CAPL 2011 Agricultural Supplement

connection energy & agricultural land

C a n a d i a n a s s o C i at i o n o f P e t r o l e u m l a n d m e n s u P P l e m e n t 2 0 1 1

Presented by

Celebrating 30 YEARS

OF DEVELOPING RELATIONSHIPS BETWEEN INDUSTRY AND THE AGRICULTURAL COMMUNITY

30 th EST. 1981

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441638 ❍ LAND ACQUISITION D.R. Hurl & Associates Ltd ❍ LAND ADMINISTRATION IFC ❍ CONSULTATION

❍ PROJECT MANAGEMENT ❍ MUNICIPAL APPLICATIONS

Since 1981 the HURLAND team has been providing comprehensive services in all aspects of Surface Land Acquisition, Administration, Project Management and Public Consultation CALGARY

403∙264∙8550 info@hurland.com SHERWOOD PARK

1∙888∙321∙2222 info@hurland.ca

www.hurland.com

table of Contents 16

keePing it all straight

Making a difference—the CAPL in your community

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who are you going to ask?

8

oPerations snaPshot

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rural resPeCt

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exPloring field aCquisition PaPerwork

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working with ogaa in northeastern british ColuMbia

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negotiator’s notebook:

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Message froM the editor

Message froM the President

Horizontal drilling and hydraulic fracturing

Snowed under with papers?

Here’s a quick guide to wading through the blizzard.

Surface and mineral lease administration— a landowner perspective

Key contacts for landowners in western Canada

New oilpatch initiative urges service workers to show courtesy in the field

Creating a great deal with the oil company

Know what’s below.

Call before you dig.

831505 www.transcanada.com TransCanada PipeLines Limited Guaranteed first page facing Inside Front Cover

energy & agriCultural ConneCtion | 2011

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Commitment Runs Deep

Being a Good Neighbour.

In late 2007, Devon’s Marc LaBerge saw an opportunity to reduce the impact of pipelining on the land and build our relationship with landowners. By working in partnership with provincial regulators, Marc helped Devon introduce innovative pipelining strategies to the company and the industry.

This low-impact process involves less topsoil disturbance, smaller rights of way, narrower trenches, reduced clean-up costs, less deforestation and reduced downtime for both industry and landowners. As a result, this technique has become standard practice across Devon’s Canadian operations.

448950 Devon Canada Corporation full page · fp

Thanks to the creativity and resourcefulness of people like Marc, Devon is continually enhancing our ability to be a good neighbour.

FORTUNE 100 Best

Companies to Work For® 2011 GREAT PLACE TO WORK INSTITUTE CANADA

Best Workplaces 2010

President: Dalton Dalik, P. Land Managing Editor: Dean Gould, P. Land Director, Public Relations: Sally Jackson, P. Land Advertising Sales: Nicole Kiefuik Deborah Wilson Published by: JuneWarren-Nickle’s Energy Group the Canadian association of Petroleum landmen is an expanding organization committed to enhancing all facets of the land profession through communication, education, professional development, technology and member services.

2010–2011 CaPl board of directors Vice-President James Condon, P.land Director, Business Development frank terner, P.land Director, Communications margaret ariss Director, Education Jan mcKnight Director, Field Management Jason tweten, Psl Director, Finance John Covey Director, Member Services robyn Van den bon, P.land, Psl Director, Professionalism nikki sitch, P.land, Psl Director, Technology robin thorsen Secretary/Director, Social gloria boogmans, P.land

Message froM the editor On behalf of the CAPL Public Relations Committee, it is a great pleasure to present this year’s Energy & Agricultural Land Connection publication. One of the primary objectives in compiling the many articles that have been presented in previous Energy & Agricultural Land Connection publications, along with those currently featured in this year’s publication, is to provide our readers some insight into the many issues affecting the oil and gas industry and the community in which it operates. This year’s compilation of articles was specifically constructed to provide an overview along with some insight into oil and gas field operations and the related activity affecting the surface landowner. We hope to provide the readers of these articles some answers to the many questions and concerns affecting the many stakeholders, along with some reference material for possible future use.

To view past Agricultural Insert publications, please visit: www.landman.ca and go to the “Annual Feature” tab beneath the “Publications” heading.

The CAPL Public Relations Committee is always striving to meet the demands and wants of its readership. We welcome you to voice your comments and suggestions so that we can better tailor future Energy & Agricultural Land Connection publications to your interests. On behalf of the CAPL Public Relations Committee, I encourage you to contact me at dean@spectrumlandservices.com with your comments and/or suggestions.

— d.a. (dean) gould, P. land Managing Editor CAPL Public Relations Committee

Past President Ken gummo, P.land #350, 500 - 5 Avenue S.W. Calgary, Alberta T2P 3L5 Phone: (403) 237-6635 Fax: (403) 263-1620 www.landman.ca

energy & agriCultural ConneCtion | 2011

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493035 Traverse Land Group Surface land consultants who know what it takes 1/2h to bridge the gap between 路 hp energy producers and stakeholders.

Calgary 300 1011 1st Street SW Calgary, AB T2R 1J2 | p: 403.265.1050 | f: 403.234.0621 | t-f: 866.835.8429 Sedgewick 4911 48th Ave, P.O. Box 36 Sedgewick, AB T0B 4C0 | p: 780.384.3565 | f: 780.384.3576 www.traverselandgroup.com

At ARC Resources Ltd. we are committed to honest and respectful day to day interactions with all our stakeholders: the people who own and work in our company, the people that we do business with, the communities where we live and operate in, government and other regulatory agencies we interact with and the people of the provinces whose oil and gas we produce.

826502 ARC Resources Ltd 1/2h 路 hp

Message froM the President Making a difference—the CaPl in your community While “land” is in our name, the CAPL knows that “people” are really what our business is all about.

We recognize that our success both as an association and as individual members is built on our close connections to the community. Since our inception in 1948, the CAPL has not only worked hard to establish and nurture close relationships but also to make a difference in the community.

WE’RE ExHiBiTioNiSTS! One important way that the CAPL contributes is by supporting and participating in regional agricultural exhibitions. These “fairs” play a valuable role in the community by providing a combination of education, entertainment, social connection and, often, a look to the future. By sponsoring elements of these events and/or participating as an exhibitor, the CAPL is able to stay connected with “old friends” and bring awareness and education to the next generation of agri-business colleagues and neighbours.

This past year, the CAPL participated in the Canadian Western Agribition in Regina, Sask. The event took place from Nov. 22-27, 2010.

Its theme was “Forty Years of Excellence,” in honour of the event’s 40th anniversary. As one of close to 1,100 exhibitors, the CAPL had the opportunity to reach many of the 150,000 exhibition attendees. In particular, the Regina-area landmen who staffed our booth were pleased with the opportunity to connect with some of the over 5,000 schoolchildren that attended as a part of their school curriculum. We also had the great privilege to participate in the Agri-Trade Show in Red Deer, Alta., again this past year.

