The Court of Appeal agreed:
The Board did not err in finding that the phrase “capable of producing the leased substances” means the “demonstrated, present ability of a well on the lands to produce the leased substances in a meaningful quantity within the time frames contemplated in the lease.” (Board Decision 2009-037 at 9, hereafter Board Decision) The lease is a contract through which the lessor and lessee agreed to develop the leased substances for mutual benefit. This purpose would be defeated if the lease were interpreted in a manner that allowed it to continue almost indefinitely at a time when a drilled well is incapable of producing a meaningful quantity of oil or gas in its present state and operations are not being conducted to make it produce. Requiring a “meaningful” volumetric quantity was sufficient to determine this case. Considering each lease and its surrounding circumstances will allow this test to develop in a contextual setting. [emphasis added]Read the decision at: Omers Energy Inc. v. Alberta (Energy Resources Conservation Board).
Omers Energy Inc. is an investment of OMERS - the Ontario Municipal Employees Retirement System - which has over $53 billion in net assets (at December 31, 2010).