Nebraska Senator stands up for Keystone XL landowners: Press Release

LINCOLN, NE, September 27, 2011 – Today, Senator Bill Avery, who could not be in attendance to present his remarks at a scheduled US State Department Hearing on the TransCanada Keystone XL Pipeline pending application, released this statement:

“For the record, I am not opposed to an international pipeline. I realize that there are currently hundreds of natural gas and oil pipelines across Nebraska and across the United States. I have sent a letter to President Obama and Secretary Clinton indicating that while I do not oppose the pipeline or its purpose, based on our historical need for oil and gas, I have several very serious reservations about TransCanada’s operations and procedure for route approval.

I am extremely concerned about TransCanada’s questionable record of pipeline maintenance. Keystone I has already experienced 12 spills in its first year but claims no fault because those spills were at pumping stations. That’s more first-year spills than any other pipeline in US history. Keystone I was recently issued a Federal Corrective Action Order in June, 2011 by the US Department of Transportation to take necessary action to protect the public, property and the environment from potential hazards associated with two spills this summer in Sargent County, North Dakota and Doniphan County, Kansas.

There is absolutely no denying that spills will happen. Enbridge dumped over 1 Million gallons of tar sand crude into Michigan’s Kalamazoo River, polluting and closing the waterway to fishing and swimming for 6 months. ExxonMobile spilled 42,000 gallons of oil into the Yellowstone River contaminating America’s National Park waterway. The good people of Louisiana, where I attended Tulane University, will suffer for decades from the tragedy of British Petroleum’s offshore explosion. Spills can and will happen. They will poison our waterways and kill our wildlife. The Sandhills are home to the endangered Whooping and Sandhill Crane migratory bird species, the endangered American Burying Beetle, and dozens of waterfowl and wildlife. Even worse, viscous tar sands, which won’t float like light sweet crude, will sink into our porous Ogallala Aquifer, contaminate our clean water systems, and cause catastrophic and irreversible damage. If we don’t stop this now, future generations will forever wonder why we allowed this to happen.

I am opposed to TransCanada’s questionable and deceptive tactics. It’s a very serious problem when a foreign corporation can enter our state and dictate what’s going to happen on our private property. Property that has been held by generations of Nebraska family farmers. The US State Department must acknowledge that TransCanada did not have the proper permits to threaten to invoke eminent domain. It’s unethical and it’s against the law. I have a copy of the letter they have sent to landowners threatening land condemnation. The intimidation and deception of our citizens is real.

Furthermore, I am outraged that TransCanada has briefed our legislative staff, partnered with our local unions, sent the Consulate General of Canada to meet with me, sponsored our Nebraska State Fair, and implied University of Nebraska backing on Husker gamedays all while declaring to be our friend.

Friends don’t send hostile letters to innocent landowners. They don’t infiltrate our state with unsubstantiated illusions about increased jobs and decreased oil prices at a time when working families, farmers and cattle ranchers are clinging to their livelihoods and barely making ends meet. Friends don’t turn a deaf ear when a state pleads for them to shelter their drinking water from toxic crude oil and their fragile ecosystems from erosion.

Our two US Senators have said no. One US Representative has said no. Our Governor, Dave Heineman, has asked the President to deny TransCanada’s permit based on location. Our University has told TransCanada to get their advertisements out of Memorial Stadium. 30 Nebraskans peacefully protesting TransCanada’s tactics have been arrested at the White House. Our Legislature is seriously considering – and I support – a costly Special Session to protect our state from TransCanada’s refusal to hear us that our Aquifer is Nebraska’s most precious resource. They’ve threatened our landowners with eminent domain and land condemnation, invaded our airwaves and newspapers with confusing and manipulative advertising and made questionable political contributions to our lawmakers. Today, TransCanada has caused hundreds of Nebraskans to take the day off, drive across the state and show up to again voice their serious concerns.

How many more times can Nebraska tell you?  We do not want our Ogallala Aquifer and Sandhills adversely affected by TransCanada’s dirty tar sand sludge. The Final Environmental Impact Study report indicated that for 65 miles, Keystone XL Pipeline will be less than 10 feet away from the Aquifer. That simply is not acceptable. The Aquifer provides 78% of Nebraska’s clean drinking water and provides 83% of Nebraska’s total irrigation water for livestock and crops. We do not want TransCanada jeopardizing our clean water, irrigation source or the livelihood of Nebraska’s family farmers with vague and unfounded promises. We will not risk a spill on our watch.

