Category: Oil & Gas Page 51 of 57

ERCB Decision on an Acid Gas Disposal Scheme: Further Lessons for the Regulation of Carbon Capture and Storage Schemes

On January 8, 2010

In Carbon Capture and Storage, Oil & Gas

By: Nigel Bankes & Trevor Ference

PDF version: ERCB Decision on an Acid Gas Disposal Scheme: Further Lessons for the Regulation of Carbon Capture and Storage Schemes

Case Commented On: Re: AltaGas Ltd, Applications for Two Pipeline Licences, An Amendment to a Facility Licence, and Approval for an Acid Gas Disposition Scheme, Pouce Coupe Field, ERCB Decision 2009-073

During the fall of 2009 the province of Alberta signed letters of intent for funding with four proponents for carbon capture and storage schemes (CCS): (1) Swan Hills Synfuel for an in situ goal gasification and enhanced oil recovery (EOR) project, (2) Enhance Energy and Northwest Upgrading for a CO2 trunkline, (3) Shell for the Quest project and (4) TransAlta for Project Pioneer. As these proponents move to implement their projects we will start to see how the existing and proposed regulatory scheme accommodates CCS projects. There are perhaps four types of legal and regulatory issues that project proponents face in relation to the storage elements of any project: (1) property issues (e.g. pore space ownership); (2) regulatory issues (Energy Resources Conservation Board (ERCB) approvals); (3) liability issues (will long term liability for storage sites transfer to the province?), and (4) crediting issues (how will CCS projects be treated within the context of Alberta’s Specified Gas Emitters Regulation, Alta. Reg. 139/2007; will CCS projects create emission performance credits or offset credits?). The Carbon Capture and Storage Development Council (Accelerating Carbon Capture and Storage Implementation in Alberta, Final Report, March 2009) has urged the province to provide guidance and regulatory certainty on these issues but, by and large, the province has yet to act.

The Supreme Court of Canada Denies Leave in Brookfield

By Nigel Bankes

On November 20, 2009

In Oil & Gas, Supreme Court of Canada

Cases considered: Brookfield Bridge Lending Fund Inc. v. Vanquish Oil and Gas Corporation, 2008 ABQB 444, reversed 2009 ABCA 99, leave to appeal denied November 19, 2009

The Supreme Court of Canada has denied leave to appeal to the joint operators in the Brookfield Bridge case. The case involves the circumstances under which a joint operator might be able to establish a constructive trust over assets of the operator other than those already impressed with an express trust by the language of clause 507 of the CAPL Operating Procedure in a situation where the operator expends monies from the commingled account for its purposes.

When, if at all, does a Pooling Agreement Trigger an Area of Mutual Interest Obligation?

By Nigel Bankes

On November 10, 2009

In Oil & Gas

Case considered: Hunt Oil Company of Canada Inc v. Shell Canada Limited, 2009 ABQB 627

PDF Version: When, if at all, does a pooling agreement trigger an area of mutual interest obligation?

In a 1994 decision, Luscar v Pembina Resources Ltd (1994), 162 AR 34, the Alberta Court of Appeal cast doubt on the proposition that Y, a lessee of a tract within a drilling spacing unit (DSU), who enters into a cross conveyance pooling agreement with Z, a lessee of a different tract within the same DSU, will invariably trigger an area of mutual interest (AMI) obligation that Y owes to X with respect to the undivided interest that Y acquired within Z’s tract by virtue of the pooling agreement.

In this decision, Justice Alan Macleod has extended that line of reasoning and has decided (subject to the language used in any particular case) that Y will not trigger an AMI obligation, not only in the narrow situation described above but also in the situation where Y and Z, holding adjacent lands, enter into a pooling agreement to improve project economics and not for the purpose of forming a drilling spacing unit.

Williston Wildcatters: bluster no substitute for reasons and yet another judicially created leave and licence

By Nigel Bankes

On September 9, 2009

In Oil & Gas

Case considered: Montreal Trust Co v. Williston Wildcatters Corp., 2009 SKCA 85

PDF version: Williston Wildcatters: bluster no substitute for reasons and yet another judicially created leave and licence

Over the last decade we have seen litigation in both Saskatchewan and Alberta on the question of how to calculate damages where an operator continues to produce hydrocarbons on a dead lease. The Alberta case is Lady Freyberg v. Fletcher Challenge Oil and Gas, 2007 ABQB 353 (on the damages issue – following 2005 ABCA 46 on the lease validity issue). This matter has been settled on a confidential basis and unfortunately we cannot expect to see an appeal judgement on the damages question. I say “unfortunately” because the trial judgement seems to have proceeded on the basis that the continued production was tortious; but there is at least some ground for thinking that the operator’s activities were continued with the permission of a co-owner. If that is correct, then the co-owner/lessor’s claims should have been dealt with on the basis of a co-owner’s claim for an accounting of more than a just share received, rather than on the basis of tort (trespass or conversion). The Freyberg decision is the subject of lengthy comment by Chris Simard et al, “Lady Freyberg: Examples of How Contemporary Courts in Alberta Approach the Modern Business Realities of the Freehold Petroleum and Natural Gas Lease” (2009), 46 Alberta Law Review 299.

Ontario Oil and Gas Case of interest to the Calgary Bar

By Nigel Bankes

On July 20, 2009

In Oil & Gas

Cases Considered: Tribute Resources Inc v. McKinley Farms Ltd, 2009 CanLII 33043 (ON S.C.)

PDF version: Ontario Oil and Gas Case of interest to the Calgary Bar.

While most of the country’s oil and gas cases are decided in Alberta courts (even if in some cases the property to which the litigation pertains is, for example, in British Columbia – see eg Canadian Natural Resources Ltd. v. Encana Oil & Gas Partnership, 2008 ABCA 267 dealing with right of first refusal issues in relation to a property in British Columbia), sometimes the courts in other Canadian jurisdictions do get to add to the body of Canadian oil and gas law.