The show ran from Nov. 10-13, 2010, with over 75,000 people in attendance. Our member volunteers that staffed the CAPL’s booth were from a variety of disciplines within our profession.

They enjoyed the opportunity to connect with landowners, educate their neighbours about the CAPL and field questions about individual specialties and career opportunities.

HoLy CoW! The 4-H Foundation is an important organization in the community. For the past five years the CAPL has sponsored the Calgary Stampede Steer competition fundraiser in support of the 4-H Foundation. Each year, we purchase the Reserve Champion Steer and then, with the assistance of our generous sponsors, we raffle it off and donate the proceeds to the 4-H Foundation. To date, this community-based fundraiser has contributed over $48,000 to this wonderful youth-based program.

WELL ENDoWED! The Petroleum Land Management (PLM) Program at the University of Calgary’s Haskayne School of Business was initiated in 1983

with an endowment from the CAPL. This school offers the only Mineral Land Management concentration in Canada. The CAPL continues to support our industry and promote youth education by providing additional endowment funding, providing networking opportunities and making scholarships available.

The CAPL also provides support to another first-class education program, the Land Agent program at Olds College. Originally called Olds Agricultural College, this highly respected institution has been providing career-oriented education to our youth since 1913. The CAPL recently provided an endowment of $50,000 to Olds College in support of the Land Agent Diploma program.

WE “gRoW ouR oWN”!

Another important initiative that the CAPL undertakes is the mentorship program. This program has been designed to enhance the success of PLM students as they make their transition from student to working professional. This year fifteen landmen, all of who are members of the CAPL, volunteered to act as mentors to help “grow” these students into successful professionals.

WE PAy iT FoRWARD! The CAPL holds a silent auction in conjunction with its annual Christmas meeting. The proceeds are donated to a different charity each year. A couple of past examples are the Ronald McDonald House (associated with the Alberta Children’s Hospital) in December 2009, and the North East Calgary Adopt-a-Family program, which received a donation of $4,247 in December 2010. iT’S A WRAP….

The CAPL is in the process of planning our community involvement and initiatives for the coming year. We look forward to carrying on our current initiatives as they have been so well received, and our members have enjoyed the connection and sense of community that naturally occurs from giving back. We are also looking for new opportunities to make a difference in this vibrant community in which we live and work.

— Dalton Dalik, P.Land CAPL President 2010-2011

energy & agriCultural ConneCtion | 2011

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oPerations snaPshot horizontal drilling and hydraulic fracturing

PHOTO: JOEY PODLUBNY

By Devon Hall

do you ever wonder how several hundred 30-foot, 495-pound pieces of steel drill pipe joined together can be manipulated and steered 90 degrees from vertical to a horizontal? Or why, after a drilling rig leaves a newly drilled location, there is a sudden neverending convoy of equipment, trucks, tanks and personnel filing into the location and what all that equipment is for?

Horizontal drilling and hydraulic fracturing (“fracing”) is quickly becoming the mainstream operation and the preferred choice among oil and gas operators in trying to enhance oil and gas recovery and maximize production. This technology is growing in leaps and bounds and has become a valuable key to unlocking some reserves once thought untouchable and, interestingly enough, reducing the industry’s footprint.

The drilling of a horizontal well begins no differently than that of a vertical well. A drill bit is attached to the bottom of the drill pipe and drilling commences by rotating the entire length of the drill stem. The rotation of the drill stem causes the bit to begin chewing and cutting its way through the rock formations. As the bit makes its way through the rock formations, the drilling mud plays a major role in keeping the bit cool, bringing all the rock cuttings to surface, providing wellbore stability and also maintaining a heavy column of fluid (“hydrostatic pressure”) in the wellbore to keep any pressures downhole within the formations and not making its way to surface (“kick”).

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energy & agriCultural ConneCtion | 2011

The first step is the drilling of the surface hole. The surface hole is drilled to depths far below any possible source of known fresh water aquifers and the drilling string is then removed (“tripped”) from the hole. Steel pipe (“casing”) is then run down the wellbore and cemented in place by pumping cement down the top of the casing and forcing it out the bottom of the casing (“casing shoe”) and all the way back to surface between the outside of the casing and the rock formation, creating a seal of steel and concrete, thus isolating the wellbore from any freshwater aquifers.

The drill stem is then run back into the hole and drilling resumes by first drilling through the cement and casing shoe and the intermediate hole is underway. The drilling can now take several days if not months depending on the target depth and any setbacks along the way, such as: getting stuck in the hole, changing of dull bits, loss of circulation, equipment failure and weather, to name a few. Typically, this vertical wellbore ends approximately 500 feet above the planned horizontal leg of the well—known as the kickoff point. The drill pipe is again removed or tripped out of the hole and steel intermediate casing is run down the hole and cemented in place.

At this point, a directional drilling company arrives on location to use their tools, technology and expertise in getting the wellbore from vertical to horizontal by steering the bit to and through the intended target or pay zone. The directional drilling crew

horizontal drilling and hydraulic fracturing is quickly becoming the... preferred choice among oil and gas operators trying to enhance recovery and maximize production.

Horizontal drilling—by tHe numbers Horizontal completions—canaDa

according to JuneWarren-nickle’s p.o.s.t. report, these are some of the major horizontal drilling projects planned for 2011 in western canada:

2010 - 5,023 2005 - 2,345

novus energy at DoDslanD, sask: 37 viking wells

2001 - 1,488

top 5

WHo’s drilling, and WHere?

horizontal drillers

by Metres drilled

‘10

CRESCENT PoiNT ENERgy—774,088 CANADiAN NATuRAL RESouRCES—674,070 PETRoBAKKEN ENERgy—664,676 ENCANA—599,506 PENN WEST PETRoLEuM—551,610

installs a specialized joint of pipe containing a mud motor and measurement-while-drilling (“MWD”) instruments on the end of the drill string. The drill pipe is then run back into the hole and drilling commences by again drilling through the cement and intermediate casing shoe. The difference now is the drill stem is no longer being rotated to turn the bit—the bit is the only thing rotating. The bit is being rotated by the mud motor, which is being driven by the force of the drilling mud being pumped down the pipe. Since the pipe is no longer being rotated, this enables the mud motor to have a slight angle placed in it by the directional driller—so when the mud motor is at bottomhole and the pipe is slightly rotated at surface, you can essentially steer the direction of the drill. Knowing which way to turn the pipe is accomplished by interpreting readings sent to surface by the MWD tool. This tool is a sophisticated cluster of instruments located in a nonmagnetic piece of pipe above the mud motor. These instruments send pulses up through the mud, which are decoded at surface and indicate the angle and inclination of the well as it is being drilled. As these measurements are constantly being sent to surface, the directional driller can make a series of adjustments over time by slightly rotating the pipe and gradually steering the bit where it needs to go.

