Landowners Guide to Oil and Gas Development

 Landowners' Guide
 to Oil and Gas Development

Introduction to 3rd Edition

3rd edition
Authors:	Duncan Kenyon, Nikki Way, Andrew Read, Barend Dronkers, Benjamin Israel, Binnu Jeyakumar, Nina Lothian
Publisher:	Pembina Institute
Publish Date:	October 2016
PDF Download:	[Landowners' Guide]              [Landowners' Primer]
Initiation Phase
Exploration Phase
Development Phase
Pipelines and Other Infrastructure
Environmental Impacts
Abandonment and Reclamation
Compensation, Rights, and Hearings
Appendices

We are proud to release the third edition of the Landowner’s Guide to Oil and Gas Development',' This new Landowner’s Guide provides information about citizens’ rights in Alberta as they relate to oil and gas development. We hope it will serve as a valuable tool for landowners, those who rent land, real estate professionals, the oil and gas industry, and any members of the public who may have oil and gas development close to or on their property.

History of the Guide and What’s New

First released in 2001 as When the Oilpatch Comes to Your Backyard, and revised in 2004, the guide was a resource that rural residents and landowners remember fondly more than a decade later as an impartial and comprehensive resource. It was seen as a tool to help landowners feel more empowered in their conversations, interactions and negotiations with oil and gas producers. Since 2004, however, much has changed. The Alberta government has introduced new legislation, regulations and procedures; the responsibilities of some departments have changed; and since 2013, the Energy Resources and Conservation Board has been replaced with the Alberta Energy Regulator which is instituting significant changes in the regulatory space for oil and gas in the province. The shale revolution represents a completely new and extensive type of oil and gas resource and this industry is developing at a rapid pace. Shale oil and gas development is also occurring in new locations, bringing activity to landowners who may have never experienced development in their area. While hydraulic fracturing uses some similar equipment and techniques as other conventional oil and gas wells, there are also considerable differences — its operations are generally more intensive (more equipment, large well sites, longer duration on site, etc.), and it comes with some unique considerations for maintaining your property and protecting the surrounding environment. The third edition reflects the considerable changes that have occurred and provides readers with the information to understand how oil or gas operations and policy and regulatory system work.

Early Involvement is Critical

One of the most significant learnings we’ve heard in our work is that early involvement is critical. The earlier that stakeholders get involved in in the planning and development stage, the more likely it is that all stakeholders can find ways to work out issues and settle on mutually beneficial solutions. If a nearby oil or gas project is not yet approved by the Alberta Energy Regulator, Before the Project Starts will provide you with the context you need to know about being involved in the project before a decision is made. However, we encourage you to read Getting Started in its entirety, as it provides important background information and advice to keep in mind while reading through the guide.

What This Guide Provides

Who is it for: Landowners, those who rent land, people who do business related to land (real estate professionals, etc.), oil and gas companies and their employees, and members of the public who have an interest in the responsible development of oil and gas. What it provides:

• What to expect with oil and gas development
• Ways to get involved in planning and decision-making processes to ensure the responsible development of oil and gas
• Information on legally required minimum standards that apply to any company engaged in resource development activities
• Ways you can encourage a company to adopt best practices to reduce possible impacts of energy development on air, land and water quality
• Accessible answers to these complex questions:
  • If a permit agent knocks at your door and says a company wants to conduct seismic exploration on your land, how do you decide whether to grant permission?
  • If a land agent tells you a company plans to drill a well or put a pipeline on your land, what do you need to know before you start negotiations? How do you decide whether any special conditions are needed in a surface lease or right-of-entry agreement?
  • If there are plans to build a well or pipeline near your home, is the company obliged to tell you or consult with you?

Where to get more help: Although this guide should give you a good sense of where to start and what issues to consider, we would encourage you to seek out help from one of the numerous contacts described in Appendix B, or a consultant or lawyer familiar with land and surface rights issues with oil and gas development.