I’ve heard the arguments about ending our dependence on foreign oil. About Canada being a friendly nation we can count on. About TransCanada being a neighbor who will invest in our communities. I understand about the need for new jobs in a time of economic instability. And quite frankly, I am not moved. I am simply not convinced that these promises can or will be guaranteed by TransCanada. Are we willing to gamble away Nebraska’s environmental future on uncertainties? On temporary labor jobs and oil that, once refined, is not earmarked for American use? On a company who has a history of deceptive trade practices and faulty equipment installation?

Given that TransCanada refuses to be a friend and acknowledge their corporate responsibility, Nebraskans will continue to be resolute in the stewardship of our environment, our land, our history and heritage for the future of our children. We are unwavering in our support for what our families have spent generations protecting and we will not back down.

There is a solution, and we all know it. Absent a good faith effort from TransCanada to voluntarily propose to Nebraska another Pipeline route, the US State Department must reject this application and TransCanada must move the Keystone XL Pipeline east. Get it off of the majority of the Ogallala Aquifer. Keep it out of our extremely fragile ecosystem. Why is it so hard for TransCanada to move the Pipeline east? To follow its existing Keystone I pipeline route? Is it because they were deceptively acquiring land ahead of their application approval and would now have to obtain new landowner easement rights? Let me remind you: TransCanada’s bottom line is not our problem.

It is incumbent upon the US State Department to reject approval of this permit and require TransCanada to reroute the Keystone XL Pipeline away from the Sandhills and Ogallala Aquifer. Then, and only then, will this project win our confidence and likely acquire broad support in Nebraska. The Keystone XL Pipeline may be in the national interest, but the route is absolutely not in Nebraska’s interest. As Nebraskans, we respectfully request, no, we absolutely demand, the rejection of TransCanada’s permit application.”

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Case comment on Omers Energy oil and gas lease case available

Professor Nigel Bankes of the University of Calgary has posted a case commentary at ABlawg.ca on the recent Alberta Court of Appeal decision in Omers Energy Inc. v. Alberta (ERCB): case comment.  I posted a brief note on this case last week.

ABlawg.ca Case Comment: A Century of Liability for an Abandoned Well

Professor Nigel Bankes of the University of Calgary has posted a commentary on a recent decision of the ERCB which confirmed that the current owner of a non-producing oil well was responsible for "re-abandonment" costs.  The well in question had not produced oil since the 1920's.
Read the case comment at: A Century of Liability for an Abandoned Well.

Read the ERCB decision at: Dalhousie Oil Company Limited.

Ontario Court of Appeal rules against oil and gas landowner

Tribute Resources Inc. has won a partial victory in its appeal from a decision of Justice David Little that declared an oil and gas production lease (PNG lease) and a gas storage lease (storage lease) terminated. The Court found that the storage lease has terminated, but the PNG lease is still valid and subsisting.


With respect to the PNG lease, the Court of Appeal disagreed that the termination of production from oil and gas wells, although rent was still being paid under the lease, meant termination of the lease. The Court also found that late rental payments did not cause the agreement to terminate:

The Oil and Gas Lease, as I read it, does not stipulate that failure to make the rental payments on time should operate to automatically terminate the contract. Such a construction is inconsistent with the provision of the Oil and Gas Lease that provides:

In the event of default on the part of the Operator in making any payments hereunder or in complying with any of the conditions herein contained, the Land Owner shall notify the Operator by registered mail of his intention to cancel this lease. The Operator shall have 30 days from the receipt of such notice in which to remedy such default failing which the Land Owner may proceed to cancel this lease according to law.

McKinley never gave Tribute notice of default and intention to cancel the lease but accepted the late payments.

As for the storage lease, the Court agreed with Justice Little's findings:

Turning to those questions, I begin with the Gas Storage Lease. I agree with the analysis of the applications judge that the automatic termination clause of Schedule B is a true condition precedent. It provides that the Gas Storage Lease will terminate on the tenth anniversary date “if and only if” Tribute or “some other person” has not made an application to the OEB. The words of the clause and the contract read as a whole do not indicate that the automatic termination provision was for the benefit of one party or the other. Rather, the parties chose a particular event, the non-occurrence of which would terminate the contract. The clause does not place any obligation of performance on Tribute that McKinley could waive. The applications judge was correct to find that the initial acceptance of the rental payment for the ensuing year could not constitute a waiver or estoppel by conduct on the part of McKinley. The applications judge was correct to grant the declaration that the Gas Storage Lease terminated on September 24, 2008.

