Alberta Energy Co. v. Goodwell Petroleum Corp. et al., 2003 ABCA 277

• Judge: Fraser, C.J.A., Fruman and Wittmann, JJ.A.
• Court: Court of Appeal (Alberta)
• Case Date: April 17, 2003
• Citations: 2003 ABCA 277;(2003), 339 A.R. 201 (CA)

Alta. Energy v. Goodwell Petroleum (2003), 339 A.R. 201 (CA);

    312 W.A.C. 201

MLB headnote and full text

Temp. Cite: [2003] A.R. TBEd. SE.090

Alberta Energy Company Ltd. (appellant) v. Goodwell Petroleum Corporation Ltd. and the Alberta Energy and Utilities Board (respondents)

(00-18795-AC; 0201-0286-AC; 2003 ABCA 277)

Indexed As: Alberta Energy Co. v. Goodwell Petroleum Corp. et al.

Alberta Court of Appeal

Fraser, C.J.A., Fruman and Wittmann, JJ.A.

October 2, 2003.

Summary:

The Alberta and Energy Utility Board shut four wells because, in its opinion, AEC, which held oil sands and bitumen leases respecting the land, had no right to produce any initial gas-cap gas incidental to the recovery of bitumen and ordered AEC to acquire those rights through an agreement with the owner of the petroleum and natural gas rights (Goodwell). AEC appealed.

The Alberta Court of Appeal allowed the appeal, holding that the Board erred in holding that AEC's right to produce leased substances under its oil sands leases did not include any production of initial gas-cap gas. The court directed the Board to vary its decisions in this matter such that the shut-in order affecting the four bitumen wells was rescinded immediately and AEC would be permitted to resume production of bitumen, associated solution gas and initial gas-cap gas incidental to bitumen recovery, provided it continued to follow modern operating practices and complied with relevant legislation.

Mines and Minerals - Topic 8086

Oil and gas - Title - Split title lands - Oil sands and bitumen (incl. right to initial gas-cap gas) - The Alberta and Energy Utility Board shut four wells because, in its opinion, AEC, which held oil sands and bitumen leases respecting the land, had no right to produce any initial gas-cap gas incidental to the recovery of bitumen and ordered AEC to acquire those rights through an agreement with the owner of the petroleum and natural gas rights (Goodwell) - AEC appealed - The Alberta Court of Appeal held that the questions raised on the appeal were purely legal and the appropriate standard of review was that of correctness - The court allowed the appeal, holding that the Board erred in holding that AEC's right to produce leased substances under its oil sands leases did not include any production of initial gas-cap gas - See paragraphs 1 to 104 - The court stated that "an examination of scientific principles, Borys [v. C.P.R. and Imperial Oil Ltd. (P.C.)] and the case law on which it is based, the terms of applicable leases and related instruments, the Alberta statutory regime and so-called industry expectations all support the conclusion that AEC's express right to win, work, recover and remove bitumen under its oil sands leases entitles it to produce initial gas-cap gas incidental to bitumen recovery, subject to the rights Goodwell may have for compensation for the initial gas-cap gas produced" - See paragraph 104.

Cases Noticed:

Borys v. Canadian Pacific Railway and Imperial Oil Ltd., [1952] 3 D.L.R. 218 (Alta. C.A.), affd. [1953] 2 D.L.R. 65 (P.C.), refd to. [para. 5].

Anderson v. Amoco Canada Oil and Gas et al. (1998), 225 A.R. 277 (Q.B.), refd to. [para. 12, footnote 6].

Syndicat national des employés de la Commission scolaire régionale de l'Outaouais (CSN) v. Union des employés de service, local 298 (FTQ), [1988] 2 S.C.R. 1048; 95 N.R. 161; 24 Q.A.C. 244, refd to. [para. 20].

U.E.S., Local 298 v. Bibeault - see Syndicat national des employés de la Commission scolaire régionale de l'Outaouais (CSN) v. Union des employés de service, local 298 (FTQ).

