Category Archives: Oil & Gas

Precision Drilling Canada Limited Partnership v Yangarra Resources Ltd, 2017 ABCA 378: Fraud and Limitation of Liability Clauses

By: Jassmine Girgis

PDF Version: Precision Drilling Canada Limited Partnership v Yangarra Resources Ltd, 2017 ABCA 378: Fraud and Limitation of Liability Clauses

Case Commented On: Precision Drilling Canada Limited Partnership v Yangarra Resources Ltd, 2017 ABCA 378 (CanLII)

Introduction

This is a case about the legal test for civil fraud and whether a limitation of liability clause in a contract can and should exclude liability for fraud. The Alberta Court of Appeal allowed the appeal of the summary judgment and sent it to trial (see earlier Ablawg posts about lower court decisions here and here).

A court can only find fraud after weighing the evidence and applying the proper legal test. Assuming there is fraud, the court will then have to determine whether a proper interpretation of the exclusion of liability clause excludes fraud. If so, can a party that has engaged in fraud be allowed the benefit of the clause? In my opinion, it cannot, as doing so would be contrary to public policy and it would breach the duties of honest performance and good faith articulated by the Supreme Court in Bhasin v Hrynew, 2014 SCC 71 (CanLII). Continue reading →

Orphan Well Association v Grant Thornton Limited: What’s at Stake in Redwater

By: Fenner L. Stewart

PDF Version: Orphan Well Association v Grant Thornton Limited: What’s at Stake in Redwater

Case Commented On: Orphan Well Association v Grant Thornton Limited, 2017 ABCA 124 (CanLII) (leave granted)

I. Introduction

This week, the Supreme Court of Canada (SCC) granted leave to the Alberta Energy Regulator (AER) to hear its appeal of Orphan Well Association v Grant Thornton Limited (Redwater) (for more on the Redwater decision, see Nigel Bankes’ post). The Court of Appeal’s decision in Redwater has punched a hole in the AER’s program for ensuring that licencees of oil and gas wells have the capital necessary to satisfy their reclamation and abandonment obligations. The ruling effectively allows trustees in bankruptcy to disclaim worthless assets (e.g., non-producing wells where the abandonment process is not yet complete), while selling valuable assets (e.g., producing wells). Redwater grants secured creditors the best chance possible to be compensated from the bankrupt’s assets, while guaranteeing that Alberta’s oil and gas industry (and potentially taxpayers) pay the cost for the bankrupt’s reclamation and abandonment obligations. As things stand today, if Redwater is not reversed, even more wells will be orphaned, adding to the already alarming number on the books of the Orphan Well Association (OWA). Continue reading →

Lease Terminates by Reason of Wells Shut-in for Producing in Excess of the Prescribed Gas to Oil Ratio

By: Nigel Bankes

PDF Version: Lease Terminates by Reason of Wells Shut-in for Producing in Excess of the Prescribed Gas to Oil Ratio

Case Commented On: Canadian Natural Resources Limited v Rife Resources Ltd., 2017 SKQB 307 (CanLII)

Canadian Natural Resources Limited (CNRL) held a petroleum and natural gas lease for section 26 from Rife and Canpar. Continue reading →

Green Regs and Ham: Some Thoughts on Contaminated Sites, the Redwater Decision and the Principle of Intergenerational Equity

By: Nigel Bankes

PDF Version: Green Regs and Ham: Some Thoughts on Contaminated Sites, the Redwater Decision and the Principle of Intergenerational Equity

Note: This post is a revised version of remarks presented at the Fifth Green Regs and Ham Breakfast convened by the Environmental Law Centre, Edmonton on October 3, 2017. The session was entitled “Municipal Environmental Jurisdiction: Contaminated sites and hockey fights” but my remarks principally addressed liability for abandonment and reclamation of oil and gas wells and facilities.

Good morning. I acknowledge that we meet on the traditional territory of Treaty 7 First Nations, the Blackfoot, Tsuu T’ina, and Stoney First Nations. It is particularly important to acknowledge that connection given that we are talking today about our stewardship and custodial responsibilities for the land (and perhaps more specifically our failings).

There are three parts to the presentation: first, I will offer some remarks on the Court of Appeal’s decision in Redwater; second, some comments on a recent paper from the CD Howe Institute dealing with oil wells (see, Benjamin Dachis, Blake Shaffer and Vincent Thivierge, “All’s Well that Ends Well: Addressing End-of-Life Liabilities for Oil and Gas Wells”) and third, I will conclude with some more philosophical observations on the importance of the principle of intergenerational equity. Continue reading →

The Intersection of Discretionary Powers, Fiduciary Duties, the Public Interest and the Standard of Review

By: Nigel Bankes

PDF Version: The Intersection of Discretionary Powers, Fiduciary Duties, the Public Interest and the Standard of Review

Case Commented On: Coldwater Indian Band v Canada (Aboriginal Affairs and Northern Development), 2017 FCA 199 (CanLII)

In this decision, the Federal Court of Appeal, by a majority (per Justice Eleanor Dawson, Justice Donald Rennie concurring; Justice Wyman Webb, dissenting), concluded that the Minister of Indian Affairs and Northern Development breached the fiduciary duty he owed to the Coldwater Indian Band when he approved the assignment of a pipeline right of way easement of 1955 from one affiliate of Kinder Morgan Canada Inc to another affiliate without taking steps to improve the terms of the bargain or at least to ensure that the Crown had been vigilant in its continuing fiduciary obligation to preserve and protect the Band’s interest in the reserve land from an exploitive or improvident bargain. Since the matter came before the Court as an application for judicial review, the Court set aside the Minister’s decision and returned the matter to the Minister for redetermination in accordance with the Court’s reasons. An earlier application by the Band to prevent the Minister from granting approval to the assignment had been dismissed by the Federal Court on the basis that that the application was premature; see the decision in Coldwater Indian Band v Canada (Indian Affairs and Northern Development), 2014 FCA 277 (CanLII). For my earlier post on those proceedings see here. Continue reading →