In getting the well from vertical to horizontal (“lateral”), the directional drillers follow a well plan, which is a predetermined

trioil resources at locHenD, alta: up to 16 cardium wells WilD stream exploration at DoDslanD, sask: 15-20 wells WilD stream exploration at sHaunavon, sask: 20-25 wells paramount resources at musreau, alta: 15 wells nal oil & gas at garrington, alta: 15 (net) cardium wells

blueprint of calculations showing the well path from the kickoff point, to building the appropriate angle, to reaching horizontal and finally the target zone. The distance between the kickoff point and where the well will finally become horizontal is typically around a quarter of a mile. Once horizontal, the lateral leg of the well can reach thousands of metres in length, penetrating large distances of the target rock formation. Upon completion of the lateral leg of the well, the drill stem is removed from, or tripped out of, the hole and in most cases production casing is run and cemented into place—which permanently seals off the entire wellbore from the rock formations it passes through. A temporary wellhead is now placed at the surface and the drilling rig is released and a much smaller and quicker service rig is brought in to complete the well.

To complete a well and bring it to a production-ready state, the service rig can perform any number possible completion operations depending on the type of well. In horizontal wells where oil and gas operators are trying to access and unlock the reserves trapped in a low permeability or extremely hard rock (“tight formation”), it is quite common for the operator to use an operation known as hydraulic fracturing or multistage fracturing (“fracing”) to complete the a well. A frac job requires a lot of equipment and usually results in a large increase in the traffic and personnel entering a newly drilled location. The fracing operation utilizes ›

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several large pumper trucks, personnel trucks, flow lines, coil tubing units and multiple large tanks. Although these fracs are usually completed in one day, the logistics are staggering and it can take up to two months to plan and organize the job—with the setting up of crews, water, sand and equipment.

The first step prior to the actual frac is to blast holes (“perforate”) in the target zone. A perforating gun is lowered into the wellbore at the end of a one-to-three inch semi-ridged pipe that is mounted on a large spool or reel (“coil tubing truck”). It is lowered down to the target zone in the horizontal leg of the wellbore. An electrical charge is sent down the tubing, which triggers the perforating gun and sets off a series of small explosive charges, which blow holes through the casing, cement and a short distance into the rock formation. In a multistage frac, once one zone is perforated, it is isolated with a frac plug and the operation is repeated in the next zone. This is repeated until the entire horizontal leg or target zone has been perforated and in some instances can be up to 12-20 times. The frac plugs are then drilled out and the wellbore is now ready for the actual fracing operation to commence. A series of large pumper trucks connected together through a network of pipes and manifolds then simultaneously pump frac fluid into the wellbore at extremely high rates. The frac fluid is typically a mixture of either water, light oil, CO2 or nitrogen mixed with an additive (to prevent scaling, bacteria growth and friction) and a proppant such as sand. Usually, the fluid is 99 per cent water and sand. This frac fluid is pumped down the wellbore at

extremely high pressures at volumes that can reach up to 16,000 litres per minute. It is forced through the perforations and out into the rock formation, fracturing the rock and creating a network of fissures and cracks throughout the rock that will now link the formation to the wellbore. Once the pressure is released, the proppant in the frac fluid keeps the cracks and fissures from fully closing, which allows the oil or gas to migrate into the wellbore.

An operation then takes place to recover the fracing fluids that don’t remain in the formation, so they may be stored or reused.

The storage, handling and disposal of frac fluids are strictly regulated and must comply with the Energy Resources Conservation Board requirements. After the fluids are recovered, the well testers can then flow the well and determine the economic viability of the well.

Although all these operations seem very intensive and require large amounts of traffic and personnel condensed in an area, the drilling of a single horizontal well with a multistage frac is definitely enhancing the recoverability of oil and gas. Due to this success, single well operations such as these are now taking the place of the numerous vertical wells it would take to get the same result. This reduces the number of access roads, the number of facilities, the amount of long term traffic, the number of pipelines and the overall impact on an area. Essentially, these operations not only result in enhanced recovery and maximized production, but they also substantially reduce the industry footprint in areas where this technology is being utilized. ■

A Partner in the Community 744605 Imperial Oil 1/2h · hp

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At Imperial Oil, we pride ourselves on being a partner in the community.

By providing energy to Canadians and investing in communities, we strive to make a positive and lasting contribution.

energy & agriCultural ConneCtion | 2011

WP001194 10 06

PHOTO: ©iStockphoto.com/malerapaso

exPloring field aCquisition PaPerwork snowed under with papers? here’s a quick guide to wading through the blizzard.

By Nikki Sitch, B.Comm (PLM), PSL, P.Land, Land Agent

when a land agent arrives at your door carrying a large stack of paper under one arm, I’m sure there are a few folks wondering what the purpose is for all of this paperwork. Alberta’s oil and gas industry is heavily governed by regulations and there is a lot of paperwork to complete in order for the operator to drill a well or install a pipeline or facility on your land. The required documents include a project-specific information package, Section 17 Waiver and/or Receipt of Proposed Agreement form (optional), Entry Fee form and the Surface Lease or Alberta Right-of-Way Agreement.

With the removal of Clause 1(c)(ii) from the Land Agents Licensing Act, it is no longer a requirement for landowner advisers to have a land agent’s licence. However, it is advisable that a land agent or lawyer be used if you have negotiation concerns with an oil and gas or utility company. Unfortunately, you will not have much recourse if a negotiation goes sideways and you’ve used an unlicensed adviser.

Although it is not a legislated requirement, many oil and gas companies will provide some compensation to landowners for the use of land advisers, however many will refuse to pay for representation from someone who is not professionally recognized.

PRojECT-SPECiFiC iNFoRMATioN PACKAgE

SECTioN 17—LAND AgENTS LiCENSiNg ACT

A project-specific information package, as described in Directive 056, is required by the Energy Resources Conservation Board (ERCB). The project letter introduces the project to you and creates an opportunity for dialogue between yourself and the land agent to openly discuss the proposed project and ask any questions or bring forth any concerns you might have.

Along with the project letter, the operator is required to provide you with the following documents issued by the ERCB: a letter from the chairman of the ERCB, an ERCB brochure Understanding Oil and Gas Development in Alberta, EnerFAQs 7: Proposed Oil and Gas Development: A Landowner’s Guide and ERCB EnerFAQs publications that relate to the type of energy development proposed (i.e. well, pipeline or facility). Additional information relating to Directive 056 can be found on the ERCB website.

When the land agent enters into negotiations with you for an interest in land, Section 17 of the Land Agents Licensing Act requires that the land agent leave you with a completed copy of the proposed agreement with the land agent’s name and business address endorsed on it or attached to it and at that time explain to you the provisions of Section 17. The proposed agreement must be left with you for at least 48 hours before any negotiations can resume, unless you sign a waiver of the 48hour period. Section 17 only has to be complied with once during the negotiations and does not have to be complied with again even though further negotiations may result in changes to the agreement.

If you do not require the proposed agreement be left with you for the 48-hour period and would like to sign the agreement, a Waiver of Application of Section 17(2) of the Act form must be signed by you and commissioned (usually by the land agent). If you choose not to waive the 48-hour period then an optional form may be used by the land agent called the Receipt of Proposed Agreement. This form provides documentation that the land agent complied with Section 17 of the Act and Section 7(2) of the Regulation and that the landowner took his or her 48 hours to review the proposed agreement.