Pushpanathan v. Canada (Minister of Citizenship and Immigration), [1998] 1 S.C.R. 982; 226 N.R. 201; 160 D.L.R.(4th) 193, addendum [1998] 1 S.C.R. 1222, refd to. [para. 20].

Dr. Q., Re (2003), 302 N.R. 34; 179 B.C.A.C. 170; 295 W.A.C. 170; 223 D.L.R.(4th) 599 (S.C.C.), refd to. [para. 20].

Dr. Q. v. College of Physicians and Surgeons (B.C.) - see Dr. Q., Re.

Ryan v. Law Society of New Brunswick (2003), 302 N.R. 1; 257 N.B.R.(2d) 207; 674 A.P.R. 207; 223 D.L.R.(4th) 577 (S.C.C.), refd to. [para. 20].

Barrie Public Utilities et al. v. Canadian Cable Television Association et al. (2003), 304 N.R. 1; 225 D.L.R.(4th) 206 (S.C.C.), refd to. [para. 23].

Coalition of Citizens Impacted by the Caroline Shell Plant v. Energy and Utilities Board (Alta.) et al. (1996), 187 A.R. 205; 127 W.A.C. 205 (C.A.), refd to. [para. 25].

Giant Grosmont Petroleums Ltd. et al. v. Gulf Canada Resources Ltd. et al. (2001), 286 A.R. 146; 253 W.A.C. 146 (C.A.), leave to appeal refused [2002] 1 S.C.R. vii; 289 N.R. 399; 299 A.R. 394; 266 W.A.C. 394, refd to. [para. 27].

Chieu v. Canada (Minister of Citizenship and Immigration), [2002] 1 S.C.R. 84; 280 N.R. 268, refd to. [para. 31].

Anderson v. Amoco Canada Oil and Gas et al. (1998), 225 A.R. 277 (Q.B.), varied (2002), 312 A.R. 112; 281 W.A.C. 112 (C.A.), leave to appeal granted [2002] S.C.C.A. No. 362, refd to. [para. 36].

Jones v. Consolidated Anthracite Collieries Ltd., [1916] 1 K.B. 123, refd to. [para. 48].

McDonnell Estate v. Scott World Wide Inc. et al. (1997), 160 N.S.R.(2d) 349; 473 A.P.R. 349; 149 D.L.R.(4th) 645 (C.A.), refd to. [para. 48].

Lemieux v. Canada (1917), 16 Ex. C.R. 246, refd to. [para. 48].

St. Mary's Milling Co. v. St. Mary's (Town) (1916), 37 O.L.R. 546 (C.A.), refd to. [para. 48].

Fuller v. Garneau (1921), 61 S.C.R. 450, refd to. [para. 51].

Barnard-Argue-Roth-Stearns Oil & Gas Co. v. Farquharson, [1912] A.C. 864 (P.C.), refd to. [para. 52].

Marshall v. Borrowdale Plumbago Mines and Manufacturing Co. (1892), 8 T.L.R. 275, refd to. [para. 54].

Butterknowle Colliery Co. v. Bishop Auckland Industrial Co-operative Society Ltd., [1906] A.C. 305 (H.L.), refd to. [para. 55].

Butterley Co. v. New Hucknall Colliery Co., [1909] 1 Ch. 37 (P.C.), refd to. [para. 56].

Acton v. Blundell (1843), 152 E.R. 1223; 12 M. & W. 324 (Exch. Ch.), refd to. [para. 57].

Ballacorkish Silver, Lead & Copper Mining Co. v. Harrison (1873), L.R. 5 P.C. 49, refd to. [para. 57].

Whitehead v. Parks (1858), 157 E.R. 358; 2 H. & N. 870 (Exch.), refd to. [para. 57, footnote 22].

Penno v. Manitoba, [1976] 2 W.W.R. 148 (Man. C.A.), refd to. [para. 58, footnote 23].

Pugliese et al. v. National Capital Commission et al., [1979] 2 S.C.R. 104; 25 N.R. 498, refd to. [para. 58, footnote 23].

Ramsay v. Blair (1876), 1 App. Cas. 701 (H.L.), refd to. [para. 60].

