The Alberta Government has recently introduced two pieces of
legislation impacting the energy sector, in particular,
large‐scale carbon capture and storage (CCS) projects and
the development of coalbed methane.
On November 1, 2010, Bill 24, The Carbon Capture and Storage
Statutes Amendment Act, 2010, was introduced in the
Alberta Legislature. The Bill is intended to guide
large‐scale CCS projects and to clarify the ownership of
the pore space where carbon dioxide will be stored. Alberta is the
first province in Canada to introduce legislation for this
greenhouse gas reduction technology. The Bill proposes amendments
or additions to the following statutes:
Energy Resources Conservation Act;
Mines and Minerals Act;
Oil and Gas Conservation Act;
Public Lands Act; and
Surface Rights Act.
The Bill provides that the Alberta Crown will own the subsurface
pore spaces where carbon dioxide will be stored, and will accept
permanent liability for injected carbon dioxide after an operator
provides data showing the stored carbon dioxide has been contained
over a specified period of time. CCS operators will be responsible
for any mitigation work during operation and will remain
responsible until a closure certificate has been issued by the
Crown. Once a closure certificate is issued to an operator, the
Crown will become the owner of the captured carbon dioxide and
assume all liability. The Crown will also establish and manage a
post‐closure stewardship fund which will be financed by
CCS operators for ongoing monitoring costs and required
remediation. The proposed legislation will not change mineral
ownership or mineral production and will have no impact on Enhanced
Oil Recovery (EOR) projects which will continue to be governed by
the current regulatory system.
According to Alberta Energy Minister, Ron Liepert, Bill 24 is
intended to ensure that Alberta is on track to reduce greenhouse
gas emissions, while increasing provincial royalties and taxes. By
using some of the captured carbon dioxide for EOR, it is expected
that Alberta's conventional oil recovery will double, thereby
generating tens of billions of dollars in additional provincial
royalties and taxes. By having the Crown assume long‐term
liability for captured carbon dioxide, the Government hopes to
encourage more companies to move forward on large‐scale
CCS projects in an effort to reduce provincial greenhouse gas
The Government has yet to decide how much time must pass before
a closure certificate is issued and liability assumed by the Crown,
or how much operators will have to pay into the postclosure
stewardship fund. Such details will be included in regulations
enacted following passage of the Bill.
On October 27, 2010, the Government introduced Bill 26,
Mines and Minerals (Coalbed Methane) Amendment Act, 2010,
and stated that it is an effort to remove historic barriers to
resource development in the Province. The legislation proposes that
coalbed methane is, and always has been, natural gas for both Crown
and freehold purposes. Under the proposed amendments to the
Mines and Minerals Act, coalbed methane would be owned by
natural gas rights holders rather than the owners of the coal
An important provision in the Bill is that existing agreements
entered into by natural gas rights holders, or their lessees, that
specifically provide coalbed methane rights to the coal rights
holders or their lessees, will not be affected by the amendment.
The Bill also states that natural gas rights holders and their
lessees cannot sue coal rights holders or their lessees for
compensation for coalbed methane that was extracted, produced or
removed before the legislation was enacted.
According to the Province, the amendment is intended to provide
certainty in coalbed methane split title situations where different
parties own the rights to coal and natural gas under the same
parcel of land. The legislation is intended to clear the way for
coalbed methane development and facilitate the efficient and
responsible development of Alberta's mineral resources.
Observers note that the Bill, if passed, would put to rest years of
legal disputes between landowners and the owners of coal rights
granted to the Canadian Pacific Railroad in the 1880s.
Coal seams with coalbed methane potential are found underneath
much of Alberta. A study from the Alberta Geological Survey
indicates that Alberta's coalbed resource could contain upwards
of 500 trillion cubic feet (Tcf) of coalbed methane. In comparison,
Alberta's current remaining natural gas reserves are only 36
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