Category: Energy Page 40 of 57

By: Heather Lilles

PDF Version: Upholding the Lexin Equipment Order – The AER Wins the Battle, But Most Likely Will Lose the War

Case Commented On: Interim Order and Order Re Equipment (ABQB), Alberta Energy Regulator (applicant) and Lexin Resources Ltd. (respondent), Court File Number 1701-02272 and Alberta Energy Regulator v Lexin Resources Ltd., 2017 ABQB 219 (CanLII)

Lexin Resources may only be a junior oil and gas company, but recent extensive coverage by local news agencies (see here for example) has caused the name of the small oil and gas producer to become as familiar as its larger counterparts, or – perhaps – as infamous as Redwater Energy Corporation. Redwater, another junior in the Canadian industry, became notorious last October when Chief Justice Neil Wittmann of the Court of Queen’s Bench allowed the Receiver of Redwater to disclaim unproductive oil and gas assets even where those assets were subject to abandonment orders from the Alberta Energy Regulator (AER). See the post of Professor Bankes on the Redwater decision here.

Like Redwater Energy, Lexin has been petitioned into bankruptcy under the Bankruptcy and Insolvency Act, RSC 1985, c B-3. In Lexin’s case, a Receiver was appointed on the application of the Alberta Energy Regulator – an unprecedented step for the Regulator. This post addresses two of the recent court actions involving Lexin Resources and the AER: the Interim Order Re Equipment which was issued by the Court of Queen’s Bench on February 14, 2017 (the “Interim Order”) and the recent decision in Alberta Energy Regulator v Lexin Resources Ltd., 2017 ABQB 219 (CanLII) (the “Lexin Decision”). This post does not directly discuss Lexin’s bankruptcy or what effect the Court of Appeal’s decision in Redwater (not yet released) could have on Lexin’s bankruptcy and its AER licensed assets.

Details of Alberta’s First Renewable Program Competition Announced: A Comment on the Dispute Resolution Procedure and Change of Law Provisions

By Nigel Bankes

On April 11, 2017

In Energy

By: Nigel Bankes

PDF Version: Details of Alberta’s First Renewable Program Competition Announced: A Comment on the Dispute Resolution Procedure and Change of Law Provisions

Documents commented on: (1) AESO, Request for Expressions of Interest for the first renewable electricity program procurement (REP Round 1), posted March 31, 2017, and (2) AESO, Key Provisions of the Renewable Electricity Support Agreement, March 31, 2017

The Government of Alberta released the framework for its plans to support the development of renewable energy projects in Alberta in November 2016 and provided the implementing authority for that program with the introduction and recent entry into force (March 31, 2017) of the Renewable Electricity Act, SA 2016, c R–16.5 (REA). The program adopted was based on a design proposed by the Alberta Electric System Operator (AESO) and the AESO has been charged with its implementation. For discussion of the AESO’s proposals and REA see my earlier post here.

This post briefly references the first Request for Expressions of Interest (REOI) and then discusses the dispute resolution provision of the Key Provisions of the Renewable Electricity Support Agreement (RESA).

The Alberta Energy Regulator Grants Rare Participation Rights to Three Indigenous Groups

By Amy Matychuk

On April 4, 2017

In Aboriginal, Energy

By: Amy Matychuk

PDF Version: The Alberta Energy Regulator Grants Rare Participation Rights to Three Indigenous Groups

Decision Commented On: The Alberta Energy Regulator decision on participation in the hearing of Prosper Petroleum Ltd.’s Rigel Project, March 16 2017

On March 16, 2017, the Alberta Energy Regulator (AER) held that three indigenous communities were directly and adversely affected by the Prosper Petroleum Rigel Oil Sands Project and granted these groups participation rights in the hearing on Prosper’s project application.

The AER has been publishing its participation and procedural decisions since September 2015. Since then, there have been 42 decisions dealing with claims by First Nations or Métis communities that they are directly and adversely affected by a proposed project. The AER has denied every claim until now. This decision only gives the three indigenous communities the right to participate in the hearing where the AER will decide whether to green light Prosper’s applications. It does not ensure that their lands or traditional activities will actually be protected, only that they will have the opportunity to explain how the project will affect them. However, given the pattern of decisions since 2015, this is a significant development.

The End of Economic Withholding in Alberta’s Electricity Market?

