Category Archives: Oil & Gas

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

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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

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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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Governance and Accountability: Preconditions for Committing Public Funds to Orphan Wells and Facilities and Inactive Wells

By: Nigel Bankes, Shaun Fluker, Martin Olszynski and Drew Yewchuk

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Announcement commented on: Department of Finance Canada, Canada’s COVID-19 Economic Response Plan: New Support to Protect Canadian Jobs, April 17, 2020

As any resident of this province knows, the Alberta oil and gas sector’s problem of underfunded environmental liabilities has been growing for decades. On April 17, 2020, in response to the impact of both the COVID-19 pandemic and the Saudi/Russian price war, the federal government announced an injection of $1.7 billion of public funds to support the ‘clean up’ of inactive and orphan wells in Saskatchewan, Alberta and British Columbia. With respect to Alberta, $200 million will go to the Orphan Well Association as a loan to deal with orphan wells (i.e. wells that have no owner) while $1 billion will go to the Government of Alberta to deal with inactive wells (i.e. wells that are not producing but have not been properly closed and remediated).

The first part of this post examines the background to the Orphan Well Association and how it has moved from being an industry funded organization to the recipient of significant public funds. We suggest that this change in the source of funding is likely permanent and thus demands a complete rewrite of the governance structure for orphan wells in the interests of transparency and accountability. The second part of this post offers comments on the proposed program for inactive wells. This part of the post is shorter and more speculative because the announcement is remarkably vague and lacking in important details on this part of the program. Continue reading →

Two Manitoba Oil and Gas Lease Termination Cases

By: Nigel Bankes

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Cases Commented On: Corex Resources Ltd. et al. v 2928419 Manitoba Ltd., 2020 MBQB 47 (CanLII) and 6660894 Canada Ltd. v 57110 Manitoba Ltd., 2020 MBQB 50 (CanLII)

Two Manitoba oil and gas lease termination cases; two days apart – March 10, 2020 and March 12, 2020; same judicial district (Brandon); same outcome (leases terminated); but different judges and significantly different analytical and doctrinal approaches. The Corex decision is grounded in the specialized body of case law which recognizes that oil and gas leases can terminate automatically in accordance with their terms. The 6660 decision takes a contractual approach and frames the case in terms of fundamental breach and repudiation. While both decisions get to the same point (the lease in each case had terminated), the reasoning in Corex is far more consistent with the relevant authorities. Continue reading →

Alberta Court of Appeal Opines That Federal Carbon Pricing Legislation Unconstitutional

By: Martin Olszynski, Nigel Bankes and Andrew Leach

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Decision Commented On: Reference re Greenhouse Gas Pollution Pricing Act, 2020 ABCA 74

Last month, the Alberta Court of Appeal released its decision in Reference re Greenhouse Gas Pollution Pricing Act, 2020 ABCA 74, Alberta’s challenge to the constitutionality of the federal government’s Greenhouse Gas Pollution Pricing Act, SC 2018, c 12 (GGPPA). Writing for a majority of three judges, Chief Justice Catherine Fraser concluded that the GGPPAcould not be upheld on the basis of Parliament’s residual power over matters of “peace, order, and good government” (POGG), nor any other potentially relevant federal head of power. Concurring in the result but not the analysis, Justice Wakeling also held that the GGPPA was unconstitutional. Justice Feehan, dissenting, would have upheld the law on the basis of POGG, and the “national concern” branch of that power in particular. The Alberta Court of Appeal’s decision thus stands in contrast to the earlier decisions of the Courts of Appeal of both Saskatchewan (Reference re Greenhouse Gas Pollution Pricing Act 2019 SKCA 40) (Saskatchewan Reference) and Ontario (Reference re Greenhouse Gas Pollution Pricing Act, 2019 ONCA 544) (Ontario Reference), where a majority of judges in each court upheld the law as a valid exercise of the national concern branch of the POGG power. Continue reading →