Shallow Rights Reversion: Uncertainty and Disputes

Authors

  • Allan Ingelson Associate Professor, Faculty of Law, University of Calgary, Member of the Law Society of Alberta
  • and Will Randall B.Sc., J.D., LL.M., Member of the Texas Bar

DOI:

https://doi.org/10.29173/alr159

Keywords:

Energy Law, Petroleum Law

Abstract

To encourage shallow gas production from up-hole non-producing zones on provincial lands and increase Crown royalty revenues, the Government of Alberta has adopted a shallow rights reversion (SRR) scheme for oil and gas mineral rights holders. Under SRR the rights to natural gas above the top of the shallowest productive zone are to be severed at the time of lease continuation and revert to the Crown, but the rights from the top of the shallowest productive zone to the base of the deepest productive zone will continue to be held by the Crown lessee.

In 2007 the British Columbia government amended the Petroleum and Natural Gas Act to establish a zone specific retention (ZSR) scheme. Under the ZSR system the Crown lessee need only establish the mere presence of oil or gas in a standard Zone Designation layer in order to continue the lease.

Unlike British Columbia, the SRR system in Alberta applies to all existing Crown leases, and is therefore more controversial than the ZSR regime. In April 2011, Alberta Energy intends to start serving SRR notices. The department has recently changed its policy regarding the consolidation of petroleum and natural gas agreements. The more complicated SRR system, which facilitates an increased number of oil and gas developers, may prompt additional trespass and commingling disputes.

Downloads

Issue

Vol 48, No 2: Petroleum Law Edition

Section

Articles

License

For Editions following and including Volume 61 No. 1, the following applies.

This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License

For Editions prior to Volume 61 No. 1, the following applies.

Author(s) retain original copyright in the substantive content of the titled work, subject to the following rights that are granted indefinitely:

  1. Author(s) grant the Alberta Law Review permission to produce, publish, disseminate, and distribute the titled work in electronic format to online database services, including, but not limited to: LexisNexis, QuickLaw, HeinOnline, and EBSCO;
  2. Author(s) grant the Alberta Law Review permission to post the titled work on the Alberta Law Review website and/or related websites.
  3. Author(s) agree that the titled work may be used for educational or instructional purposes and/or in educational or instructional materials. The author(s) acknowledge that the titled work is subject to other such "fair dealing" provisions and applicable legislation.
  4. Author(s) grant a limited license to those accessing the titled work from an electronic database or an Alberta Law Review website to download the titled work onto their computer and to print a copy for their own personal, non-commercial use, subject to proper attribution.

To use the journal's content elsewhere, permission must be obtained from the author(s) and the Alberta Law Review.