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Category: Oil & Gas Page 19 of 54

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

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On November 15, 2017

In Bankruptcy and Insolvency, Oil & Gas

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).

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

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On November 2, 2017

In Oil & Gas, Property

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.

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

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On October 5, 2017

In Bankruptcy and Insolvency, Environmental, Oil & Gas

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.

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

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On October 3, 2017

In Aboriginal, Oil & Gas

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.

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GRTAs, Patch Agreements, Indefeasible Title and Collapse Orders

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On September 29, 2017

In Oil & Gas, Property

By: Nigel Bankes

PDF Version: GRTAs, Patch Agreements, Indefeasible Title and Collapse Orders

Case Commented On: Chesterworld Holdings Ltd v Computershare Trust Company of Canada, 2017 ABQB 43 (CanLII)

This decision involves the interpretation of a will from 1949 as well as the validity of a gross royalty trust agreement (GRTA) and a subsequent patch agreement. Justice Park concluded that the patch agreement was incapable of saving the GRTA because it was executed by the incorrect parties (or by the correct parties but not in their correct capacity). The case may call into question the efficacy of other patch agreements that were intended to revive or extend GRTAs affected by the decision in Guaranty Trust Co. of Canada v Hetherington, 1989 ABCA 113 (CanLII).

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