Borden Ladner Gervais via Mondaq | 20 May 2015

Alberta Court of Appeal Decision a Reminder of the Importance of Municipal Approvals Before Oil and Gas Operations

The Alberta Court of Appeal recently issued a tough reminder that oil and gas service companies need municipal approvals to operate—and not just assumptions or assurances that those approvals will come.

Background
In Site Energy Services Ltd. v Wood Buffalo (Regional Municipality), 2015 ABCA 106, the applicant, Site Energy, leased four lots in the Hamlet Commercial District for temporary offices, parking, washrooms, security, and fuel storage to support its work on a pipeline project. It applied to the respondent, Wood Buffalo, for development permits. Wood Buffalo refused the application because it categorized the use as an “Industrial Support Facility”, which was neither a permitted nor discretionary use in the district under the land use bylaw.

Rather than appeal the refusal, Site Energy continued operating because it anticipated reaching “an understanding” with Wood Buffalo. It had, on other occasions, commenced operations without permits in anticipation of subsequent approval.

Wood Buffalo issued a stop order, requiring Site Energy to remove its equipment and buildings. Site Energy appealed the stop order to the Subdivision and Development Appeal Board, arguing that the use could and should be recategorized as a “business support facility,” a discretionary use in the district. The board upheld the stop order and appears to have reasoned that it could not issue development permits for the alternate use because only the stop orders (and not the earlier refusal) had been appealed.

The Daily Signal | 13 May 2015

The Valley of Missed Opportunity: One Town’s Fight for Economic Revival

Marian’s Pizza Shack sits 10 miles north of the Pennsylvania line, an invisible boundary that separates this small business from economic opportunity.

After 23 years in business, owner Marian Szarejko has decided to sell her pizza shack.

“There are no jobs here,” Szarejko said. “Business has gone down so much that I am dipping into my savings just to keep this afloat.”

Szarejko’s decision echoes a common theme that has plagued the southern tier of upstate New York for years—a lack of economic development.

“If I owned a place in Pennsylvania, I wouldn’t be thinking of closing. I would be thinking about expanding,” Szarejko said. “The difference is they did fracking.”

The issue of high-volume hydraulic fracturing, commonly referred to as fracking, has emerged as a contentious national debate. Communities and states are deciding whether to embrace or ban the new form of natural gas extraction.

But nowhere is the issue as real as it is for upstate New Yorkers who see the prosperity of neighboring communities in Pennsylvania.

New York and Pennsylvania are two of five states that sit above the nation’s largest natural gas field, the Marcellus Shale.

New York bans fracking. Pennsylvania allows it.

Business for Social Responsibility | 7 April 2015

Column: Don’t Forget the Ethics

Those of us in the corporate responsibility profession often assume that definitions of “good” and “bad” are easily defined. The vocation is full of binary assumptions and pseudoscientific rankings: Reach the top of this index, adhere to that code, apply this new standard. This is the stuff upon which the profession is made.

There are many good reasons why this is the case. Environmental limits are scientifically defined. Human rights are clearly set out in declarations and covenants on which near-universal international consensus exists. Development that lifts people up from poverty is undeniably a good thing.

But I feel uneasy by this sense of certainty. Something is niggling inside of me—is our thinking too lazy?

There are many times when “good” and “bad” are not easily defined. Consider each of these scenarios, where wise and responsible people could reach very different conclusions on what the “right” course of action should be.

  • Plenty of countries have poor human rights records and inadequate governance. Is it “right” for companies to stay clean by not entering those markets, or is it “right” for companies to invest in and engage with them to improve human rights protections?
  • The entertainment industry has come under criticism for the portrayal of torture and human rights abuses in film, TV, and games. Are films that portray torture promoting torture or exposing it?
  • Governments have a duty to enforce laws that protect the rights of their citizens. But how do we balance surveillance activities without violating the right to privacy? When is it right for a company to collaborate with law-enforcement agencies?
  • The printing of 3D objects has the potential to offer huge social and environmental benefits. But what should companies do to make sure that the software and hardware making 3D printing available isn’t misused for nefarious applications?
  • And my favorite one: Is it “right” to design ever more sophisticated weapons systems that are more likely to hit their target?

While we can always refer to universal standards and international codes, they often leave significant room for maneuver in how to achieve them. Indeed, different schools of thought in ethics will lead us to different courses of action: A utilitarian focused on the greatest happiness of the greatest number would reach a different conclusion than someone taking a rights-based approach. For some, intent matters more than outcomes, and for others, outcomes matter more than intent.