Coniagas Mines Ltd. v. Cobalt (Town) (1909), 20 O.L.R. 622 (C.A.), refd to. [para. 62].

Cabre Exploration Ltd. v. Arndt and Provincial Planning Director (1986), 69 A.R. 279 (Q.B.), refd to. [para. 62].

Bank of Montreal v. Enchant Resources Ltd. et al. (1999), 255 A.R. 116; 220 W.A.C. 116 (C.A.), affd. [2002] 1 S.C.R. 146; 281 N.R. 113; 299 A.R. 1; 266 W.A.C. 1, refd to. [para. 63].

Bank of Montreal v. Dynex Petroleum Ltd. - see Bank of Montreal v. Enchant Resources Ltd. et al.

Berkheiser v. Berkheiser, [1957] S.C.R. 387, refd to. [para. 63].

Nywening v. Melton Holdings Ltd. (1998), 217 A.R. 312 (Q.B.), varied (1999), 255 A.R. 354; 220 W.A.C. 354 (C.A.), refd to. [para. 63].

Tener and Tener v. British Columbia, [1985] 1 S.C.R. 533; 59 N.R. 82, refd to. [para. 63].

Hamilton Brothers Corp. et al. v. Royal Trust Corp. of Canada et al. (1991), 113 A.R. 321 (Q.B.), refd to. [para. 63].

Northwestern Utilities Ltd. v. Edmonton (City), [1979] 1 S.C.R. 684; 23 N.R. 565; 12 A.R. 449, refd to. [para. 102].

Paccar of Canada Ltd. v. Canadian Association of Industrial, Mechanical and Allied Workers, Local 14, [1989] 2 S.C.R. 983; 102 N.R. 1, refd to. [para. 102, footnote 45].

Labour Relations Board (N.B.) v. Eastern Bakeries Ltd., [1961] S.C.R. 72, refd to. [para. 102].

Canadian Broadcasting Corp. v. Syndicat des employés de production du Québec et de l'Acadie, [1984] 2 S.C.R. 412; 55 N.R. 321, refd to. [para. 103].

Syndicat des employés de production du Québec et de l'Acadie v. Canada Labour Relations Board - see Canadian Broadcasting Corp. v. Syndicat des employés de production du Québec et de l'Acadie.

Canada (Attorney General) v. Public Service Alliance of Canada, [1993] 1 S.C.R. 941; 150 N.R. 161, refd to. [para. 103].

Statutes Noticed:

Alberta Energy and Utilities Board Act, R.S.A. 2000, c. A-17, sect. 26 [para. 23, footnote 7].

Oil and Gas Conservation Act, R.S.A. 2000, c. O-6, sect. 16(1) [para. 92].

Authors and Works Noticed:

Anger and Honsberger, Law of Real Property (2nd Ed. 1985), vol. 2, pp. 1289 to 1291 [para. 48].

Barnett, Doug, An Early History of the Athabasca Oil Sands, http://www. usask.ca/education/ideas/tplan/sslp/ yukon/bitumont.htm, generally [para. 1, footnote 1].

Gerth, Jeff, Canada Builds a Large Oil Estimate on Sand, New York Times (June 18, 2003) W1, generally [para. 2, footnote 2].

Halsbury's Laws of England (2nd Ed. 1933), vol. 11, p. 381, para. 669 [para. 63].

Halsbury's Laws of England (4th Ed. 1986), vol. 31, p. 238, para. 330 [para. 61].

Oil & Gas Journal, Worldwide Look at Reserves and Production, 100:52 (Dec. 23, 2002), pp. 114, 115 [para. 2, footnote 2].

Counsel:

D.M. Todesco, for the appellant;

S.M. Shawa, for the respondent, Goodwell Petroleum Corp.;

D.A. Larder and J.P. Mousseau, for the respondent, the Alberta Energy and Utilities Board.

This appeal was heard on April 17, 2003, before Fraser, C.J.A., Fruman and Wittmann, JJ.A., of the Alberta Court of Appeal. Fruman, J.A., delivered the following judgment for the court on October 2, 2003.