Bill 26 passed Third Reading in the November 24th, 2010 sitting
of the Government of Alberta Legislative Assembly. We now await
Royal Assent to make the Bill law. The Bill, first introduced into
the assembly on October 27, 2010, amends the Mines and Minerals
Act and declares coalbed methane (CBM) "to be and
at all times to have been natural gas" for both Crown
and freehold minerals.
Objectives of Bill 26
When introducing Bill 26 into the Assembly, Minister of Energy
Ron Liepert described the amendments in Bill 26 as follows:
they provide CBM ownership certainty by declaring that CBM is
and always has been natural gas for both Crown and freehold
they recognize that existing agreements entered into by the
natural gas owner or their lessee that specifically granted CBM
rights to the coal owner or coal owner's lessee will not be
they protect coal owners and their lessees, surface owners, and
the government from being sued by natural gas owners or their
lessees for extraction, reduction, or removal of CBM prior to the
Bill coming into force.
In its Government Backgrounder released the same day, the
Government highlighted its view that the lack of clarity over
ownership of coalbed methane was a potential barrier to resource
development in Alberta. At present under the Mines and Minerals
Act, CBM is only declared to be natural gas on Crown land. The
Act is silent as to the nature or ownership of CBM on freehold
lands. Indeed nine lawsuits are scheduled to be heard in the Spring
of 2011 over ownership of coalbed methane.
By declaring CBM to be and at all times to have been natural
gas, the Government believes that Bill 26 will provide certainty as
to the inclusion of CBM in natural gas grants, which in turn may
encourage additional development of Alberta's CBM
Alberta Position Now to be Aligned with Many Other
This legislation essentially gives effect to the decision of the
Energy Resources Conservation Board (then the EUB) in AEUB Decision
2007-024 wherein it declared the CBM is natural gas and not an
intrinsic part of the coal for regulatory purposes.
Further, the effect of this legislation is to bring
Alberta's regime in line with the position taken in British
Columbia (the Coalbed Gas Act, S.B.C. 2003, c. 18), the
United States Supreme Court determination on the issue in Amoco
Production Co. v. Southern Ute Indian Tribe, (No. 98-830,
released June 7, 1999) and a number of other Commonwealth
jurisdictions including the States of Queensland and New South
Wales in Australia.
Coal Certainty Agreements Excluded
Of note however, its that Bill 26 expressly honours existing
agreements entered into between natural gas owners and coal owners
that specifically grant CBM to the coal owner. As a result, the
Coal Certainty Agreements entered into by many industry
participants over the years would seem to be excluded from the
effect of Bill 26.
Also of note, natural gas rights holders do not have a right of
action against coal owners for any CBM produced prior to this Bill
becoming law. Further, Bill 26 expressly provides that its
enactment does not constitute an expropriation.
The amendments to the Mines and Minerals Act as set out
in Bill 26 should finally settle the CBM ownership issue in favour
of the natural gas owner or rights' holder. However, as Bill 26
awaits Royal Assent to become the law in Alberta, it remains to be
seen whether industry players, particularly coal owners, will
accept Bill 26 as the final word on ownership of CBM in
Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
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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