LAND AgENTS In Alberta, in order to negotiate for an interest in land a person must hold a valid land agent’s licence, which must be renewed every two years. If you are unsure if a person holds a valid land agent’s licence, ask to see a copy of their licence or contact the office of the Registrar of Land Agents (Land Agents Licensing) to verify. Land agents are required to follow certain negotiation procedures and standards of professional conduct according to the Land Agents Licensing Act and Regulation.

If you require assistance with or have a concern regarding a land agent, you can contact Land Agents Licensing to discuss the situation.

SECTioN 7—LAND AgENTS LiCENSiNg REguLATioN The proposed agreement referred to in Section 17 of the Land Agents Licensing Act must have an accurate sketch attached to it and must be completed with the proposed terms, which include an offer of compensation, the names and addresses of each of the parties, the nature of ›

energy & agriCultural ConneCtion | 2011

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the interest being acquired, and the legal description. The land agent must also offer to explain to you the proposed terms of the agreement.

If you do not want the terms explained, the land agent does not have to explain them, however the offer to explain them has to be made in order for the land agent to comply with Section 7(2) of the regulation.

The Field Acquisition Management Committee of the Canadian Association of Petroleum Landmen has been working on a new Surface Lease and Alberta Right-of-Way Agreement that uses plainer language and is updated for current regulations and precedents. It is anticipated that these agreements will be finalized and available for use in 2011.

SECTioN 19—SuRFACE RigHTS ACT (ENTRy FEE) Section 19 of the Alberta Surface Rights Act requires the operator to pay an entry fee to the lessor (landowner) prior to exercising the right of entry. The entry fee is not applicable to the completion of a survey. Typically, the operator has a separate entry fee form which describes the government-legislated amount of $500 per acre for entry fee with a $250 minimum, up to a maximum of $5,000 per titled unit. This amount is in addition to any compensation payable with respect to the right of entry.

SuRFACE LEASE AND ALBERTA RigHT-oF-WAy AgREEMENTS These are the legal contracts negotiated between you (the landowner) and the land agent (on behalf of the operator). These agreements provide the operator with your permission to lease a portion of your land to drill and operate a well, access their facilities, build and operate a pipeline or power line, and/or build and operate surface facilities. Like any contract, the Surface Lease and Alberta Right-of-Way Agreement require the following elements: intention, offer and acceptance, certainty of terms, consideration, capacity to contract and legality.

CoMPENSATioN Compensation is described in Section 25 of the Surface Rights Act and includes the following factors for Surface Leases: market value or land value, loss of use, adverse effect and general disturbance. Market value is described as the amount the land granted to the operator might be expected to realize in the open market by a willing seller to a willing buyer. Land value is the per-acre value of the titled unit in which the land granted to the operator is located, based on the highest approved use of the land. Loss of use is typically defined as crop loss or pasture loss and is typically a standard area-per-acre amount based on the type of crop, but can be figured out based on the price per bushel, and number of bushels per-acre then average on a five-year rotation. Adverse effect is the adverse effect of the area granted to the operator on the remaining land of the owner or occupant and the nuisance, inconvenience and noise that might be caused by or arise from the operations of the operator. General disturbance is described as the additional nuisance, inconvenience and noise associated with the operator’s activities in the first year, such as drilling. The annual compensation is derived from adverse effect and loss of use.

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Check out our new Sustainable Development website at: www.conocophillips.ca

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energy & agriCultural ConneCtion | 2011

www.cpcsustainability.com

The compensation factor that is used for pipelines or utilities on the Alberta Right-of-Way Agreement is land value and is paid prior to construction. The year after construction, damages are settled with the landowner, or occupant at the landowner’s request. The Damage Release includes crop loss or pasture loss relating to lack of growth over the right-of-way.

If there was any additional nuisance and inconvenience relating to pipeline construction, this is the agreement where this gets settled.

WHERE To go FoR HELP If you have questions or concerns about a negotiation or a pro ject, start with the land agent, who can provide you with additional information. If your concern is with an existing facility, well or pipeline, contact the operator and ask for the land department.

• Seismic activity—start with the operator then Alberta Sustainable Resource Development • Surveys—start with the operator then the Alberta Land Surveyors’ Association • Project concerns (safety, objections, licensing, spills)—start with the operator then the Energy Resources Conservation Board • Compensation—start with the operator then the Surface Rights Board • General information for landowners—Farmers’ Advocate Office • Reclamation—Alberta Environment • Land agents—Land Agents Licensing ■

on the web:

oNLiNE SouRCES FoR MoRE iNFoRMATioN energy resources conservation BoarD: www.ercb.ca - Public Zone—EnerFAQs, Across the Board Newsletter, oil and gas, public safety - Industry Zone—Acts and Regulations, Directives Farmers’ aDvocate oFFice: www1.agric.gov.ab.ca/$department/deptdocs.nsf/all/ofa2621 - Pipelines in Alberta: What Farmers Need to Know and Negotiating Surface Rights - Seismic Operations and Landowners’ Rights - Landowner’s Roadmap for Energy Development lanD agents licensing: www.employment.alberta.ca/documents/WiA/WiA-LAL_sr_ landagent.pdf - Surface Rights and the Land Agent—A Guide for Landowners and Occupants surFace rigHts BoarD: www.surfacerights.gov.ab.ca - Process, forms, rules, contact information

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energy & agriCultural ConneCtion Suncor Energy: 2011 CAPL Agricultural Supplement: Half page 7”w x 5”h; 4c, no bleed.

KLVC. February 4, 2011. | 2011

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ILLUSTRATION: ©iStockphoto.com/publiy

negotiator’s notebook:

Creating a great deal with the oil CoMPany

By David B. Savage, P.Land, ACC

TARgET READER AND SiTuATioN farmers, ranchers and acreage owners who are surface landowners and/or occupants that are approached by (or in a business relationship with) an oil company.

KEy MESSAgE To get the best deal, you must first clarify your own interests and objectives then design the relationship collaboratively with the company representative. Most often, we avoid and minimize the opportunity for both parties to understand one another’s real interests and develop a positive long-term relationship. To create a great deal with the oil company, you must clarify your own interests, communicate them with the company representative and be prepared to design the relationship and the deal together.

ExPLoRATioN Your life as a farmer, rancher and acreage owner is rewarding and challenging. Time is short and many variables beyond your control have significant impacts on you, your family and your operation. When an oil company representative contacts you and wants to meet to discuss their plans to drill a well, build a road or install a gathering line, a common reaction is, “I don’t have time for this.” A second common reaction is, “Leave me alone.” Consider that how you engage 14

energy & agriCultural ConneCtion | 2011

(or not) will have an impact on the resulting negotiation. Consider the possibility that through effective preparation, conduct and follow-through for a negotiation, you may be better off than you were before.

