Category Archives: Oil & Gas

The Effect of Well Abandonment and Reclamation Obligations for the Valuation of Matrimonial Property

By: Nigel Bankes

PDF Version: The Effect of Well Abandonment and Reclamation Obligations for the Valuation of Matrimonial Property

Case Commented On: Walker v Walker, 2017 SKQB 195 (CanLII)

Judicial decisions on the legal nature of abandonment and reclamation obligations may arise in the strangest of ways. Take this matrimonial property case, for example, in which Mr. Walker (Darcy) was seeking to argue that his assets should be discounted on the basis that a small oil and gas company (Outback) that he controlled had net abandonment and reclamation liabilities. Part of the challenge that he faced in making this argument was of course that the liabilities in question were the liabilities of the corporation. While a director or controlling mind of a corporation might ordinarily take some comfort from this state of affairs, in this case counsel for Darcy tried to suggest that his client would inevitably face personal liability under the terms of Saskatchewan’s The Environmental Management and Protection Act, 2010, SS 2010, c E-10.22 [EMPA] and The Oil and Gas Conservation Act, RSS 1978, c O-2 [OGCA] and s 59 of The Oil and Gas Conservation Regulations, 2012, RRS c O-2 Reg 6 [OGCR]. Actually the argument was even stranger insofar as Mrs. Walker (Becky) was also a director of the company (Outback) and thus might face the same liability should Darcy be correct. Continue reading →

Court of Appeal Confirms that Summary Judgement Not Available in a Factually Complex Oil and Gas Case

By: Nigel Bankes

PDF Version: Court of Appeal Confirms that Summary Judgement Not Available in a Factually Complex Oil and Gas Case

Case Commented On: Talisman Energy Inc v Questerre Energy Corporation, 2017 ABCA 218 (CanLII)

The Court of Appeal has concluded that summary judgement will not be available for monies owing based upon the liquidated demand clause in the 1990 CAPL Operating Agreement where the matter involves the existence of an alleged additional or collateral agreement that, if proven, may vary the terms or application of the Operating Agreement on which the claim depends. Continue reading →

Recommendations on Implementing the Oil Sands Emission Limit

By: Nigel Bankes

PDF Version: Recommendations on Implementing the Oil Sands Emission Limit

Report Commented On: Oil Sands Advisory Group (OSAG), Recommendations on Implementation of the Oil Sands Emissions Limit Established by the Alberta Climate Leadership Plan, dated May 8, 2017, released to the public June 16, 2017 with related news release

One of the planks of Alberta’s Climate Leadership Plan (CLP) is the adoption of a 100 Megatonne (Mt) cap on greenhouse gas emissions for the oil sands sector. The government introduced and passed the Oil Sands Emissions Limit Act, SA 2016 c. O-7.5 (OSELA) to give effect to this commitment. I commented on the Act as it was introduced as Bill 25 here. While OSELA provides the necessary legal authorization for the cap, many of the details still need to be worked out and then implemented through the regulation-making power in s 3 of OSELA (and see in particular s 3(h)). Recognizing the need for advice on this set of issues Minister Phillips established the Oil Sands Advisory Group (OSAG) in July 2016. The terms of reference are available here along with two mandate letters from Premier Notley here and here. Continue reading →

Preliminary Skirmishing in Ongoing Compulsory Unitization Hearings for the Hebron Field

By: Nigel Bankes

PDF Version: Preliminary Skirmishing in Ongoing Compulsory Unitization Hearings for the Hebron Field

Case Commented On: ExxonMobil Canada Properties v Canada-Newfoundland and Labrador Offshore Petroleum Board, 2017 NLTD(G) 80 (CanLII)

In this decision Justice Burrage dismissed an application for leave to appeal an interlocutory decision of the Oil and Gas Committee established under the Canada–Newfoundland and Labrador Atlantic Accord Implementation Act, SC 1987. c. 3 (the “Federal Accord Act”) in which one of the parties responding to the application of the Chief Conservation Officer (the “CCO”) of the Canada-Newfoundland and Labrador Offshore Petroleum Board (the “C-NLOPB”) for a unitization order pursuant to the Accord Acts sought to compel production of a legal opinion prepared for one of the other parties. Continue reading →

Party Principally Interested in Thermal Recovery Succeeds on Appeal

By: Nigel Bankes

PDF Version: Party Principally Interested in Thermal Recovery Succeeds on Appeal

Case Commented On: IFP Technologies (Canada) Inc v EnCana Midstream and Marketing, 2017 ABCA 157 (CanLII)

The Court of Appeal by a majority (Chief Justice Fraser, Justice Rowbotham concurring;  Justice Watson dissenting) has concluded that a party (IFP Technologies) who acquired from PanCanadian Resources (PCR, now Encana) a 20% undivided interest in a set of oil and gas properties under the terms of a conveyancing document (denominated here as the Asset Exchange Agreement, AEA), retains a working interest in those properties even where other contemporaneous documents executed by the parties, including a joint operating agreement (JOA), purported to limit IFP’s interest to an interest in the production that occurs as a result of thermal processes and not as a result of primary production. As a result of its interpretation of the AEA, the majority concluded that IFP was entitled to an accounting for its proportionate share of the net revenue realized from primary production from the relevant properties (now held by Wiser – and most recently Canadian Forest Oil – pursuant to a farmout from PCR to Wiser). The Court also held that IFP had reasonably withheld its consent to Wiser’s acquisition of PCR’s interest in the lands. In reaching these conclusions the majority overruled Chief Justice Wittmann’s decision at trial (2014 ABQB 470 (CanLII)) acting in place of the Trial Judge, Justice Ron Stevens who (at para 48) died in spring 2014 without having been able to render judgement based on a trial which took place between January and June 2011. Continue reading →