2017 Harvest

2017 Harvest

Monday, December 10, 2012

Court rules that oil and gas production lease does not grant gas storage rights

This is another decision in the ongoing McKinley Farms and Tribute Resources battle over gas storage rights on 200 acres of land in Huron County.  Tribute, through its predecessor(s), had obtained an oil and gas lease and a gas storage lease for the land in question.  The Court of Appeal has earlier ruled that the 1998 gas storage lease is no longer valid, but the Court upheld the oil and gas lease. 
 
Tribute now argues that it has gas storage rights under the oil and gas lease.  However, in the meantime, McKinley Farms has granted a gas storage lease to a different numbered company and now seeks an order from the Court that this lease is the only lease of the McKinley Farms lands that validly grants storage rights.  Justice Rady of the Superior Court of Justice in London has granted this order.
 
Justice Rady agreed with Tribute that its oil and gas lease contained language that could be interpreted to convey rights to storage; but she also concluded that the storage lease agreement (which was found by the Court of Appeal to be invalid or expired) was intended by the parties to replace those rights.