When surface rights owners and mineral rights owners negotiate, a large percentage of the discussions are about rights and money. It’s important to take a look at the variety of information on the Internet and in documentation you receive from the oil company representative. The rights and money issues will certainly be identified; however, if you focus on these two topics alone, you may be missing some other important possibilities. Preparing for and during the negotiation, the questions of who has the right to what and to do what, and how much, are important—and they miss a key element of the negotiation.

Definitely know your rights and attempt to negotiate a deal that is equitable to both parties. Take the negotiation process as an opportunity and platform to learn and identify the accountabilities and consequences for both parties.

Here are some items for you to consider as you respond to an oil company representative. This is only a partial and summary list, which does not replace the importance of more complete and professional advice:

A. Do not avoid or give in (the most common response).

B. First, say no.

I. In the recent book from the Harvard Program on Negotiation, The Power of a Positive No: How to Say No and Still Get to Yes, William Ury tells us that a positive no is comprised of a yes/no/yes.

II. Yes: Expresses your interests. It is yes to myself and what is important to me.

III. No: Asserts your power and boundaries.

IV. Yes: Further builds the relationship.

This yes may be your counter-proposal on the when, where, what and who for your first meeting and beyond.

C. Tell the representative what you need from them. This may include information on timing, location, who will be on your land, what are your key contacts with them now and in the future, what authority does the oil company representative have and where else do decisions need to be reviewed, what advisers and third-party experts are available, how do we protect the land/water/air, and much more.

D. Find out whether they are on a single track with most everything already decided before they come to you or whether they are open to alternatives that you may create together.

E. Prepare yourself and the representative to negotiate in a collaborative manner

to find solutions that may not be initially apparent.

F. Do not avoid the negotiation, as you may end up with much less than what is possible had you engaged. g. Do not fear conflict. Holding boundaries around what is most important to you is necessary for a good negotiation.

I. In my 35 years negotiating in the North American oil and natural gas business, some of the greatest outcomes for all stakeholders have come out of conflict. When we are in conflict, angry and even hostile, there is something underneath that needs to be heard, understood, honoured and built into the deal.

II. In contrast, the most frustrating and narrowest deals often come from avoidance or giving in.

H. Be prepared to communicate your interests to the company in a way that allows them to look for ways to respect and share them.

I. Know the difference between positions and interests.

II. Positions are, “This is what I must have.”

III. Interests are the underlying motivators to those positions: what is most important to me, what are my values, what are my fears, what are my dreams for my family and this land, how might the oil lease support or detract from my business, etc. i. Create measurable accountabilities and consequences in the agreement. If something happens or one party fails to meet their obligations, what are the consequences for that party? Include this in a written agreement. j. When all is said and done: I. The money should be negotiated last.

It should provide for what all the other terms do not cover.

II. The rights will be addressed by the contract, the law, the regulatory system and other avenues. These two components are key but not central to a great deal.

III. Meet face to face as much as possible.

IV. Know that we must go slow before we can go fast.

V. Create an ongoing relationship with the company and the representative. When things change or challenges arise, create the relationship that can respectfully and responsibly react together.

Just saying no or taking the money without regard to all the other issues and interests is rarely the way to explore the opportunity, the challenge, the costs, the benefits, the risks or the future benefits.

I encourage this type of deal undertaking for you to develop a respectful, collaborative negotiation resulting in a mutually acceptable agreement for both parties and produce a significant positive relationship.

Some oil company representatives do not have the authority, skill or interest in engaging this way. However, I know that most do. If the oil company representative does not have the authority, skill or interest, then it is better to know this early.

Then decide how you can make the necessary requests to change that.

CALL To ACTioN I challenge you: 1. To write out a list of things that are most important to you, your family and your business related to the negotiation. These are not terms, conditions or positions.

These are your interests, values and visions for your future on this land.

2. To contact the company representative or broker and request a face-to-face meeting to explore these and develop strategies and terms that meets both yours and the company’s.

3. To create a learning conversation and business relationship between you and the company.

When more surface rights owners and mineral rights owners engage in negotiations like these, as families, communities, provinces and our nation, we will all benefit. Who will not benefit are perhaps those whose interests are served by distrust and ongoing conflict (and there are these on both the surface and mineral sides).

Let’s shift from adversarial, shortsighted, time-limited and distrustful negotiations to ones that build authentic, respectful and collaborative engagement to create more complete deals and longterm mutually beneficial relationships.

Create a great deal. ■

522820 Progress Land Services Ltd 1/6h · dqch Ph: 1-866-454-4717

www.progressland.com

637332 Farmers’ Advocate of Alberta 1/6h · dqch FA R M E R S ’ A D V O C AT E O F F I C E

“Re-thinking Rural Alberta”

Phone: 310-FARM (3276) Fax: (780) 427-3913 www.farmersadvocate.gov.ab.ca

energy & agriCultural ConneCtion | 2011

15

surface and mineral lease administration—a landowner perspective

By Paul Negenman and Tamara Bews

keeping proper track of your surface and mineral leases with oil and gas companies can sometimes be a daunting task, especially at certain moments, such as: • upon the death of the landowner (i.e., the lessor) who originally granted the lease; and • when you wish to transfer the rental or royalty payments to your children or others.

This article offers an overview of the underlying rules of what to do when these events occur. If you have an understanding of why certain things need to be done, it can help you keep the whole process straight, so the paper you sign achieves your goals.

Please remember that oil and gas company land administrators can often be of assistance in providing the lease documentation required to change their records at no cost. We know it can be very difficult to find the right person to help, but if you keep trying, you will find some very helpful people. For an oil and gas company, there is nothing worse than uncertainty about whom to pay rentals or royalties to. They want to keep their land records straight just as much as you do so that they can ensure that they pay the proper parties. Honest.

2. The personal representative then distributes the deceased’s estate to the beneficiaries.

Having regard to the above, oil and gas companies are reluctant to change their land records even if you provide them with a copy of the death certificate for the deceased landowner or a copy of the deceased’s will. Oil and gas companies want to avoid being put in a position of attempting to interpret the deceased’s will or to determine its potential validity. As a result, oil and gas companies will not usually change their records until the person requesting the change provides them with appropriate documentation to ensure that any lessor (i.e., landowner) to be recognized under the surface and mineral lease will be the same person named on the certificate of title.

To summarize, two separate but overlapping issues arise in connection with the administration of surface and mineral leases by oil and gas companies: • who is named of the certificate of title?; and • who is the recognized lessor (landowner) under the agreement?

DEATH oF THE LANDoWNER

TRANSFER oF THE CERTiFiCATE oF TiTLE To PERSoNAL REPRESENTATiVE oR SPouSE

If a landowner dies without a valid will, government legislation (such as the Alberta Intestate Succession Act, the Intestate Succession Act in Saskatchewan, etc.) will apply to the distribution of the deceased’s estate.

It is important to remember that the process of transferring the deceased’s estate and the lease is a two-step process: 1. The deceased’s estate passes to the personal representative or representatives (i.e., the person or persons who have been authorized by the courts to deal with the deceased’s property).

