PDF version: More grist for the mill, another case of gross negligence under CAPL 1990
Case commented on: Trident Exploration Corp. (Re), 2012 ABQB 242
An operator under a pooling agreement who agrees to take charge of responding to a Crown offset notice and who fails to do so and fails to inform tract owners that it is no longer intending to respond, is grossly negligent within the meaning of Article 4 of the 1990 CAPL Operating Procedure.
By: Matthew Ducharme
PDF Version: The European Fuel Quality Directive: Will It Stay or Will it Go?
Document Commented On: Draft Implementing Measure to the European Union Fuel Quality Directive, February 23, 2012
On February 23, 2012, a European Union (EU) drafting committee voted on a draft law that discriminates against bitumen. This was the Draft Implementing Measure to the European Union Fuel Quality Directive (Implementing Measure). The Canadian press reported the vote ended in a stalemate. The press also noted that the law would be reconsidered in the late spring or early summer (National Post; CBC; Globe and Mail).
If the EU enacts the law it will have made a step in its fight against climate change, but the market for bitumen may be negatively impacted. If the law dies, Canada can expect a higher price on the sale of its bitumen in overseas markets. This note examines the February 23 vote within the EU law making process.
By: Nigel Bankes
PDF Version: Competing Uses of Geological Space: Resolving Conflicts Between Production and Natural Gas Storage
Decision Commented On: Kallisto Energy Corp. Application for a Well Licence Crossfield East Field, 2012 ABERCB 005, February 24, 2012
This decision deals with the potential for conflict between conventional oil and gas operations and natural gas storage projects.
The idea of resource use or landscape level conflicts is familiar to us in the context of the use of the surface. Consider, for example, the conflicts between recreation and forestry interests, between forestry and oil sands or conventional oil and gas exploration. The idea of competing uses of the subsurface is less familiar but our search for new resources or the application of new technologies to known resources is increasing the potential for those subsurface conflicts. High pressure fracturing operations to stimulate production either from shallow oil formations or deeper shale gas formations raises concerns about the effect of these operations on potable groundwater resources, and proposals to sequester carbon dioxide in saline formations or depleted oil or gas reservoirs raises concerns of sterilizing hydrocarbon resources. The province’s new CCS regime explicitly addresses this scenario through a provision in the Oil and Gas Conservation Act, (OGCA) RSA 2000, c O-6, s. 39(1.1) which provides that the ERCB “may not approve a scheme for the disposal of captured carbon dioxide to an underground formation…unless the [applicant] satisfies the Board that the injection of the captured carbon dioxide will not interfere with (a) the recovery or conservation of oil or gas, or (b) an existing use of the underground formation for the storage of oil or gas.”
PDF version: Deep rights, shallow rights and the interpretation of a purchase and sale agreement
Case commented on: Nexxtep Resources Ltd v Talisman Energy Inc, 2012 ABQB 62
The oil and gas industry splits petroleum and natural gas rights by substances to create severed estates in gas and petroleum but it also splits rights along the vertical axis into different formations. Split rights may be created along the vertical axis for several reasons. In some cases the Crown or other lessor initiates the severance in order to encourage exploration (e.g. deep and shallow rights reversions – explore non-producing horizons in your lease or lose them). In other cases rights will be severed as part of farmout agreements since farmors will be reluctant to allow the farmee to earn interests in formations that are deeper (and in some cases shallower) than those formations to which the test well is to be drilled. But these vertical splits cannot always be determined with accuracy and in some cases the Energy Resources Conservation (ERCB) may be asked to classify or reclassify whether a pool is part of deeper rights or shallower rights for the purposes of different conservation rules including, spacing rules, first well in the pool rules etc.: see Oil and Gas Conservation Act, RSA 2000, c O-6, s 33.
PDF version: The Northern Gateway Joint Review Panel and the Governor in Council
Documents commented on: (1) An open letter from the Honourable Joe Oliver, Minister of Natural Resources, on Canada’s commitment to diversify our energy markets and the need to further streamline the regulatory process in order to advance Canada’s national economic interest, January 9, 2012;
(2) National Energy Board Act, RSC 1985, c N-7, s 52;
(3) Canadian Environmental Assessment Act, SC 1992, c 37, s 37.
On January 9, 2012, the day before the hearings by a Joint Review Panel (JRP) were due to open for the proposed Northern Gateway pipeline (NGP), the federal Minister of Natural Resources, Joe Oliver took the extraordinary step of issuing an Open Letter to Canadians. He followed this up with a series of media appearances. In his letter Minister Oliver made four main points. First, Canada needs to diversify its export markets for many products including oil. Second, “environmental and other radical groups” seek to block this opportunity and any underlying projects. Third, these “radicals” will “hijack our regulatory system,” stack public hearings, “kill good projects,” exploit any opportunity they can to delay project reviews. These radicals have access to foreign money to implement their goals. The delays that ensue are unacceptable. Fourth, Canada needs a fair and independent process to assess projects based on science and the facts – but the current system is out of balance and “is broken.”
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