Case considered: Bearspaw Petroleum Ltd v Encana Corporation, 2010 ABQB 225

PDF version: Yes folks the language of the habendum does matter

In this decision Justice Terry McMahon held that a petroleum and natural gas lease that provides for continuation at the end of its primary term where leased substances are “producible” will be continued where the lessee has drilled a well that has discovered natural gas in commercial quantities; the lease will be continued even though that well has not been tied in and is therefore not capable of actual production. The decision also offers a comment on implied and express covenants to market.

Continue reading →

Case considered: Snopko v Union Gas Ltd, 2010 ONCA 248

PDF version: Ontario Court of Appeal confirms the exclusive jurisdiction of the Ontario Energy Board in relation to natural gas storage rights

Gas storage schemes offer the opportunity to take maximum advantage of existing pipeline infrastructure. Storage also helps provide security of supply and extra deliverability at times of peak demand. While some storage remains regulated as a public utility the general trend is to deregulate storage where there is adequate competition. In some provinces pore space for natural gas storage is principally publicly owned (and then acquired by private operators by way of lease) as in British Columbia and Alberta and in other provinces as in Ontario the pore space is largely privately owned as in the facts of this case.

In either case there may be a need to deal with holdout problems and there will always be the question of how to compensate the private pore space owner for the use of the storage rights. That is what was at issue in this case; and we can expect this issue to become more contentious as gas storage increases in value.

Continue reading →

Case considered: Diaz Resources Ltd v Penn West Petroleum Ltd, 2010 ABQB 153

PDF version:  Challenge notices under the terms of the 1990 CAPL Operating procedure

This case will be of interest to the oil and gas bar for two reasons. First, the case provides some guidance as to the quality of the information that a joint operator must provide to support a challenge notice. Second, the case raises (but does not resolve) a question as to whether or not a challenging joint operator also carries the burden of establishing that it is capable of operating the property in a “good and workmanlike manner.”

Continue reading →

Matter considered: Alternatives North, Notice of Motion, Mackenzie Gas Project, asking the National Energy Board to order the proponent to provide the Board with an update on the North American gas market

PDF version:   The Mackenzie Gas Project and Shale Gas

The Joint Review Panel issued its assessment of the Mackenzie Gas Project (MGP) at the end of 2009 and attention now turns to the National Energy Board (NEB) which must decide whether (subject to the approval of the Governor in Council) to issue a certificate of public convenience and necessity for the pipeline.

Continue reading →