The most obvious thing that needs to be done is for the certificate of title to the land to be transferred into the name of the personal representative or surviving spouse. This results in a new certificate of title being issued by a land titles office. This is very important to do. Otherwise the certificate of title can be left stranded in the name of a deceased person. Although this does not usually occur with surface titles, it happens way too often with mineral titles. In our business this leads to annoying problems for all parties involved, because lawyers insist that leases be taken

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energy & agriCultural ConneCtion | 2011

PHOTO: ©iStockphoto.com/publiy

keePing it all straight

if you have an

ASSigNiNg THE SuRFACE AND/oR MiNERAL LEASE

process straight, so

Okay, so you’ve completed all of the above and the title is transferred. Is there anything else that needs to be taken care of? Unfortunately, the answer is yes.

By transferring the certificate of title, you’ve confirmed who now owns the lands. However, this does not confirm that the new landowner is entitled to receive rentals or royalties from the oil and gas company with respect to a mineral or surface lease. In other words, the entitlement to receive payment is not a question ›

PHOTO: ©iStockphoto.com/s-dmit

from the registered owner on title, and it is very difficult for dead people to sign a mineral or surface lease.

In Alberta, if the deceased landowner was listed along with his or her spouse on the certificate of title as joint tenants, the title can be transferred very simply. The surviving spouse merely needs to file a copy of the death certificate with an Alberta land title registry agent and a new certificate of title in the spouse’s name alone will be issued.

If, however, the deceased landowner was not listed as a joint tenant with another person, was unmarried or widowed, then the certificate of title can only be transferred upon probate of the will or administration of the deceased’s estate in Alberta. This is a standard court application most often made by a lawyer.

Once the court grants the application, the grant of probate form is filed at the land title office and a new certificate of title in the name of the personal representative is issued.

Usually a second title transfer occurs immediately thereafter, whereby the personal representative transfers title to the proper beneficiaries, so that a new title is in their names. If you are acting as a personal representative, it is important not to delay in filing this second transfer. This is again an annoying problem in our business because this second transfer is often forgotten and years later the title is again stranded in the name of a deceased or elderly personal representative, rather than lands being transferred into the name of the beneficiaries.

understanding of why certain things need to be done, it can help you keep the whole

the paper you sign achieves your goals.

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Synergy Land

Pursuing Perfection www.synergyland.ca | 1.877.961.LAND (5263)

energy & agriCultural ConneCtion | 2011

17

PHOTO: ©iStockphoto.com/Kirby Hamilton

for an oil and gas company, there is nothing worse than uncertainty about whom to pay rentals or royalties to. they want to keep their land records straight just as much as you do.

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of land ownership. Rather, it is a contractual matter that must be dealt with separately in accordance with the provisions set out in the applicable lease. Very, very often this contractual part of the equation is forgotten and the beneficiaries of the estate get upset at the oil and gas companies for continuing to pay the wrong people. Please don’t blame the oil and gas company—they must comply with the legal requirements that pertain to the lease.

For an oil and gas company, all payments must be made according to the terms of the lease agreement, which requires payment be made to the party who is the recognized lessor (subject to the direction to pay exception discussed below). When the recognized lessor is deceased, it becomes difficult to make payments to that person.

For a certain period of time, the bank will keep the deceased’s bank account open, so payments can still be deposited, but at some point this account will be closed and this can result in cheques being returned to the oil and gas company because the account number is no longer valid, and no one wants that.

The oil and gas company will usually request that the personal representative or representatives present them with a document called an assignment of lessor’s interest (which transfers the lease to the personal representative); and a notice of change of depository. Oil and gas companies all have these forms available, and if you ask, they will often fill out the form and send it to you or the lawyer administering the estate.

This second step very often gets forgotten by the personal representative and leads to confusion and frustrated landowners.

Please ensure that these forms are completed and returned to the oil and gas company. Properly following the rules of contract law is a good thing and benefits everyone in the long run.

TRANSFER oF PAyMENTS To oTHERS Sometimes you will want to remain the recognized lessor to a lease but have the rents or royalties payable under the lease paid to a third party or perhaps to another relative.

In this situation, we recommend that you do not assign the lease to this third party. The primary reason being that you might want to remain the recognized owner since you remain on the land and want the oil and gas company to report to you. This is entirely possible and an appropriate alternative under your lease.

If you merely want to direct the payments to a third party, you do so by way of a written document called a “direction to pay” signed by yourself and indicating who the payee is. Again, most oil and gas companies can provide you with the form you need.

One further advantage of a direction to pay is that you can cancel (revoke) the direction at any time. So if you change your mind and want the rentals or royalties paid to you, you can unilaterally do so without having to consult with any other person.

Remember though, if you execute an assignment of lease rather than a direction to pay, you will have assigned all your rights in the lease to the assignee and will no longer have a contractual relationship with the oil and gas company. Rather, the assignee (e.g. relative) will now be the party to the contract. The disadvantage to you is that an assignment of lease cannot be cancelled and you now have no say on how the lease is administered even though it affects your land. ■

Although a majority of issues can be dealt with by contacting the landman

who are you going to ask?

or company directly, there are several groups that can be contacted to answer questions or help with concerns.

key contacts for landowners in western Canada

By Mike Downie

The following is a list of some of the key agencies that may be able to offer some guidance. You are encouraged to contact the agency or visit their website for more details.

BRiTiSH CoLuMBiA BC oil and gas Commission—The BC Oil and Gas Commission is an independent, single-window regulatory agency with responsibilities for overseeing oil and gas operations in British Columbia, including exploration, development, pipeline transportation and reclamation.

Phone: 250-794-5200 www.bcogc.ca

lease and right-of-way agreements. It helps them understand their rights should they wish to engage in the regulatory processes associated with energy development on their land and assists with dispute resolution/ mediation if appropriate to try to resolve individual concerns with energy development.

Phone: 310-FARM (3276) | Email: farmers.advocate@gov.ab.ca www.farmersadvocate.gov.ab.ca

Surface Rights Board of British Columbia—The Surface Rights Board of British Columbia provides dispute resolution services to landowners and companies. The board resolves disputes on the amount of compensation payable for surface access or terms of a surface lease.

Phone: 1-888-775-1740 | Email: office@surfacerightsboard.bc.ca www.surfacerightsboard.bc.ca

SASKATCHEWAN Saskatchewan Surface Rights Board of Arbitration—The board’s objectives are: • to provide a comprehensive procedure for acquiring surface rights; • to provide for the payment of just and equitable compensation for the acquisition of surface rights; and • to provide for the maintenance and reclamation of the surface of land acquired in connection with surface rights.

Phone: 306-463-5447 | Email: SurfaceRightsBoard@gov.sk.ca www.er.gov.sk.ca/SurfaceRights

ALBERTA Alberta Environment—Alberta Environment sets, monitors and enforces environmental standards, pollution-control measures, issues authorizations for the life cycle (construction, operation and reclamation) of certain activities, administers and manages the environmental assessment process, as well as the reclamation and remediation of project sites following closure.

Phone: 1-780-427-2700 | Email: env.infocent@gov.ab.ca www.environment.alberta.ca Alberta utilities Commission—The Alberta Utilities Commission regulates the Alberta utilities sector to protect the social, economic and environmental interests of Albertans.

