Category Archives: Energy

The Implementing Regulation for Bill 12: The Liabilities Management Statutes Amendments Act, 2020

PDF Version: The Implementing Regulation for Bill 12: The Liabilities Management Statutes Amendments Act, 2020

Matter Commented On: Orphan Fund Delegated Administration Amendment Regulation, OC 174/2020

Bill 12, the Liabilities Management Statutes Amendments Act, 2020, amongst other things, authorized the delegation of additional responsibilities to the Orphan Well Association (OWA). I provided commentary on Bill 12 in a previous post here. The entry into force of Bill 12 is set for June 15, 2020, and this amendment to the Orphan Fund Delegated Administration Regulation, Alta Reg 45/2001 (Delegation Regulation), effective the same day, implements that incremental delegation and clarifies some additional issues.

This post draws attention to four elements of the amendment: (1) the definitions of “holder of the mineral rights” and of “person who has the right to win, work and recover a mineral”; (2) the limitation of liability provisions of the Delegation Regulation; (3) the applicability of the audit and inspection provisions of the Government Organization Act, RSA 2000 c G-10 (GOA); and (4) the enhanced authority of the OWA to enter into and expend funds pursuant to “agreements” with other parties. Continue reading →

Different Uses of Subsurface Storage Space: Natural Gas Storage or Compressed Air Energy Storage?

By: Nigel Bankes

PDF Version: Different Uses of Subsurface Storage Space: Natural Gas Storage or Compressed Air Energy Storage?

Decision commented on: OEB Decision and Order EB-2019-0287, Tribute Energy Storage Inc., Application for an order to revoke the designation of the natural gas storage areas known as the Bayfield Pool and the Stanley 4-7-XI Pool, in the County of Huron, April 9, 2020

This post focuses on an application by the project proponent and licensee (Tribute or TESI) to have the Ontario Energy Board (OEB) revoke an existing designation of a depleted gas reservoir as a natural gas storage area, with a view to potentially having the same reservoir re-licensed as a site for compressed air energy storage (CAES).

While the application to revoke the designation is the focus of this post, there are two other underlying themes. The first is the question about how we make decisions on the competing uses of underground (storage) space or pore space. I have commented on this issue before on ABlawg; the most recent post is here, with links to earlier posts. A second theme relates to the importance of establishing appropriate rules for energy (electricity) storage projects, whether these projects are battery projects, pumped hydro or, compressed air energy storage. These rules include not only the necessary tenure and licensing rules for the physical project, which is the focus here, but also, in some cases, the appropriate market rules. Should a storage project be treated as generation to the extent that it supplies energy? Should it be treated as load to the extent that it draws energy to pump water upstream or to inject compressed air? Should it be treated as transmission to the extent that it might avoid the need to reinforce transmission to an in isolated community? And how should storage be able to participate in the different ancillary markets? The appropriate characterization is important because characterization affects how the provider is compensated – either by market rules or cost of service.

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Considerations in the Design of a Royalty Regime for Helium

By: Nigel Bankes

PDF Version: Considerations in the Design of a Royalty Regime for Helium

Matters commented on: Press Release, “New royalty rate responds to soaring helium interest” Minister of Energy, May 13, 2020; Department of Energy, Information Letter IL 2020-22 , Helium Royalty Rate, May 13, 2020; Natural Gas Royalty Regulation, 2009 (AR 221/2008) as amended by OC 154/2020; and Natural Gas Royalty Regulation, 2017 (AR 211/2016) as amended by OC 155/ 2020.

On May 13, 2020 Minister Sonya Savage announced the establishment of a new royalty rate for helium produced from Crown lands. The new rate (5% minus a 0.75% helium royalty adjustment factor, for an effective rate of 4.25%) replaces a zero royalty rate for helium production. The press release suggests that the proposed royalty structure “helps set the stage for investment” by providing some certainty while “ensuring a fair price for Albertans.” (This is misleading. The market will set the price not the royalty.) The press release goes on to indicate that, “[t]his effective royalty rate is set for an initial period of five years. At that time, the rate will be reviewed to ensure it remains competitive and allows for any necessary adjustments.” The accompanying Information Letter issued by the Department (IL 2020-22) suggests that the review is to be limited to the appropriateness of the 0.75% adjustment factor, not the entire rate.

The new royalty is implemented by amendments to the Natural Gas Royalty Regulations of 2009 and 2017 (each applies to different ‘vintages’ of production) and made retroactive to April 1, 2020. (Prior to these amendments there was a requirement (see IL 2018-25, now revoked), that “operators producing and selling helium must report monthly helium production volumes and monthly average selling prices ….”) The new royalty will only apply to helium produced from lands where the mines and minerals are vested in the Crown. If helium is produced, saved and sold from private mineral lands, the applicable royalty will be established by the terms of the lease between the owner of the mines and minerals and the working interest owners. Continue reading →

AER Refuses Transfer of Foothills Sour Gas Approvals from Shell Canada to Pieridae Energy

By: Shaun Fluker and Nigel Bankes

PDF Version: AER Refuses Transfer of Foothills Sour Gas Approvals from Shell Canada to Pieridae Energy

Decision Commented On: Alberta Energy Regulator Decision, Shell Canada Limited Transfer of Ownership Including the Waterton Sour Gas Plant EPEA Application No 021-258 and Jumping Pound Sour Gas Plant EPEA Application No. 015-11587, May 13, 2020

On May 13, the Alberta Energy Regulator (AER) denied an application by Shell Canada to transfer regulatory approvals with respect to its foothills sour gas assets (facilities, wells, pipelines, and related infrastructure) to Pieridae Energy. The subject approvals are issued under a host of energy and environmental legislation, including the Environmental Protection and Enhancement Act, RSA 2000, c E-12 (EPEA). This post comments on the rationale given by the AER for this decision.

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COVID-19 and the Suspension of Environmental Monitoring in the Oil Sands

By: Shaun Fluker

PDF Version: COVID-19 and the Suspension of Environmental Monitoring in the Oil Sands

Decisions Commented On: Alberta Energy Regulator Decisions 20200505A, 20200501C, 20200501B, and 20200501A

Last week the Alberta Energy Regulator (AER) issued decisions 20200429D (subsequently replaced with 20200505A), 20200501C, 20200501B, and 20200501A, which suspend environmental monitoring requirements associated with oil sands mines operated by Canadian Natural Resources Limited, Suncor Energy, Fort Hills Energy Corporation, Syncrude Canada, and Imperial Oil Resources Limited. These decisions relieve the named operators from environmental monitoring on matters such as groundwater, surface water, sulphur emissions, wildlife, and wetlands. The suspension is in place until further notice. Similar to Order 17/2020 issued by the Minister of Environment and Parks under section 52.1 of the Public Health Act, RSA 2000, c P-37, which suspended routine environmental reporting by industry, these AER decisions were made in response to COVID-19 but offer little justification for granting such extraordinary relief from regulatory requirements.

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