 

The Associated Press | 18 February 2015

Report Says Dutch Authorities Put Gas Revenues Ahead of Citizen Safety

An independent report into natural gas drilling that has triggered a rash of small earthquakes in the northern Netherlands said on 18 February that energy companies and the government put production ahead of people’s safety in their decision making.

The Dutch Safety Board has issued a report of an investigation into the manner in which the safety of the inhabitants of the province of Groningen was taken into account when decisions on extraction of natural gas in Groningen in past years were made.

The Dutch Safety Board reached the conclusion in a report prompted by dozens of small but damaging earthquakes caused by gas drilling that have rocked the northern province of Groningen for years, causing structural damage to thousands of buildings.

Companies and government bodies involved in drilling, including Shell, ExxonMobil, and the Ministry for Economic Affairs, formed a “closed system” in which “security concerns in practice played an inferior role,” the safety board said.

It added that they should now repair their relationship with locals in part by “acknowledging that, until 2013, they did not take sufficient care with the security of citizens of Groningen.”

Blakes Lawyers via Mondaq

Procedures Introduced To Administer and Coordinate First Nation Consultation

On 4 February 2015, the Aboriginal Consultation Office (ACO) and the Alberta Energy Regulator (AER) released the Joint Operating Procedures for First Nations Consultation on Energy Resource Activities. The procedures were released in accordance with Energy Ministerial Order 105/2014 and Environment and Sustainable Resource Development Ministerial Order 53/2014.

The procedures expand upon the Government of Alberta’s Policy on Consultation with First Nations on Land and Natural Resource Management released on June 3, 2013, and the Government of Alberta’s Guidelines on Consultation with First Nations on Land and Natural Resource Management released on 28 July 2014.

Purpose
The purpose of the procedures is to help facilitate First Nation consultation related to energy projects in Alberta. The procedures introduce new processes to administer and coordinate the operations of the ACO and the AER on matters related to First Nation consultation. The procedures also encourage the ACO and AER staff to  engage one another informally, as needed, to coordinate the processing of individual energy resource development files or applications.

4 February 2015

A Workshop Reflection—What Will Your Tight-Rock Project Legacy Be?

Social responsibility is the newest evolving element within the health, safety, security, environment, and social responsibility sector of the upstream petroleum industry. In December, the Society of Petroleum Engineers held a workshop to discuss social responsibility issues related to project development. The workshop, titled Beyond Conventional Oil and Gas: New Social Opportunities and Risks, was held 2–4 December in Banff, Alberta, Canada. Workshop presenters Robert Sandilos with Chevron and Caleb Wall with Environmental Resources Management have compiled lessons from the workshop. Both, along with other social responsibility presenters, will be on hand at the 2015 SPE E&P Health, Safety, Security, and Environmental Conference—Americas on 16–18 March in Denver, where a special poster session will showcase the lessons from this and other social responsibility workshops.

This article is a brief exploration of a few key threats and opportunities, the sum of which will likely define the life-cycle legacy of most tight-rock developments, as discussed during the Banff workshop.

  • Evaluating social risks and impacts
  • Management frameworks for environmental and social risks
  • Water use in unconventional development
  • Industry impacts on community health
  • Industry relationships with indigenous peoples
  • Stakeholder engagement

Evaluating Social Risks and Impacts
In many prospective tight-rock basins globally, very few if any wells have been drilled. Stakeholders on both sides of the drilling divide start at the same place, but industry opponents have the advantage of a clean slate—no oil and gas activity (although there well may be pollution problems and environmental impacts already). A significant opportunity for industry is to set the full-field development bar high for all operators through government regulation and voluntary actions. A significant challenge for industry, in being transparent about operations, is to clearly communicate timing, specific activities, and mitigations from leasing through to plugging and abandonment.

Management Frameworks for Environmental and Social Risks
Numerous tools and management systems have been developed by operators and consultants to attempt to integrate social performance into now-traditional environmental impact assessments. A significant opportunity is to describe and plan better to manage societalrisks throughout the life cycle, most of which diminish significantly as drilling and completion moves on to long-term production. Potential economic and community investment benefits, of course, are the key long-term opportunities. The leading challenge over the life cycle of most projects is maintaining environmental protection, and the most fundamental is casing, cementing, and wellbore integrity.

