Category: Oil & Gas Page 48 of 57

PDF version: Injunction denied in oil and gas right of first refusal case

Case considered: NAL GP Ltd. v. BP Canada Energy Company, 2010 ABQB 626

NAL was the successor in interest to an agreement between BP and Spearpoint which afforded each party mutual rights of first refusal (ROFR). The agreement (which was not a Canadian Association of Petroleum Landmen (CAPL) form) apparently covered a number of different properties. In July 2010 BP announced that it had reached an agreement with Apache to sell certain assets including the assets subject to the ROFR. There were negotiations surrounding the possible waiver of the ROFR but on September 1 NAL requested that BP prepare the ROFR notices required by the agreement. BP did so. The notices (12) were delivered September 20. The aggregate value of the 12 packages was $1.56 billion. The total sale price was $3.25 billion (US). The agreement required the ROFR to be exercised within 15 days.

In this application NAL sought a declaration that the notices were deficient or alternatively a temporary injunction. NAL also sought to examine documents relating to the sale and oral discovery of representatives of BP and Apache and sought to abridge the 15 day notice period.

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PDF version: What’s the next step when shallow rights become deep rights?

Cases considered: Talisman Energy Inc. v Energy Resources Conservation Board, 2010 ABCA 258; ERCB Decision 2009-050, Nexxtep Resources Ltd., Pool Delineation Application: Redesignation of the Lower Mannville C Pool to Rock Creek, Wilson Creek Field, August 7, 2009; ERCB letter decision, June 23, 2010, unpublished, available here.

The purpose of this note is to update readers on the developments in a set of facts that first came before the courts in 2007 and on which I blogged in July 2008.

The Facts

The facts, as outlined in my earlier blog, were as follows:

“Nexxtep purchased certain petroleum and natural gas rights under Crown oil and gas leases from the base of the Mannville through the Rock Creek formation to the base of the Pekisko pursuant to a purchase and sale agreement (PSA) of March 2004 with Talisman. The assets included a horizontal well but not a more prolific vertical well which, at the time of the PSA, both parties assumed to be producing from above the base of the Mannville. Subsequent investigations by Nexxtep established that the vertical well was producing from the Rock Creek formation below the Mannville. When Nexxtep’s requests that Talisman shut in the vertical were unsuccessful, Nexxtep commenced an action [the QB action] and brought an application for an injunction requiring Talisman to shut in the vertical well below the Mannville. Talisman in turn sought an order for summary judgment and in the alternative security for costs.”

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PDF version: A century of liability for an abandoned well

Case considered: Dalhousie Oil Company Limited, Section 40 Review of Abandonment Cost Order No. ACO 2008-1, Turner Valley Field, ERCB Decision 2010-19

In this decision the Energy Resources Conservation Board (ERCB, the Board) confirms that the current owner of an abandoned well has a continuing responsibility to pay for the re-abandonment costs associated with that well even though the well in question had not produced since the 1920s. The decision is particularly interesting in the context of the current discussion surrounding who should assume responsibility for the long term liabilities associated with carbon capture and storage projects.

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