Also of note in the case is the Court's comment on the applicability of the recent Snopko v. Union Gas decision (also from the Court of Appeal), which confirmed the Ontario Energy Board's exclusive jurisdiction over gas storage agreements. In this decision, the Court clarified that the OEB's exclusive jurisdiction commences only when it has designated a storage area under the OEB Act. In this case, where no designation order had been made (and no storage of gas was taking place), the Court's jurisdiction to determine questions about the termination of the storage agreement was not affected by the OEB Act.

Read the Court of Appeal decision at: Tribute Resources Inc. v. McKinley Farms Ltd., 2010 ONCA 392 (CanLII)

Read Justice Little's original decision at: Tribute Resources Inc. v. McKinley Farms Inc., 2009 CanLII 33043 (ON S.C.)

Southwest farmers tell oil company to forget pipeline - Winnipeg Free Press

Southwest farmers tell oil company to forget pipeline - Winnipeg Free Press

It's a showdown between a group of Manitoba farmers, who want to get their crops in the ground, and a big oil company from Houston. ...

National Energy Board cancels Same Season Relief Well hearing

The National Energy Board (NEB) has now cancelled outright the hearing process announced in February to review the need for relief wells associated with offshore oil drilling.  In an earlier post I commented on the effect the BP disaster in the Gulf of Mexico has had on that hearing process and on the NEB's policy of "goal-oriented regulation".

Now, rather than addressing the particular question of relief wells (work on a relief well in the Gulf of Mexico is currently under way, but won't be ready for months), the NEB plans a general review of Arctic safety and environmental offshore drilling requirements.  The NEB says, "Full details of the review will be announced in the near future, when the focus in the Gulf of Mexico shifts from stopping the leak and protecting the environment to understanding what happened. The process will be public and consultative. The NEB will welcome the participation of other regulators in this process."

Click on this link to view the NEB's Press Release.

Same Season Relief Well issue before the NEB - What will be done in Canada to avoid a repeat of the BP disaster here?

Somewhat ironically, the National Energy Board had started a hearing process in February, 2010 to review its Same Season Relief Well (SSRW) policy, just weeks before the BP drilling rig explosion and oil spill in the Gulf of Mexico (relevant documents can be viewed at: MH-1-2010.  BP has been criticized for not having relief wells in place to reduce the pressure in its damaged well that is now spewing oil onto the Gulf coast. 

Here's what BP said in its submission to the NEB in March:

As will be discussed in greater detail below, for both technological and operational reasons, continuance of the SSRW capability is not required and is problematical for BP and other operators, and may well impede further exploration in the Beaufort Sea.

BP is advocating that the policy be changed by eliminating the requirement for same season relief well capability, and any time-of-year drilling restrictions associated with that policy. In BP's view, consistent with the on-going development of goal-oriented regulation, the Board should utilize a series of goals and objectives to enhance safety and protection of the environment.

That was in March.  Of course, in April, BP's operations in the Gulf of Mexico have initiated the worst environmental disaster in the United States since the Exxon Valdez.  Is "goal-oriented regulation", which is the NEB's policy in dealing with safety and the environment, right for Canada?  Where the goal is to avoid environmental disasters, does "goal-oriented" regulation (i.e. set the goal and let industry decide what needs to be done to achieve the goal) do any good?

For its part, Conoco Phillips wrote to the NEB on Monday to suggest that the hearing process be put on hold pending the investigation of the BP disaster: Conoco Phillips to NEB.

Standing at the ERCB without an interest in land, but “no costs for you!”

Standing at the ERCB without an interest in land, but “no costs for you!”

Click on the link above to read an article by Assistant Professor Shaun Fluker of the University of Calgary, Faculty of Law about participation rights before the Alberta Energy Resources Conservation Board (ERCB):

Standing at the ERCB without an interest in land, but “no costs for you!”

