Category Archives: Natural Resources

The sky is falling, let’s blame the royalty review

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I have lived in Alberta and this city for nearly thirty years. During the fall of 2007 I thought that we had the best public policy debate that I have ever seen in this province. The subject of that debate was the province’s royalty review.

I think that it was a good debate because it was a well informed debate on a crucial public policy issue. It was a well informed debate because the province, for the first time in its history, struck a public review which articulated a set of principles that should govern royalty design. Prior to that, royalty reviews were essentially private affairs between government and industry.

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Adjudicating on waterflood enhanced recovery schemes: is it time for compulsory unitization in Alberta?

Cases Considered: Hunt Oil Company of Canada Inc: Applications to amend enhanced recovery scheme approval No. 10848 and Pool Delineation Kleskun and Puskwaskau Fields, December 23, 2008, ERCB Decision 2008-130, December 23, 2008.

PDF Version:  Adjudicating on waterflood enhanced recovery schemes: is it time for compulsory unitization in Alberta?

Hunt and Galleon (and perhaps others) have interests in the same small oil pool and indeed a series of oil pools that are all “in communication” by virtue of a common aquifer. But evidently they cannot agree on how best to develop the pool, or perhaps they cannot agree on how to share the costs and benefits of joint development including the allocation of resulting production. As a result, each of them operates separate waterflood schemes in the same pool. Each such enhanced oil recovery (EOR) scheme needs to be approved by the ERCB under s.39(1)(a) of the Oil and Gas Conservation Act (OGCA), R.S.A. 2000, c. O-6.

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Terminating a Long Term Gas Sales Contract on Account of a Material Adverse Change: The Continuing Fallout from the Collapse of the Enron Empire

Cases Considered: Marathon Canada Ltd v. Enron Canada Ltd, 2008 ABQB 408;
Marathon Canada Ltd v. Enron Canada Ltd, 2009 ABCA 31.

PDF Version: Terminating a long term gas sales contract on account of a material adverse change: the continuing fallout from the collapse of the Enron Empire

The Court of Appeal, in a memorandum of judgement authored by Justices Ellen Picard, Peter Costigan and Jack Watson, has affirmed the decision at trial of Justice Terence McMahon of the Alberta Court of Queen’s Bench. Justice McMahon held that Marathon Canada had lawfully terminated a natural gas purchase contract with Enron Canada. Marathon chose to terminate when Enron Canada’s US parent (Enron Corp) fell into serious financial difficulties. Both courts also held that: (1) Marathon was entitled to recover $560,000 damages for natural gas that it had delivered prior to contract termination, but that, (2) Enron Canada was not entitled to recover liquidated damages of some $126 million based on a counter-claim of wrongful termination and the estimated\guesstimated present value of Marathon’s future deliveries at the contract price.

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Obtaining leave to appeal an ERCB decision: Where is the justice?

Cases Considered: Bearspaw Petroleum Ltd. v. Alberta Energy and Utilities Board, 2008 ABCA 405;
Bearspaw Petroleum Ltd. v. Alberta Energy and Utilities Board, 2009 ABCA 3.

PDF Version: Obtaining leave to appeal an ERCB decision: Where is the justice?

Section 41 of the Energy Resources Conservation Act, R.S.A. 2000 c. E-10 provides for an appeal from a decision of the Energy Resources Conservation Board (ERCB) on questions of law or jurisdiction with leave of the Court of Appeal. The test for leave includes a consideration of four factors: (1) whether the point on appeal is of significance to the practice; (2) whether the point raised is of significance to the action itself; (3) whether the appeal is prima facie meritorious; and (4) whether the appeal will unduly hinder the progress of the action. Bearspaw Petroleum Ltd. v. Alberta Energy and Utilities Board is one of many recent leave to appeal decisions from the Court (See for example “Landowners, Procedural Fairness and Alberta’s Energy Resources Conservation Board” ). What strikes me about this decision is how it compares to the Court’s decision to deny leave to appeal in Sawyer v. Alberta Energy and Utilities Board, 2007 ABCA 297 (see “Standing against public participation at the Alberta Energy and Utilities Board”).

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An Important Development in the Kelly Appeal

Cases Considered: Kelly v. Alberta (Energy and Utilities Board), 2008 ABCA 410

PDF Version:  An Important Development in the Kelly Appeal

Last March I posted a blog about a Court of Appeal decision which granted a group of landowners (Kelly et al.) leave to appeal a decision of Alberta’s Energy and Utilities Board (now the Energy Resources Conservation Board). See “What does the Canadian Charter of Rights and Freedoms have to do with Oil and Gas Development in Alberta?”. The grounds for leave in the Kelly appeal indicated that the Court of Appeal might have to address novel and difficult questions in relation to the possible application of section 7 of the Charter in the context of oil and gas development in Alberta. A recent development in the case, however, leaves me wondering whether the merits of the appeal will ultimately be heard or not.

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