Category: Oil & Gas Page 51 of 54

The Crown has neither the power nor the duty to invest Indian monies: The use of legislation to limit trust duties

The “money management” part of the long-running Samson\Ermineskin Case has now come to a close. A unanimous seven person panel of the Supreme Court of Canada in a judgement authored by Justice Marshall Rothstein has ruled that the Government of Canada is not liable when it fails to invest First Nation royalty monies and instead deposits those monies to the credit of the Consolidated Revenue Fund (CRF) and pays the First Nations interest on those monies. In fact, the Court has ruled that the Indian Act makes it illegal for the Crown to invest Indian capital monies. The Court also ruled that the provisions of the Act which require this conclusion do not constitute discrimination within the meaning of s.15 of the Charter.

Co-Ownership is a Messy Business (Even with an Operating Agreement)

By Nigel Bankes

On February 15, 2009

In Bankruptcy and Insolvency, Oil & Gas, Property

Cases Considered: San Juan Resources Inc (Re) 2009 ABQB 55 (Registrar in Bankruptcy).

PDF Version: Co-ownership is a messy business (even with an operating agreement)

Co-ownership is a legal relationship for parties who are able to get along together. For those who cannot the court will order partition or sale under the Law of Property Act, R.S.A. 2000, c. L-7. But co-ownership is also the typical foundation for oil and gas operations in this province and elsewhere since oil and gas companies will typically be tenants in common (working interest owners) of their title documents (the freehold and Crown leases) on which their operations rely.

The sky is falling, let’s blame the royalty review

By Nigel Bankes

On February 3, 2009

In Natural Resources, Oil & Gas

PDF Version: The sky is falling, let’s blame the royalty review

I have lived in Alberta and this city for nearly thirty years. During the fall of 2007 I thought that we had the best public policy debate that I have ever seen in this province. The subject of that debate was the province’s royalty review.

I think that it was a good debate because it was a well informed debate on a crucial public policy issue. It was a well informed debate because the province, for the first time in its history, struck a public review which articulated a set of principles that should govern royalty design. Prior to that, royalty reviews were essentially private affairs between government and industry.

Adjudicating on waterflood enhanced recovery schemes: is it time for compulsory unitization in Alberta?

By Nigel Bankes

On February 1, 2009

In Natural Resources, Oil & Gas

Cases Considered: Hunt Oil Company of Canada Inc: Applications to amend enhanced recovery scheme approval No. 10848 and Pool Delineation Kleskun and Puskwaskau Fields, December 23, 2008, ERCB Decision 2008-130, December 23, 2008.

PDF Version: Adjudicating on waterflood enhanced recovery schemes: is it time for compulsory unitization in Alberta?

Hunt and Galleon (and perhaps others) have interests in the same small oil pool and indeed a series of oil pools that are all “in communication” by virtue of a common aquifer. But evidently they cannot agree on how best to develop the pool, or perhaps they cannot agree on how to share the costs and benefits of joint development including the allocation of resulting production. As a result, each of them operates separate waterflood schemes in the same pool. Each such enhanced oil recovery (EOR) scheme needs to be approved by the ERCB under s.39(1)(a) of the Oil and Gas Conservation Act (OGCA), R.S.A. 2000, c. O-6.

Terminating a Long Term Gas Sales Contract on Account of a Material Adverse Change: The Continuing Fallout from the Collapse of the Enron Empire

By Nigel Bankes

On January 31, 2009

In Contracts, Natural Resources, Oil & Gas

Cases Considered: Marathon Canada Ltd v. Enron Canada Ltd, 2008 ABQB 408;
Marathon Canada Ltd v. Enron Canada Ltd, 2009 ABCA 31.

PDF Version: Terminating a long term gas sales contract on account of a material adverse change: the continuing fallout from the collapse of the Enron Empire

The Court of Appeal, in a memorandum of judgement authored by Justices Ellen Picard, Peter Costigan and Jack Watson, has affirmed the decision at trial of Justice Terence McMahon of the Alberta Court of Queen’s Bench. Justice McMahon held that Marathon Canada had lawfully terminated a natural gas purchase contract with Enron Canada. Marathon chose to terminate when Enron Canada’s US parent (Enron Corp) fell into serious financial difficulties. Both courts also held that: (1) Marathon was entitled to recover $560,000 damages for natural gas that it had delivered prior to contract termination, but that, (2) Enron Canada was not entitled to recover liquidated damages of some $126 million based on a counter-claim of wrongful termination and the estimated\guesstimated present value of Marathon’s future deliveries at the contract price.