Oil and Gas Lease: Operate at a loss or nominal return or lose your lease?

This case involves five freehold petroleum and natural gas (PNG) leases that cover most of a section of land in Alberta.  The Plaintiffs are some of the current owners of the land plus a top-lessee, whose lease will only become effective if it is determined that the five existing leases have terminated.  The main issue in the case was whether those leases terminated as a result of the stoppage of operation and production from a well on the land between 1995 and 2001.  More specifically, the Court asked whether the Defendants (or their predecessors) were required to operate the well at a loss or nominal return during those years in order to preserve and continue the leases.

The Alberta Court of Queen's Bench heard evidence from a number of factual and expert witnesses about the decision made to shut-in the well in question for economic reasons.  In the end, the Court ruled that the well was shut-in for reasons permitted under the leases, and the leases did not terminate as a result of the cessation in operations and production.  The Plaintiffs' action was dismissed as a result.

Read the decision at: Stewart Estate v TAQA North Ltd.

Red Lily Wind Farm - Court Decision denying injunction

In a previous post, I wrote about a Saskatchewan landowner who may face a costs order as a result of a failed application for an injunction to prevent the Red Lily Wind Farm project from moving forward.  The decision denying the injunction is now available to read at: McKinnon v. Martin no. 122 (Rural Municipality). 

The Court rejected outright the evidence of the expert witness put forward by those seeking the injunction:

If Dr. Nissenbaum could be considered an expert to provide opinion evidence on the issue surrounding the granting of the injunction, there are two further reasons to reject his evidence. The first is that he has assumed the role of advocate. A review of his affidavit No. 2 especially shows that he does not take an objective approach to the issues at hand. He passionately believes in the harmful health effects of wind turbines from his own survey on the Mars Hill project and has made that the basis for his foray into an area that he has little real knowledge of. It is clear from the content and tone of his second affidavit that he has no objectivity in respect of the issues. Secondly, in addition to the leaps of logic that were contained in para. 17 of both affidavits, he makes bold, unsupported statements on issues critical to the injunction.

Having rejected the evidence of the plaintiff's expert in favour of the project proponent's expert, the Court found that the test for an injunction had not been satisfied.