Category: Oil & Gas Page 45 of 57

The theory and the practice of well abandonment and surface reclamation in Alberta: the latest episode in the dismal saga of Sarg Oils Limited

On December 13, 2011

PDF version: The theory and the practice of well abandonment and surface reclamation in Alberta: the latest episode in the dismal saga of Sarg Oils Limited

Decision commented on: Sarg Oils Limited, Review of Abandonment Orders AD 2006-17, AD 2006-17A, AD 2006-18, AD 2006-19 and AD 2006-20, November 15, 2011, 2011 AERCB 032.

Well over ten years ago Sarg Oils sold oil and gas assets to another party. The Energy Resources Conservation Board (ERCB) refused to consent to the transfer of the well licences associated with those assets and as a result Sarg was left with the responsibility of abandoning those facilities. And when Sarg refused, the ERCB did the job itself and sent the bill to Sarg; and when Sarg didn’t pay (and the Court of Appeal ruled that this was a lawful debt owing to the Board: ERCB v Sarg Oils Ltd, 2002 ABCA 174) the ERCB garnisheed other assets of Sarg (the Southern Alberta assets). Sarg didn’t like that and shut the facilities in – owing by this time in excess of $1 million. The Board informed the province of this dastardly deed and the province triggered the procedures under the Petroleum and Natural Gas Tenure Regulation (Alta Reg 267/1997, s18) to terminate the leases on those Southern Alberta assets. Since Sarg no longer had the right to exploit the resources on those terminated leases, the ERCB ordered Sarg (2006) to abandon the related wells and facilities. Sarg did nothing about this except to seek a section 40 review (this application) under the Energy Resources Conservation Act, RSA 2000, c E-10) of the Board orders. And now, five years later, the Board has concluded that the orders “are valid and will be upheld” (at para 148). And now, Sarg must really get on with it! Whew! Unless of course Sarg seeks leave to appeal.

Bill 16, 2011: Alberta Paves the Way for Cleaner Coal with In Situ Coal Gasification

By Astrid Kalkbrenner

On November 8, 2011

In Climate Change, Environmental, Oil & Gas

By: Astrid Kalkbrenner

PDF Version: Bill 16, 2011: Alberta Paves the Way for Cleaner Coal with In Situ Coal Gasification

Legislation Commented On: Bill 16 – Energy Statutes Amendment Act, 2011

On 13 May 2011, the Legislative Assembly of Alberta passed the Energy Statutes Amendment Act (“Bill 16, 2011”). Bill 16, 2011 amends the following acts: the Alberta Utilities Commission Act, RSA 2007, c A-37.2, the Coal Conservation Act (CCA), RSA 2000, c C-17, the Electric Utilities Act, RSA 2003, c E-5.1, the Gas Utilities Act, RSA 2000, c G-5, the Oil and Gas Conservation Act (OGCA), RSA 2000, c O-6, the Oil Sands Conservation Act (OSCA), RSA 2000, c O-7, and the Pipeline Act (PA), RSA, c P-15. The amendments entered into force on 13 May 2011.

Bill 16, 2011 implements two central amendments to the regulatory regime of the above mentioned energy laws. The first amendment removes the Industrial Development Permit (IDP) legislation (see ERCB Bulletin 2010-42). In short, section 51 of the CCA, section 111 of the OGCA and section 27 of the OSCA cancel existing IDPs. The general repeal of these provisions makes it unnecessary to apply for an IDP in the future. See previous post by Nigel Bankes here. The second amendment clarifies the ERCB’s authority to regulate in situ coal development and sets out the requirements for in situ coal projects (see ERCB Bulletin 2009-36).

Section 19 of the Perpetuities Act and the oil and gas lease as a fee simple determinable estate of a profit à prendre

By Nigel Bankes

On November 1, 2011

In Oil & Gas, Property

PDF version: Section 19 of the Perpetuities Act and the oil and gas lease as a fee simple determinable estate of a profit à prendre

Statute commented on: Perpetuities Act, RSA 2000, c P-5.

In a couple of years we will “celebrate” the fortieth anniversary of the Perpetuities Act of 1972, SA 1972, c 121. They may not know it yet, but the wildest celebrations will be heard from those who hold oil and gas leases granted after July 1, 1973 which are still in force. Here’s why. After that date, as each and every oil and gas lease reaches its fortieth birthday, the lessor’s possibility of reverter for terminating the lease for want of production comes to an end; thenceforward the lease can only be terminated for cause (as described in the default clause of the leases) such as the non-payment of royalties, which causes can typically be cured without losing the lease. Lessees will become the effective owners of the oil and gas estate.

Accounting issues left unresolved in split title litigation

By Nigel Bankes

On October 14, 2011

In Oil & Gas

PDF version: Accounting issues left unresolved in split title litigation

Case considered: Anderson v Amoco Canada Oil and Gas Co, 2011 ABCA 268

The Court of Appeal has finally brought an end to the phase gas, split title litigation known under the style of cause of Anderson v Amoco. The Court did so (at the behest of the petroleum owners (the defendants)) under the cover of the drop dead rule of the old Rules of Court. As a result of this decision the accounting issues, one of the key issues in split title litigation which has been around since the Privy Council’s decision in Borys v CPR, [1953] AC 217, will remain unresolved. While this dismissal will bind the particular plaintiffs listed in this litigation it will not preclude disgruntled gas owners from returning to the fray in the future – either individually or as part of a class action. Thus, while the defendants and their lawyers may have cracked open a few bottles of champagne last week to celebrate the end of this long-running litigation I am not sure that the accounting issues related to production from split title lands are going to go away.

What does the term “oil well rights” mean when used in a will?

By Nigel Bankes

On September 30, 2011

In Oil & Gas, Wills and Estates

PDF version: What does the term “oil well rights” mean when used in a will?

Case considered: Wernicke v Quirk, 2011 SKCA 95

The moral of this story might well be “don’t mess with terms you don’t understand”; and if you want to make a specific devise of surface rentals from gas wells on your property you might wish to do so explicitly and not use a term like “oil well rights”.