          Written by: Shaun Fluker

Case considered: Freehold Petroleum and Natural Gas Owners Association v. Alberta (Energy Resources Conservation Board), 2010 ABCA 125

In Freehold Petroleum and Natural Gas Owners Association, Madam Justice Elizabeth McFayden dismisses an application for leave to appeal an Energy Resources Conservation Board (ERCB) hearing costs decision that relates to an earlier ERCB decision concerning a mineral lease dispute. This Court of Appeal decision and the underlying ERCB decisions are noteworthy to me for two reasons: (1) the ERCB granted full hearing participation rights to the Freehold Petroleum and Natural Gas Owners Association (the Freehold Owners Association) despite the fact it does not have an interest in land; and (2) the Court of Appeal defers to the ERCB on what I consider to be an unreasonable exercise of its discretion on the costs matter. I will comment on each of these points in turn after briefly summarizing the facts. [...]

Canadian Natural Resources Limited appeal dismissed by Alberta Court of Appeal

The Alberta Court of Appeal has dismissed the appeal of Canadian Natural Resources Limited (CNRL) of a Court of Queen's Bench surface rights decision made in favour of landowners.  The most important ground of appeal revolved around criticisms which the Court of Queen’s Bench made of one of the CNRL’s witness’ expert evidence. There is case law which was not disputed on the appeal. It holds that if a pattern of dealings has been established, then compensation for compulsory imposition (or renewal) of a surface lease for an oil or gas well may be based on the negotiated amounts in those prior contracts between others. The Court of Queen’s Bench concluded that no such applicable pattern of dealings had been proved here (paras. 89, 118 and 155). That was a rejection of most of the evidence of this expert witness.

The Court of Queen's Bench had summarized the reasons for its rejection of the pattern of dealings evidence:

a) There was no definition, precise or general, of the area to which this pattern was said to apply.

b) There was no information with respect to how many sites, overall, are within the area.

c) There was no indication of how many sites were reviewed in order to ascertain the comparables, nor any indication of why other sites reviewed were not comparable.

d) There was no explanation of why this pattern was applicable to a certain area.

e) There was no information provided with respect to the number of parties, either operator or landowner, represented within the comparables.

f) There was no information with respect to the negotiation process.

g) With respect to the chart showing CNRL irrigation and dryland leases, almost half of the leases do not fit the compensation pattern.

h) There was no explanation of why leases that were presented as comparables but that did not fit the compensation pattern supported the pattern of dealings.

i) There was no explanation as to why initially only new agreements were considered appropriate comparables, but why later, rent reviews were also considered to be properly included.

The Court of Appeal found that the Court of Queen's Bench, as finder of fact, was entitled to reject the expert evidence of pattern of dealings.  There was no reversible error in the lower court decision.

Read the Alberta Court of Appeal decision at: 2010 ABCA 91 (CanLII).

Read the Alberta Court of Queen's Bench decision at: 88 Alta. L.R. (4th) 298

NEB rules Imperial Oil to provide updated economics on Mackenzie Valley Pipeline project

I recently posted a link to a notice of motion brought by Alternatives North in connection with the Mackenzie Valley gas pipeline project. Alternatives North has requested that the National Energy Board (NEB) require the proponents of the project to update economic information they had filed in 2007, citing changes in financial circumstances (drop in demand for natural gas, etc.).

The NEB has ruled on the motion in favour of requiring updated information to be filed. Read the decision at:
https://www.neb-one.gc.ca/ll-eng/livelink.exe?func=ll&objId=601020&objAction=browse

British Columbia oil and gas landowners to have "Farmer's Advocate"

In response to landowner concerns about the growing oil and gas industry in British Columbia, the provincial government has created the "Northeast B.C. Rural Residents Independent Land Information & Advocacy Office" or "Farmers' Advocate"). The stated purposes of the Advocate are to: disseminate information; resolve problems; emphasize facilitation and negotiation; and provide an effective, independent "gateway" to existing organizations with mandates relating to rural landowners.

A Request for Proposals by candidates interested in the Farmers' Advocate position closed February 11, 2010.

Visit the Farmer's Advocate page on the B.C. Government website at:
http://www.empr.gov.bc.ca/MACR/FarmersAdvocate/Pages/default.aspx

U.S. EPA creates public surveillance program called "Eyes on Drilling"

Nick Snow of the Oil and Gas Journal reports on a new initiative by the Environmental Protection Agency (EPA) in the U.S. that invites citizens to report non-emergency suspicious activity related to oil and gas development. Read more at:
http://www.pennenergy.com/index/blogs/washington-pulse/blogs/OGJ/washington-pulse/post987_2866464857426730017.html