Find What You Need in the Guide

Before the Project Starts: What you need to know before activity has started, such as when you should be notified about planned activities, how to engage a company about your concerns, and how to engage with others. Initial stages of resource development: Questions that you may want to ask before signing a permit, lease or right-of-way agreement

• Exploration for Oil and Gas
• Oil and Gas Wells
• Pipelines
• Oil Batteries and Gas Compressor Plants

Operational issues and impacts

• Emergencies: Emergencies
• Potential Environmental Impacts During Oil and Gas Operations: Operational issues and potential impacts on land, air or water.
• Well and Pipeline Abandonment and Reclamation: Requirements for abandoning wells and reclaiming land.

Administrative issues:

• Compensation and Surface Rights Access: compensation for surface rights access and right-of-entry orders.
• Public Hearings and Regulatory Board Processes: public hearing process

Resources:

• Appendix A: Contact information for government departments and boards
• Appendix B: Contact information for lawyers, professional bodies and non-profit organizations.
• Appendix C: Government legislation
• Appendix D: example checklist of costs you should keep track of
• Appendix E: Glossary. Words that are defined in the glossary are italicized the first time they appear in a section. Text boxes throughout the document highlight information of special importance or interest.

Definitions

In this document we use the words “landowners” and “residents” as specific terms, although for brevity we may only refer to landowners in the text. Technical definitions are: Landowner: the person or persons whose name(s) appears on the certificate of title to the land issued under the Land Titles Act. Resident: person occupying a residence on a temporary or permanent basis. Occupant: person, other than the owner, who has certain rights to the land (also referred to as ‘tenant’). The occupant may be in actual possession of the land or be shown as a person who has an interest in the land (which may be noted by a caveat on a certificate of title under the Land Titles Act). In the case of government-owned land, such as a Crown grazing lease, the occupant is the person shown in the records to have an interest in the land. Sometimes the occupant on a Crown lease is also referred to as the lessee. The AER distinguishes between landowners, occupants, residents and Crown disposition holders, which is important in the context of who a company is obligated to consult or notify before they submit an application (see Public Consultation, Notification and Involvement). Operator: person or company that has the right to conduct surveys or extract the oil, gas or other minerals. In this document we use the term “company” as well as operator. All major terms are defined in the glossary (Appendix C).

A Note on Mineral Rights

This guide focuses on the rights of landowners and others who lease or occupy the land but do not own the mineral rights. Most Albertans do not own the minerals that lie under the surface of their land. If you actually own the mineral rights on your land (as indicated on their legal mineral title):

• You should conduct additional research before starting negotiations or entering into an agreement with any company seeking access to their mineral rights.
• You may find it helpful to contact the Freehold Owners Association who has many resources about freehold mineral rights (see Freehold Owners Association).

An individual’s rights vary according to the activity in question. For example, an individual’s rights with respect to seismic lines or surveying are different from those that pertain to drilling an oil or gas well. In geophysical operations on private land the landowner or occupant can refuse entry, while in other cases they can negotiate but have no right to refuse entry. It is thus important to be aware of your rights for specific circumstances. While the ownership issues are different, much of the general information in this guide will still be relevant.

Involvement of Other Groups

While those who own or legally occupy land have specific rights with respect to development on their land, other groups also have rights to be consulted or notified.

• People who are adjacent to development who may be directly and adversely affected by oil and gas activity (see, for example, Public Consultation, Notification and Involvement).
  • People who can demonstrate that they may be directly and adversely affected are entitled to submit a statement of concern to the AER; this may allow you to be involved in the regulatory process to bring forward changes or issues that could change the project.
  • If you want more information and/or want to see changes to some development near to you, you should reach out to the company as well as the AER.
• Aboriginal and Métis people
  • Consultation and notification requirements for Aboriginal and Métis people are primarily handled through the AER’s aboriginal consultation unit in collaboration with the Aboriginal Consultation Office.
  • While the general environmental information presented is relevant irrespective of land ownership, there are other pieces of legislation that govern consultation and development of oil and gas on Aboriginal land, and these are outside the scope of this guide.