By Nigel Bankes

On March 30, 2017

In Energy

By: Nigel Bankes

PDF Version: The End of Economic Withholding in Alberta’s Electricity Market?

Matter Commented On: Market Surveillance Administrator, Notice to Participants and Stakeholders Re: Consultation re Revocation of Offer Behaviour Enforcement Guidelines, March 17, 2017

On March 17, 2017 Alberta’s Market Surveillance Administrator (MSA) issued a Notice to market participants in Alberta’s electricity market triggering a consultation with respect to the possible revocation of an important set of guidelines known as the Offer Behaviour Enforcement Guidelines (the OBEG Guidelines). These Guidelines provide guidance to market participants as to, inter alia, how they offer generation into Alberta’s wholesale power market (the power pool) with a view to ensuring a fair, efficient and openly competitive market (the FEOC principle). The OBEG Guidelines do not currently prohibit economic withholding. This Notice indicates that the MSA is reconsidering its position on this in light of a number of developments including the competition jurisprudence of the Alberta Utilities Commission (AUC) and proposals to supplement Alberta’s energy-only market with a capacity market. For an earlier post on the capacity market proposals see here.

Tolling Methodologies On Federally Regulated Pipelines In Northeast British Columbia

By Admin

On March 27, 2017

In Administrative Law, Energy, Oil & Gas

By: Nigel Bankes

PDF Version: Tolling Methodologies On Federally Regulated Pipelines In Northeast British Columbia

Matters Commented On: (1) National Energy Board (NEB), Letter decision on the Application of Westcoast Energy Inc for Review of the Decision of Members Ballem and Lytle, in Report GH-003-2015 (Towerbirch Report), Respecting the Toll Treatment of the Tower Lake Section (TLS), and (2) NEB letter to NOVA Gas Transmission Ltd (NGTL), Westcoast Energy Inc (Westcoast) and Alliance Pipeline Ltd (Alliance), re Examination to Determine Whether to Undertake an Inquiry of the Tolling Methodologies, Tariff Provisions and Competition in Northeast BC, 16 March 2017 (the Tolling Methodology Process Letter).

Northeast British Columbia is an area of expanding natural gas production due to a number of significant shale gas plays in the area including Horn River, Liard, and Montney.

Historically this area of the province was first served for conventional sour gas production by Westcoast Transmission. Westcoast offered producers a bundled service including sour gas processing as well as mainline transmission down to the lower mainland and on to serve markets in the Pacific Northwest. This entire system has long been federally regulated by the National Energy Board (NEB), a practice that was legally and constitutionally confirmed by the majority judgement of the Supreme Court of Canada in Westcoast Energy Inc. v. Canada (National Energy Board), [1998] 1 SCR 322, 1998 CanLII 813 (SCC). More recently the area has also come to be served by Alliance’s “bullet pipeline” and by extension of the NGTL system from Alberta into BC. The Alliance Pipeline is a point-to-point pipeline which transports liquids rich gas from this area and northwest Alberta to the Chicago market hub. Alliance came on stream in 2000. Its construction was backed by 15 year contracts. Few shippers elected to renew and “accordingly, Alliance developed its New Services Offering (NSO), which incorporated new services and tolling methodologies on the pipeline. Alliance applied for Board approval of the NSO in 2014.” The Board’s Reasons for Decision on that matter (RH-002-2014) are available here. The NGTL system is the old NOVA intraprovincial transmission system which began life in the 1950s under the name Alberta Gas Trunk Line (AGTL) and subsequently morphed into NOVA before merging with TransCanada PipeLines (TCPL) in 1998. Historically, AGTL and NOVA were provincially regulated until brought under federal regulation in 2009: see ABlawg post here. The AGTL\NOVA business model was quite different from that of Westcoast. NOVA focused its attention on the transmission system and left the producers to assume responsibility for owning and constructing in-field processing facilities to produce pipeline quality gas for delivery to the AGTL\NOVA system.

The result of these developments is that the natural gas transmission scene in northeast BC no longer looks like a natural monopoly, and has not for some long time. Instead, there is competition for natural gas production and competition to fill transmission systems with gas. No pipeline system feels this more acutely than the NGTL system and its sister, the TCPL mainline, which needs additional volumes of gas to make up for the declines in conventional gas production in the western Canadian Sedimentary Basin (WCSB).