Phone: 403-592-UTIL (8845) Email: info@auc.ab.ca www.auc.ab.ca Energy Resources Conservation Board (ERCB)—The ERCB regulates the safe, responsible and efficient development of Alberta’s energy resources, including oil, natural gas, oilsands, coal and pipelines.

Phone: 403-297-8311 | Email: Inquiries@ercb.ca www.ercb.ca Alberta Surface Rights Board (SRB)—The Alberta SRB adjudicates compensation issues between landowners and operators and can issue right of entry orders.

Phone: 780-427–2444 | Email: srb.lcb@gov.ab.ca www.surfacerights.gov.ab.ca The Farmers’ Advocate office (FAo)—The FAO assists landowners in developing their own negotiation strategy as it relates to energy surface

information Services Corporation (iSC)— ISC is the provincial Crown corporation responsible for the administration of land titles, vital statistics, survey, personal property and corporate registries, as well as related geographic information. www.isc.ca Saskatchewan Energy and Resources—Its mandate is to achieve full and responsible development of Saskatchewan’s energy, mineral and forestry resources; to work with businesses to expand the Saskatchewan economy; and to optimize revenues to fund government programs and services.

Phone: 306-787-2528 www.er.gov.sk.ca MANiToBA The Surface Rights Board of Manitoba—The primary function of the Surface Rights Board of Manitoba is to arbitrate disputes relating to right of entry or compensation for surface rights used by holders of oil and gas rights. The board also provides mediation services on a voluntary basis.

Phone: 1-800-282-8060 or 204-945-3744 Email: barb.miskimmin@gov.mb.ca www.gov.mb.ca/stem/mrd/board/srboard.html Petroleum Branch—The Manitoba Petroleum Branch is the governing body for the petroleum industry in Manitoba and works to enforce acts and regulation related to the oil and gas industry.

Phone: 1-800-223-5215 | Email: petroleum@gov.mb.ca www.gov.mb.ca/stem/petroleum ■

Surface Acquisition

Public Consultations

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Damage Settlements

Crown Sales

Environmental Studies

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Appraisal Studies

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501043 McNally Land Services Ltd 1/4h · tqc Serving the Petroleum Industry for Over 45 Years

#215 Summit Business Park 5718 – 1a Street S.W. Calgary, AB T2H 0E8

P: 403-503-5263 F: 403-503-5272 E: mlsmail@mcnallyland.com

energy & agriCultural ConneCtion | 2011

19

ruralresPeCt new oilpatch initiative urges service workers to show courtesy in the field

By Lynda Harrison

oilpatch service workers are being encouraged to communicate with and be respectful of the rural residents whose property they operate on, in a new initiative endorsed by Canada’s major oil and gas industry trade associations.

Community Partners, an industry-wide, in-the-field courtesy program, is designed to strengthen relationships between the upstream oil and gas industry and community members one person at a time, Roger Soucy, former president of the Petroleum Services Association of Canada (PSAC), said at the program’s launch last October.

The program focuses workers’ attention on the most common local concerns related to the industry’s activity. “That includes dust, closing gates, garbage, noise, traffic and driving more safely,” Soucy said. “The program also reminds employees and contractors to communicate openly with residents and to treat everyone and their property with respect.”

Community Partners is asking companies to participate by signing an interactive version of the program’s guiding principles and sending confirmation to their appropriate association.

Also at the launch were Ron Liepert, Alberta’s minister of energy, who offered the provincial government’s support, as well as representatives of the oil and gas industry trade associations and some companies.

The visible face of the industry is usually the service sector, said David Pryce, vice-president of operations for the Canadian Association of Petroleum Producers (CAPP). Service companies help oil and gas producers to explore, drill and produce their plays. The new program is a strong commitment to working effectively with landowners, Pryce said.

“It’s recognizing that we’ve got a social licence that we have to acquire and this kind of a program helps lean towards that.”

The “good-neighbour policy” is good business for Alberta, added Gary Leach, executive director of the Small Explorers and Producers Association 20

energy & agriCultural ConneCtion | 2011

of Canada (SEPAC). Average Albertans have to deal with the impact of this huge industry, and that impact isn’t always as easy to live with as its members would like to think.

“I think it’s important for the health of this industry that Albertans are [shown] respect by industry, and it’s important for Alberta, as a major source of North America’s energy supply, that this kind of program tries to moderate the impact [of the oilpatch] on the lives of Albertans as they go about their business,” Leach said.

The program has since been rolled out in British Columbia, with the participation of the six core association partners plus Energy Services BC, which represents the service and supply sector in that province.

“The people of this province recognize how important the natural gas and petroleum sector is to our economy, and this program will strengthen the relationship between industry and our communities,” British Columbia Energy Minister Steve Thomson said at the B.C. roll-out in December. “Community Partners is a program we can all support.”

In a public survey PSAC conducted last year, community members told the association they appreciated the economic benefits delivered by the oil and gas industry, but they were bothered by the disrespectful behaviour of some workers.

“In response, we created Community Partners—an industry-wide program with simple behaviour guidelines that make it easy for all employees and contractors to participate,” said Mark Salkeld, who took over from Soucy as PSAC president last November.

MLA Pat Pimm said that as a long-time resident of the Peace River region, he is very aware of the concerns communities have regarding natural gas and petroleum activities.

“Community Partners is an opportunity for industry to address these concerns and show a commitment to improving their work as responsible corporate citizens.”

“The program also reminds employees and contractors to communicate openly with residents and to treat everyone and their property with respect.”

— Roger Soucy, Former President, Petroleum Services Association of Canada

The initiative is in response to a survey PSAC commissioned a year ago asking residents of communities within the Western Canadian Sedimentary Basin their opinion of the industry. The 1,152 surveys conducted produced the following data highlights: • The top three overall issues for respondents were employment, health care and the economy; • 58 per cent of respondents viewed the industry favourably; • 59 per cent of respondents viewed the companies working in their communities favourably; • 79 per cent of respondents agreed the industry is believable; and,

• 63 per cent of respondents said they were interested in learning more about the oil and gas industry.

In addition to PSAC, SEPAC and CAPP, the other major oil and gas industry trade associations that have agreed to the Community Partners’ guiding principles on behalf of their member companies are: Canadian Association of Geophysical Contractors, Canadian Association of Oilwell Drilling Contractors, Canadian Energy Pipeline Association and Energy Services BC. ■ (Reprinted with the permission of JuneWarren-Nickle’s Energy Group)

Through Information Sharing, Collaboration and Consultation, Roy Northern Land and Environmental is committed to developing long term relationships with stakeholders.