A Note on the New AER

The regulation of the oil and gas industry has changed significantly in the last decade. Previously, several ministries and bodies were involved in approving energy resource projects. In 2013, the new Alberta Energy Regulator was set up as a “one-stop shop” to create a more streamlined process for upstream oil, gas and coal development within Alberta and to remove overlapping jurisdictions. Its responsibilities include applications for exploration and development; inspections, compliance, and environmental protection; and reclamation, remediation and abandonment. Appendix A outlines how different government bodies are involved in the regulation of the industry. The Responsible Energy Development Act (REDA) has fundamentally changed how the oil and gas industry is regulated in Alberta. The new Regulator now has responsibility for both environmental management and energy development —mandates that were previously the responsibility of two different government bodies. Project proponents are no longer required to seek approvals from multiple provincial authorities. In this streamlined process, projects are often approved faster and with fewer guaranteed opportunities for public involvement in a formal process such as a hearing.

Hearings vs negotiations

There are very few examples in the regulations where the Regulator is required to hold a hearing and thus far, the Regulator has recommended very few applications for a hearing. Generally there is a better chance to resolve concerns through negotiation and dispute resolution as this usually results in less cost, less time, and less frustration for all parties. But hearings can be a tool for considering larger, more complex concerns in depth and can be useful in situations where parties can not come to a resolution. However as a result of changes to the AER requirements to hold hearings and the resulting reduction in hearings, landowners or others who consider themselves to be directly and adversely affected have had a considerable reduction in their bargaining power and ability to get unwilling companies to come to mutually satisfactory outcomes. The AER has rolled out many internal efforts to engage stakeholders such as landowners and nearby residents earlier and in less formal ways to avoid a lengthy hearing. There is a greater emphasis by the Regulator for companies to build relationships before a project begins, and to resolve conflicts through their Alternative Dispute Resolution process (see Alternative Dispute Resolution). Because of this, as a person who may be impacted by development nearby, you are more likely to influence a project outcome by building relationships with the company in the early stages of a project’s development, before the company applies to the AER for their approval. If these discussions don’t lead to a satisfactory outcome but the company applies to the AER anyway, and the AER sees that you have acted in good faith, it is more likely that the project will be recommended for a hearing should that be necessary. If the AER doesn’t believe you have acted in good faith, REDA’s regulations provide the AER with the discretion to dismiss your request for a hearing, and you may be left with fewer opportunities to address your concerns.

Acknowledgements

The Pembina Institute received generous support for this work from:

• Alberta Real Estate Foundation
• Edmonton Community Foundation

Thanks to those who reviewed the text and offered encouragement:

• Experts and landowners:
• Graham Gilchrist
• Nielle and Howard Hawkwood
• Leanne and Larry Walton
• Wayne Groot
• Jason Unger, Environmental Law Centre
• Martin Steel, Biome Land Use Consulting Ltd.
• Benjamin Misener, Brazeau County
• Soledad Mills, Equitable Orgins
• Real estate professionals Glenn Fisher, Brad Woodward and Bill Fowler
• Alberta Energy Regulator’s stakeholder engagement team: Jennifer Lutz, Behn Morris, Jennifer Lough, and Eric Berg
• AER’s Hearing Commissioners and Hearing Services office: Dean Campbell, Rob McManus, and Cecilia Low
• Farmers’ Advocate Office: Jeana Les and Michele Del Colle
• Synergy Alberta: Gary Redmond and Rick Anderson, as well as all the Synergy members who attended our workshops
• Staff from Encana and Shell
• Canadian Association of Petroleum Landmen: Dennis Eisner, Robert Telford, and Brad Batten
• Our colleagues at the Pembina Institute, including interns Shelley Jodoin and Luke Wilson
• Mary Griffiths, one of the original authors of When the Oilpatch Comes to Your Backyard, who provided much insight as a reviewer and encouragement for the third edition.

Disclaimer

The contents of this guide are entirely the responsibility of the Pembina Institute and do not necessarily reflect the view or opinions of those acknowledged above. We have made every effort to ensure the accuracy of the information contained in this guide at the time of writing. However, the authors advise that they cannot guarantee that the information provided is complete or accurate and that any person relying on this publication does so at their own risk. This guide should not be treated or relied upon as legal advice. This document cannot take the place of professional advice from a lawyer, professional in land and energy issues, or other qualified experts. Links to third party websites are provided for the convenience of users, and do not constitute an endorsement of their contents or a representation as to their accuracy.

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