On October 27, 2010, the government of Alberta introduced Bill
26, Mines and Minerals (Coalbed Methane) Amendment Act, 2010. Bill
26 declares coalbed methane "to be and at all times to have
been natural gas" for both Crown and freehold minerals.
Despite this declaration, Bill 26 expressly honours existing
agreements that specifically grant coalbed methane to the coal
owner and protects coal owners or their lessees, surface owners and
the provincial government from being sued for damages or
compensation from the extraction, production or removal of coalbed
methane prior to the Bill coming into force. Under the proposed
legislation read as a whole, coalbed methane is owned by the
natural gas rights holder rather than the owner of coal
The Alberta government views the lack of clarity regarding coalbed
methane ownership as a potential barrier to resource development in
the Province. Under the Mines and Minerals Act as it currently
stands, coalbed methane is only declared to be natural gas on Crown
land. The Act is silent as to the nature or ownership of coalbed
methane on freehold lands.
This legislative silence has caused uncertainty as to ownership of
coalbed methane on freehold lands where mineral title is split
between the coal owner and the natural gas rights holder, and where
the instruments at issue do not refer expressly to coalbed methane.
In some instances, this has resulted in litigation between the coal
owner and the natural gas rights holder, with both parties claiming
ownership of coalbed methane.
The history of coalbed methane ownership in Alberta originates in
late 1800s, when the Crown granted 25 million acres of surface and
mineral land to Canadian Pacific Railway ("CPR"). The CPR
subsequently sold this land to settlers, but reserved to itself an
interest in "all coal", "all coal and
petroleum" or "all coal, petroleum and valuable
stone". Since natural gas was not reserved it was sold with
the lands. This has resulted in the split title situation that
exists today, where freehold landowners hold natural gas rights and
the CPR's successors and assigns hold the rights to
Because the initial grants and subsequent instruments did not until
recently speak to coalbed methane, Bill 26 aims to clarify
ownership of coalbed methane in split title situations. By
declaring coalbed methane to be and at all times to have been
natural gas, Bill 26 provides certainty as to the inclusion of
coalbed methane in initial natural gas grants.
Coalbed methane is a natural gas found in coal. Coal seams with
coalbed methane potential are found underneath much of Alberta,
especially in southern and central Alberta. Notably, a study by the
Alberta Geological Survey found that Alberta's coalbed
resource may contain approximately 500 trillion cubic feet (Tcf) of
coalbed methane. In contrast, the estimated ultimate potential of
marketable conventional natural gas in Alberta is between 205-253
The Bill will come into force on Royal Assent. Depending on the
amount of questioning from opposition, this could take anywhere
from two weeks to several months.
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The Government of Alberta recently announced a number of policy changes that will impact the Alberta Electricity Market, composed of its generators, transmitters, distributors, retailers, electricity consumers and wholesale electricity market.
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