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In Encana Corporation v Devon Canada
Corporation, 2012 ABCA 271, the Alberta Court of Appeal
has confirmed that coalbed methane forms part of the natural
gas title (and not the coal title) in Alberta.
Disputes had arisen among a number of parties as to who the
correct owner of coalbed methane was. In order to address the
issue, the Alberta legislature amended the Mines and Minerals Act in 2010 to provide that
"Coalbed methane is hereby declared to be and at all
times to have been natural gas".
The Court of Queen's Bench ruled in 2011 that
the amendments to the Mines and Minerals Act were unambiguous and
provided that the natural gas owners would have title to the
natural gas, both in respect of crown leases and freehold
lands.
The Court of Appeal agreed with that conclusion and ruled that
both freehold and crown CBM was owned by the owner of the natural
gas title:
We agree. Section 10.1(1) of the Mines and Minerals Act
is clear. It declares that coalbed methane is and always has been
natural gas. And the effect of section 10.1(2) is that unless there
is a specific exclusion, exception or reservation of coalbed
methane in the natural gas lease, the natural gas lessee has the
right to recover the coalbed methane. And whether or not there had
been a specific exclusion, exception or reservation of the coalbed
methane turns on whether or not coalbed methane was expressly
excluded, excepted or reserved in the natural gas lease, not on the
intentions of the parties when the lease was granted.
And when one looks at the context and examines the words
of subsections (2) and (3) of section 10.1, it is clear that
section 10.1 was intended to apply to freehold mines and minerals.
The use of phrases such as "the owner of the title to natural
gas", and "the owner of the title to coal" indicate
that freehold mines and minerals were contemplated. Owners of title
to coal or natural gas includes holders of certificates of title
issued by the province's two Land Registration District Offices
(Land Titles). Such certificates of title are issued for freehold
mines and minerals. So the Legislature must have intended the
amendment to apply to freehold mines and minerals as well as Crown
mines and minerals. The context not only "permits" such
an interpretation; it demands it.
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