Category: Oil & Gas Page 55 of 56

In a break from what seemed to be a growing trend, Mr. Justice Keith Ritter has refused leave to appeal to a group of landowners with respect to an Energy Resources Conservation Board (“ERCB”) decision. Perhaps because of the unfortunate result in Graff v. Alberta (Energy and Utilities Board), 2008 ABCA 119 (see my post on this decision ), Justice Ritter focused on one component of the test for leave – whether the appeal was prima facie meritorious – and dismissed the application. He looked at the facts and at the evidence and decided there was no merit to any of the proposed grounds of appeal. While it is hard to quarrel with all of Justice Ritter’s conclusions, ultimately his decision raises some troubling questions about procedural fairness and the ability of landowners to participate effectively in ERCB proceedings.

When Does a Royalty Owner not have to Pay for a Share of Processing Costs?

By Nigel Bankes

On August 14, 2008

In Natural Resources, Oil & Gas

Case Considered: 570495 Alberta Ltd. v. Hamilton Brothers Exploration Company, 2008 ABQB 413

PDF Version: When does a royalty owner not have to pay for a share of processing costs?

When does a royalty owner not have to pay for a share of processing costs? The answer of course should be that the royalty owner does not have to pay unless it is required to do so by the terms of the agreement that created the royalty. And that in fact is exactly what Justice Alan Macleod concludes in this judgement. Just as there is no rule of law that precludes an oil and gas lease from being kept in force beyond the end of its primary term by the mere existence of a shut-in well in “accordance with oil field practice” (see Kensington Energy Ltd v. B & G Energy Ltd 2008 ABCA 151 and my post on this decision), so too there is no rule of law that requires a royalty owner to pay a share of post-severance processing costs. This judgement confirms that processing costs are issues of contract between the parties and that the job of the court is to give effect to the terms of the agreement that the parties have negotiated.

The ERCB asserts its jurisdiction to determine the validity of an oil and gas lease

By Nigel Bankes

On August 9, 2008

In Administrative Law, Natural Resources, Oil & Gas

Cases Considered: In re Desoto Resources, Joffre Field, ERCB Decision 2008-47

PDF Version: The ERCB asserts its jurisdiction to determine the validity of an oil and gas lease

In an unusual decision the ERCB has asserted its jurisdiction to determine the validity of an oil and gas lease. While the Board has in recent years been forced to make rulings on complex questions of property law such as the competing rights of coal owners and natural gas owners to coal bed methane (In re Bearspaw Petroleum, EUB Decision 2007-24) as well as the competing interests of bitumen producers and natural gas producers (Alberta Energy Company Ltd. v. Goodwell Petroleum Corporation Ltd., 2003 ABCA 277, reviewing EUB Decision 2000-21) this is, so far as I am aware, the first reasoned decision of the Board in which it has passed on the validity of an oil and gas lease. Desoto’s application in the Court of Queen’s Bench for a declaration as to the validity of the leases was pending at the time of the Board’s decision.

What Happens when Parties Operate an Oil Battery Without a Formal Agreement?

By Nigel Bankes

On July 17, 2008

In Aboriginal, Natural Resources, Oil & Gas, Unjust Enrichment

Cases Considered: Husky Oil Operations Limited v. Gulf Canada Resources Limited 2008 ABQB 390

PDF Version: What happens when parties operate an oil battery without a formal agreement?

Husky Oil has complicated facts, some complex law (unjust enrichment, fiduciary obligation, rectification) and a confusing judgment, but surely only one possible result. Indeed, we wonder why it ever went to court at all.

What Happens When the Deep Rights You Just Purchased are being Drained by the Vendor’s Shallow Rights Well?

By Nigel Bankes

On July 4, 2008

In Natural Resources, Oil & Gas

Cases Considered: Nexxtep Resources Ltd. v. Talisman Energy Inc et al, 2007 ABQB 788; aff’d 2008 ABCA 246

PDF Version: What happens when the deep rights you just purchased are being drained by the vendor’s shallow rights well?

What happens when a purchaser obtains the deep rights under certain oil and gas leases (along with a producing horizontal well) and the parties exclude another vertical well on the basis that it is producing from the shallow rights retained by the vendor and later the purchaser forms the view that the well is producing from the deep rights and not the shallow rights? That is the issue on the merits in Nexxtep – barring disagreements as to just where the vertical well was producing from. At present the case is reported only on certain preliminary matters, Nexxtep’s request for an injunction and Talisman’s request for summary judgment.

Category: Oil & Gas Page 55 of 56

Landowners, Procedural Fairness and Alberta’s Energy Resources Conservation Board

When Does a Royalty Owner not have to Pay for a Share of Processing Costs?

The ERCB asserts its jurisdiction to determine the validity of an oil and gas lease

What Happens when Parties Operate an Oil Battery Without a Formal Agreement?

What Happens When the Deep Rights You Just Purchased are being Drained by the Vendor’s Shallow Rights Well?