Poised for a Big Breakout” Vox (21 October 2020)), often requires the creation of new legal and regulatory instruments (or adaptation of existing ones) to provide legal certainty for investors and to protect the public interest. Although the issues may vary for different “new” resources, such instruments will typically need to address the following types of questions: (1) who owns the resource in question and how may a developer acquire rights to the resource?; (2) what regulatory regime needs to be put in place to protect the public interest, including the environment? and; (3) what liability regime should we put in place to provide compensation in the event that third parties suffer harm and to ensure fulfillment of reclamation and abandonment obligations?

With the introduction of Bill 36, the Government of Alberta proposes to put in place a legal regime that will address these questions. In large part, the Bill addresses the second and third issues by drawing extensively on the Oil and Gas Conservation Act, RSA 2000 c O-6 as a model. I will not say much about that model in this post, but one well-known flaw of this model is that it has proven to be far too permissive. What I mean by permissive is that the model gives the Alberta Energy Regulator (AER) the power to make a lot of rules (e.g. rules for suspension and timely abandonment of wells) but it does not actually require that such rules be put in place. As a result, those rules may never be promulgated and the public interest not fully protected. See “Bill 12: A Small Step Forward in Managing Orphan Liabilities in Alberta”.

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Another Manitoba Oil and Gas Lease Termination Decision

By: Nigel Bankes

PDF Version: Another Manitoba Oil and Gas Lease Termination Decision

Case Commented On: Fire Sky Energy Inc. v EverGro Energy Corporation, 2020 MBQB 133 (CanLII)

I am not sure what’s going on downstream of us these days, but we now have a third oil and gas lease termination case this year from “Friendly Manitoba.” I posted on the two earlier decisions here in April.

This one is fairly straightforward. EverGro held under a CAPL 88 MAN lease form with a three-year primary term commencing January 22, 2013 and filed a caveat to protect its interest. Fire Sky top leased the property on February 9, 2017 having formed the view that EverGro’s lease had expired.

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