APRIL 9, 2015 THE WESTERN PRODUCER
BY PAUL COWLEY FREELANCE WRITER RED DEER
An Alberta surface rights group plans to fight to ensure that landowners don’t lose lease payments from bankrupt oil companies. Don Bester, president of the Alberta Surface Rights Group, accuses the provincial board that oversees surface rights issues of changing a longstanding practice of guaranteeing annual surface lease payments. The practice ensured that landownersweren’t left out of pocket when oil or gas companies went out of business. Bester said the board “erred in an interpretation of law” in a 2014 case involving Drayton Valley-area farmers Doug and Marg Lemke and Petroglobe Inc. The Lemkes argued that the insolvent company owed them $3,700 in lease payments. However, the Surface Rights Board rejected their application to seek compensation through the board. “The (Alberta) Surface Rights Board claimed the Bank and Insolvency Act superseded the Alberta Surface Rights Act, although it is veryclear that this is not the case,” said Bester.
He said the board would previously order companies that were defaulting on their payments to pay up or be stripped of their mineral rights. The board could provide compensation to landowners if no agreement was reached with the company. Bester said the implications extend beyond lease payments to farmers. There is also the question of who will be responsible for cleaning up former well sites.
“To us, it’s one of the more important issues we have faced,” he said. Municipalities also stand to lose thousands of dollars in taxes that oil and gas companies pay on the land on which their pipelines and facilities are located, he added. Alberta Surface Rights Board counsel Karen Sinclair-Santos said there has been no change in legislation or the board’s options for dealing with
companies that are behind on their payments. These options include suspension or termination orders for the site in question and board-issued directions to pay. Each case is dealt with on its own
facts, which can be complicated in cases of bankruptcy or receivership. She said the board can still offer compensation.
“Each time an application comes before the board, it makes its decision on the particular facts. There’s no guideline directing a board member to make a decision in a particular way.” There have been a number of decisions where the board has recognized that Bankruptcy Act provisions halt enforcement actions under the surface rights legislation. Sinclair-Santos said landowners who aren’t satisfied with the board’s decision can seek a judicial review.
Bester said taking the board to court is expected to cost as much as $30,000. The group is hoping to raise money to wage its fight by appealing to those potentially affected, including the counties of Red Deer, Clearwater, Knee hill and Mountain View. “We’re on the fundraising trail.” Clearwater County chief administrative officer Ron Leaf said assessment staff are not expecting any changes that will affect pipeline tax collection, which can be complicated when oil or gas companies are in arrears because they do not own the land on which their pipeline sits.