Water Use in Unconventional Development
Reducing fresh and, in some regions, brackish water use is a primary objective of all tight-rock operators. Fortunately, water use declines substantially as a hydraulic-fracturing-dependent drilling program is completed. A life-cycle challenge is that this long-term view is often not very important to local residents or policy makers during water-stress or drought conditions such as those have persisted in parts of Texas and California since the shale boom really began in 2008. Two of the most important social responsibilities over the life of any upstream project surround water use are

  • The commitment to maximize recycling and reducing or eliminating use of fresh water and increasingly usable brines
  • The need to keep produced water in the pipe for safe disposal unless it is feasible to provide acceptable quality water for beneficial use

Industry Impacts on Community Health
This area is probably the fastest emerging set of local public concerns with oil and gas operations, and the most difficult to address for the long term with current data and messages. Changes in population, workers, and incomes stress health assets and relationships. Completion-phase hydraulic-fracturing-chemical use and production-phase air emissions continue to raise public questions notwithstanding industry and government actions or assurances. As indicated during several presentations, there is a current need for additional science-based health data and research, which should address long-term operations as well as drilling and completion activity.

Land Acquisition and Involuntary Resettlement
Access and resettlement are almost always looked at as early-development-phase issues, but there are important long-term elements as well. In North America, actual resettlement is rare, but long-term land-use impacts from energy development on population and wildlife habits are common. Public safety, education, transportation infrastructure, and ecosystems are all affected by any wide-spread industrial development, even if long-term facilities are of modest size. Early communication, consultation, and life-cycle impact mitigation are equally important in addressing land-use impacts and in maintaining community consent for responsible oil and gas development.

Industry Relationships with Indigenous Peoples
Relationships with local residents, regardless of their heritage, are both the oldest and the newest societal responsibility factors. Whether projects are located around subsistence or suburban communities, maintaining a positive local relationship is arguably the single most important external factor in life-cycle project success, beyond wellhead prices. As in the case of land use and impacts, there are opportunities for life-cycle local partnerships, including public safety, education, infrastructure, and ecosystems. These can enhance relationships and mitigate long-term ignorance, dependency, or animosity.

Stakeholder Engagement
This subject was fitting as the final one in the Banff workshop because engagement with local communities and the full range of stakeholders is critical and must be contemporaneous with any new project, from preleasing to plugging and abandonment. The needs, messages, and issues will vary, and any industrial project of scale will have local impacts. It may be not be possible for to leave a clean slate, but it is possible for tight-rock projects to leave a positive social, economic, and environmental legacy behind.

Read more about the 2015 SPE E&P Health, Safety, Security, and Environmental Conference—Americas here.

Torys via Mondaq | 28 January 2015

Column: Relationship Building With Aboriginal Communities Will Come Into Focus for Resource Players

The Supreme Court of Canada has released two recent seminal decisions that will significantly impact resource development projects where Aboriginal interests might be affected. As mergers and acquisitions activity in the infrastructure, oil and gas, and mining sectors unfolds in 2015, we expect buyers of and investors in Canadian targets involved in resource development to pay increasing attention to whether appropriate consultation and accommodation have occurred with local Aboriginal communities, particularly those with existing or potential title claims.

While the practical effect of these decisions will principally be driven by the circumstances of each resource development project, we anticipate due diligence reviews in the transaction process to become more focused on ascertaining potential risks and liabilities associated with possible infringement on Aboriginal title.

Read the full column here.

Denver Business Journal | 15 January 2015

Colorado Makes It Easier To File Complaints About Oil and Gas Activities

The Colorado Oil and Gas Conservation Commission (COGCC), the state agency that oversees the multibilllion-dollar industry, launched a “new, more streamlined process” for filing and handling complaints about oil and gas operations.

COGCC’s complaint website makes it easier to file complaints and also makes it easier to track the agency’s process for addressing, closing, and communicating about the complaints, the agency said.

The process has a new, dedicated webpage for filing complaints.

Saxe Law Office via Mondaq | 11 December 2014

Lawsuit Raises Question: What is Public Interest?