600354 Roy Northern Land Service Ltd 1/2h · hp

Visit us online at: www.roynorthern.com/connection Alberta

British Columbia

Box 847 10912 - 100 Ave. Fairview, AB T0H 1L0 T: 780.835.2682 F: 780.835.2140 Toll Free: 888.835.6682

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energy & agriCultural ConneCtion | 2011

21

Working WitH ogaa in nortHeastern britisH Columbia

By Jasone Blazevic

when i wrote my august 2010 article discussing the roll-out of the new Oil and Gas Activities Act (OGAA), there were still many unknowns about the specific direction of the new act. Along with the certain questions that accompany any regulatory transition was the vision of a system that would provide greater clarity and certainty to the regulatory framework within British Columbia. Originally slated to come into effect earlier in 2010, OGAA was rolled out Oct. 4, 2010, well into the transition timing.

Four months later, there are still numerous outstanding questions and ongoing regulatory uncertainty. However, gains have been made in the creation of a structured venue where stakeholders can be heard via the new consultation and notification process.

Four months later, there are still numerous outstanding questions and ongoing regulatory uncertainty.

OGAA came as a response to the changing nature of the oil and gas industry in British Columbia, more specifically in northeastern British Columbia. Over the past decade, oil and gas drilling activity has increased dramatically. This increase has been met with growing pains for the stakeholders, communities, regulators and the oil and gas industry. While early drilling was focused in areas where there were few full-time inhabitants, drilling operations have increasingly moved closer to densely populated areas.

It is this coexistence that prompted the need for a more clearly defined set of regulations. In theory, this direction could enable the development of provincial resources in a manner that allows the people of British Columbia to benefit from those resources, while maintaining social, economic and environmental responsibility.

While the vision of OGAA has certainly taken a positive step in this direction, its implementation has not been without challenges.

One of the major casualties of the late release of OGAA was the transition time that had initially been slated to accompany its introduction. When OGAA roll-out and implementation were first planned, there was discussion of a possible three-month transition period during which the old regulations would be phased out and the new ones phased in. Unfortunately, this transition period was eliminated due to the delayed roll-out, and OGAA and most of the accompanying regulations were fully implemented without an adjustment period on October 4th. The end result of this has been the steep learning curve with which the Oil and Gas Commission (OGC), community stakeholders and industry have had to contend.

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energy & agriCultural ConneCtion | 2011

Perhaps more than any other stakeholder, the OGC has been greatly affected by the lack of regulatory transition. Although the act and its regulations have been captured in principle for some time, in practice, the actual process of implementation has been very challenging. For example, OGAA working manuals are updated monthly on the OGC website, which results in users also having to constantly update their processes. In addition, when OGAA came into effect, the OGC’s computer systems had not been updated to accommodate the changes, resulting in backlogs because of applications having to be manually inputted by OGC staff.

As stated in the Oct. 4, 2010, news release issued by the Ministry of Energy, Mines and Petroleum Resources, “OGAA better defines and clarifies the role of the British Columbia Oil and Gas Commission.� Although the implementation of OGAA has kept the OGC busy over the past four months, some gains have been made with regard to greater control over the regulation of the oil and gas industry. As with any regulatory or policy change, successful implementation will take time. Once the main focus shifts from working out day-to-day challenges with the new act and its regulations back to the broad vision of OGAA, some major gains in regulation should be realized by both stakeholders and industry.

A key aspect of OGAA is the newly created appeals tribunal system, which gives stakeholders a forum to pursue grievances. However, to my knowledge there has yet to be a test case in which this process can actually play out. In addition to the appeals tribunal, OGAA contains a new compliance and enforcement (C&E) section, which provides greater structure surrounding regulations and consequences for violations. Currently, there is no accompanying regulation for this section of the act, but it is widely believed that British Columbia is looking to model its system after the escalation model used in Alberta. Ultimately, the success or failure of the appeals tribunal and C&E model will be reflected in infraction frequency and severity, especially for companies with repeated violations.

OGAA comes as a result of eight years of collaboration with various stakeholders, striving to create the best possible consultation and notification (C&N) process as outlined in the C&N regulations.

From an industry point of view, one of the most significant changes is the C&N process required to engage stakeholders. Previously, there was a one-kilometre radius for wellsite notification. The new process requires a one-kilometre consultation radius for those whose land is adversely or directly impacted and/or contains a residence or livestock shelter. There is also a further 0.5-kilometre radius outside of this that requires notification only. Along with the C&N distances changing, the time allotted for this engagement has also changed.

Formerly, an applicant company was only required to wait two weeks for this portion of the application process to be complete from their point of view. This time frame has now been lengthened to 21 days,

plus an allotted amount of time dependent upon the prescribed method of service (i.e. mail versus email) as set out in the C&N regulation Sec. 16(1).

From stakeholder, regulator and industry perspectives, the biggest change to the C&N requirements has been the formal process of lodging concerns or objections to proposed projects by means of a written submission. Prior to OGAA, companies conducting notifications would note feedback somewhere in their submissions. However, the OGC didn’t have a clearly defined set of regulations through which it could enforce responses or actions for industry. Now, stakeholders either have 21 days to make a written submission to the applicant, or they may make a submission to the OGC up until the time that a decision is rendered on the application. Submissions received during the 21-day time frame must be responded to by the applicant. Submissions received after the 21-day time frame are left up to the discretion of the applicant with regard to a response. However, based on my own experience, it would be in the best interest of the company to respond no matter what phase of the application process they are in.

From an industry point of view, this new process puts an onus on concerned stakeholders to capture their thoughts in writing. However, it also places more responsibility on industry to respond to concerns more formally, and creates an obligation for industry to provide mitigative solutions where reasonable or provide an informative explanation for the decisions made. Hopefully, this will eliminate some of the more generic complaints that industry has historically

a key aspect of ogaa is the newly created appeals tribunal system, which gives stakeholders a forum to pursue grievances. seen, while allowing for a focused response to individual concerns.

Under OGAA and the C&N regulation, the process will require the OGC to determine if these concerns have merit, and if so, provide a structured framework for how to best address them. Ideally, this will result in a more collaborative approach for interactions between various stakeholders and oil and gas companies.

In addition to the new stakeholder response requirements, another significant impact for industry has been the increased timelines involved in securing a permit for oil and gas operations. Perhaps the most obvious change as a result of this is the additional emphasis on advance planning. Starting the acquisition process earlier and increasing both engagement and familiarity with the requirements are several of the initiatives that industry could utilize to ensure OGAA’s vision of a balanced oil and gas regulatory framework is met.

While there have been growing pains throughout the four months since the implementation of OGAA, it should eventually lead to an environment where clear guidelines, due diligence and a collaborative approach result in fair, balanced outcomes. ■

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®

430954 Canadian Association of Petroleum Landmen OBC The Canadian Association of Petroleum Landmen (CAPL) is proud to have dedicated individuals working with members of the rural community to develop our abundant natural resources in a fair and efficient manner for both Agricultural and Petroleum and Natural Gas interests.

It is the CAPL’s mandate to offer its continued support to the heart and soul of our community – the agricultural producer.

The CAPL is an expanding organization committed to enhancing all facets of the land profession through communication, education, professional development, technology and member services.

The CAPL’s activities interface with other resource-based associations, government departments and the public to facilitate common understanding of the issues, challenges and solutions in the business of the oil and gas industry.

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