Cases Considered: Kensington Energy Ltd v. B & G Energy Ltd 2008 ABCA 151

PDF Version:  The Independent Operation Of The Shut-in Clause Of An Oil And Gas Lease

In this important decision (hereafter “Kensington”) the majority of the Alberta Court of Appeal (Hunt and Slatter JJA; Romaine JA dissenting) concluded that the third proviso to the habendum of an oil and gas lease does not establish a set of conditions precedent that the lessee must fulfill before it can rely upon the shut-in wells clause and shut-in well payment to deem production, thereby continuing the lease – at least, and this is an important caveat – where the language of the shut-in wells clause does not track that of the third proviso. In reaching this conclusion the Court effectively distinguished its earlier decision in Freyberg v. Fletcher Challenge Oil and Gas Inc, 2005 ABCA 46 (“Lady Freyberg”).

Continue reading →

Cases Considered: EnCana Corporation v. Campbell, [2008] ABQB 234

PDF Version: The relationship between the well licence jurisdiction of the Energy Resources Conservation Board and the jurisdiction of the Surface Rights Board

Justice Crighton’s decision in EnCana v. Campbell suggests that land owners may be able to use the Surface Rights Board (SRB) to require an oil and gas operator to follow more stringent conditions in relation to surface access and related matters such as weed control and water quality protection and testing than may be prescribed in the terms of a well licence or the Energy Resources Conservation Board (ERCB)’s Oil and Gas Conservation Regulations. Given the potential surface impacts of coal bed methane (CBM) development in the province and the uncertainties associated with the effect of CBM operations on ground water quality this is an important development. But while it offers additional protection for surface owners it also has the potential for a patchwork of environmental requirements etc. which may vary from property to property. This may well be a case where the re-born ERCB needs to be more proactive and precautionary so as to reflect the concerns of and uncertainties faced by landowners especially with respect to such an important matter as water quality.

Continue reading →

Case Considered: Signalta Resources Limited v. Dominion Exploration Canada Limited, 2007 ABQB 636

Keywords: oil and gas law, expert witnesses, unit agreements, limitations, damages

PDF Version: What Zones Were the Subject of a Unitization Agreement?

The question of what substances are the subject of a unitization has been before the courts on at least one other occasion in Prism Petroleum Ltd v Omega Hydrocarbons Ltd, [1994] 6 WWR 585 (Alta. C.A.). The issue in that case involved a split petroleum and natural gas title. Signalta v. Dominion does not involve a split title in that sense. Rather the issue was whether the title that had been committed to a unitization agreement was confined to the Viking or whether it also included the Glauconite. Put in these terms the issue seems relatively simple but the paper trail was very complex. Combine a complex set of facts with competing expert opinions from well known legal (Ballem and Thackray) and land (O’Byrne) experts and the result is a very lengthy 74 page judgement from Justice A.G. Park in which he concluded that the Glauconite for the relevant tract was never included in the original unitization.

Continue reading →