|
Gas producers notch big win in high court ruling Supreme Court of Canada rules in favor of companies, against landowners involved in decades-old dispute; lawyer says millions of dollars at stake Gary Park Petroleum News Calgary Correspondent
Natural gas producers have won a decades-long legal fight in Canada that carries a multi-million dollar prize.
The Supreme Court of Canada issued a unanimous ruling July 16 that the producers can keep a share of the gas extracted from land once owned by the Canadian Pacific Railway.
In upholding an earlier decision by the Alberta Court of Appeal, Canada’s top court rejected 21 test cases by 85 individual landowners who had sought royalties from liquefied gas on their properties, covering 7,000 leased acres.
Lenard Sali, a Calgary lawyer who represented BP’s Canada division, said the case involved some of the most important legal issues to the energy industry to come before the court in the last decade.
He said the verdict, which represents “hundreds of millions of dollars” of royalties, could have repercussions for the development of coalbed methane in Canada.
The dispute had its origins in 1912 when the Canadian government gave the Canadian Pacific Railway land as payment for building a rail link from British Columbia to the rest of Canada. Gases belonged to landowners The railway made agreements with settlers on those lands under which petroleum liquids belonged to the energy companies that leased the rights from Canadian Pacific and the gases belonged to the landowners.
The case focused on whether natural gas that is in liquid form deep below the surface should be defined as petroleum.
The Supreme Court ruled that the term petroleum included all hydrocarbons in liquid form, including liquefied natural gas.
It further concluded that the gas was in liquid state at the time of the land sale and therefore did not belong to the landowners.
Norm Machida, an attorney for the plaintiffs in the 21 lawsuits, said his clients have received no royalties on the gas and, based on the court ruling, it is now clear that they are not entitled to any.
Companies listed in the lawsuits include BP Amoco, Petro-Canada, Gulf Canada (now ConocoPhillips Canada), Imperial Oil, Suncor Energy and Mobil Oil Canada (now ExxonMobil Canada).
| 