The Canadian Bar Association (CBA) has been engaged in a fierce internal debate over the association’s decision, now revoked, to intervene in Chevron’s appeal to the Supreme Court. The Ecuadorian plaintiffs in the case are seeking to enforce a USD 9.5 billion judgment obtained in Ecuador for terrible oil pollution and health damages allegedly caused by Texaco and others. Chevron (the corporate successor of Texaco) has no direct assets in Canada but does have an indirect Canadian subsidiary with substantial assets. Chevron has obtained a US court decision that the Ecuador judgment was obtained by fraud and argues that it cannot and should not be enforced in Canada.

The CBA originally decided to intervene to support a traditional pillar of Canadian corporate law—that, for most purposes (barring fraud), each corporation is a separate legal person, liable for its own obligations but not for those of their parent and subsidiary companies. This provoked a furious debate. Which side of this difficult case is in “the public interest?”

The CBA explained its initial decision to intervene as “based on our desire to contribute to a debate where fundamental and foundational principles of business law will be argued.” As set out in the CBA’s Public Interest Intervention Policy, the association can intervene where the case involves “a matter of compelling public interest which the Board of Directors then adopts as policy of the association” (or where there is matter of special significance to the legal profession or consistent with a previously adopted CBA policy, neither of which is applicable in this case).

But what is the public interest? As noted by several members of the Supreme Court in R. v. Zundel, a survey of federal statutes alone reveals that the term “public interest” is mentioned 224 times in 84 federal statutes. The term appears in comparable numbers in provincial statutes. The term does not and cannot have a uniform meaning in each statute. It must be interpreted in light of the legislative history of the particular provision in which it appears and the legislative and social context in which it is used.

Despite lawyers’ prolific use of the term “public interest,” it is very hard to define. Only one Canadian statute currently in force attempts to provide a definition. Manitoba’s Engineering and Geoscientific Professions Act states that “public interest” means the “well-being, convenience, and concern of the public at large.” What does that mean? Who is the “public at large?” Does the “public” include people in other countries? What are “well-being,” “convenience,” and “concern?” How does one weigh one public interest against another?

JPT | 2 December 2014

Stakeholder Issues Play Key Role in Shale Future

As the shale revolution changes the map of oil and natural gas development and shifts the balance of production between regions, public acceptance is an increasing challenge. The unconventional resource boom has brought intensive drilling and production operations to areas often unaccustomed to these activities and frequently more populous than traditional petroleum development areas.

A variety of public concerns have assumed a high profile, including the environmental issues of water use; perceived risk to groundwater aquifers; waste disposal; truck traffic, dust, and noise; and emissions.

While the success of production from shales and other tight-rock formations draws attention nationally and globally, its future depends much on the attention and reception it receives locally. As shale drilling has surged, public eyes may be more focused on the community impacts of oil and gas operations than ever before.

Shale Energy Insider | 1 December 2014

Tasmanian Landowners Seek Extra Protection During Hydraulic Fracturing Review

Shale exploration is currently under review by state officials in Tasmania, with land owners and environmental law experts pressing to secure landowners’ rights, particularly for farmers.

Jan Davis from the Tasmanian Farmers and Graziers Association has said that those in the review process should “make sure they look at the science and cut through some of the understandable but hard to manage emotions around this issue.”

State law currently offers some legislative protection to those who object to companies using their land; however, these rights are limited to the exploration phase. “Landowner consent is required at the exploration stage. It’s not required at the production stage,” said Jess Feehely of the Environmental Defender’s Office.

JPT | 15 October 2014

Engaging a Community To Gain Public Support

Colorado recently has been at the epicenter of the energy debate. The oil and natural gas industry has been facing unrelenting scrutiny from activist groups and concerns from stakeholders about operations in an urban environment. The Wattenberg field, located 25 miles northeast of Denver, has been an active field for more than 50 years and has more than 15,000 vertical wells. But the increased visibility associated with recent horizontal well activity, combined with the area becoming more densely populated, put the operations in the spotlight.

The industry has traditionally done a poor job of communicating information in a meaningful way that resonates with stakeholders. As engineers, we like to use science, data, and charts to explain things to people, but in this case it was not working. There was a need to enhance and re-engineer communications and engagement with all stakeholders.

Anadarko Petroleum recognized this need to change how the industry has traditionally interacted with the public, including the Colorado communities where it operates. Beginning in 2012, using its five core values as a guide, Anadarko began an initiative to create ambassadors out of its most valuable asset: its employees. The five core values are:

  • Integrity and trust
  • Servant leadership
  • People and passion
  • Commercial focus
  • Open communication