One size does not fit all: Changing approaches towards Aboriginal engagement

Patrick Duffy and Patrick Corney -

Attaining an Aboriginal community’s consent to a development project should not be viewed as a line item on a to-do list. Corporations that want to operate successfully in areas subject to Aboriginal interests must therefore find new ways of building or rebuilding relationships – and the first step is developing mutual trust.

The Boreal Leadership Council (BLC) – a working group of conservation organizations, indigenous peoples, resource companies and financial institutions – has developed a framework through which industry and government can engage indigenous communities. The BLC has asked industry and government to implement the idea of Free, Prior and Informed Consent (FPIC) - the right of indigenous peoples to offer or withhold consent to developments that may have an impact on their territories or resources – in other words, a veto power over resource development projects. FPIC cannot exist where a people does not have the option to meaningfully withhold consent.

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Canadian oil and gas acquisition and finance transactions

Chip Johnston, Andrew Beamer, Erin Dand  - 

The market remains slow, despite a window for capital markets that opened in late May and generally closed late in June.

There were eight public deals in Q2, three of which Stikeman Elliott acted on, putting the market on track for 32 deals in 2015, barely exceeding the anemic levels of 2014, assuming that the weakness in activity in Q1 is made up in the second half of the year. Q3 has not given us a great start. It is fair to say that the big transactions were split between two kinds – low cost of capital leveraging its advantage (Crescent Point, Tourmaline, TORC) and high cost of capital issues being resolved (Arcan, Niska) or ameliorated (Cenovus). There was decent midstream activity, but not as much as was expected, and almost nothing at all in services, where it is not clear that anyone has a clear cost advantage when it comes to capital. 

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Key developments in Canadian public markets law for the oil and gas industry - Q2 2015

Chip Johnston and Andrew Beamer -

The second quarter of 2015 saw a number of regulatory developments in Canadian capital markets that may specifically affect companies in the oil and gas industry. Below, we’ve compiled a list of key legal developments from April 1 to June 30, 2015 that may be of particular interest.

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The six conditions that must be satisfied for Quebec to become an oil and gas producer: an update

 Erik Richer La Flèche  -

It is time to update an article I wrote in May 2013. In that article I listed the following six conditions for Quebec to become an oil producer. This update applies to oil as well as gas.

1. Oil and Gas. Two juniors, Junex Inc.and Petrolia Inc., continue to explore. Press releases recently issued by them regarding their activities in the Gaspé Peninsula are positive. The Gaspé oil and gas play has one great advantage: it involves naturally fractured rock and does not require fracking. Status: More work required but recent findings are encouraging and both Junex and Petrolia hope to commence some commercial production at the end of 2016.

2. Political Will. The Quebec government remains publicly in favour of oil and gas exploration and production within the province. Investissement Québec recently increased its investment in exploration carried out by Junex and Petrolia. Pierre Arcand, Quebec’s Minister of Natural Resources, will be the keynote speaker on November 9, 2015 at the annual conference of the Quebec Oil and Gas Association in Montreal. Moreover, gas production in the Gaspé Peninsula dovetails nicely with Quebec’s “Plan Nord” strategy, inasmuch as Quebec wants LNG to replace diesel in mining and aluminum smelting within the Plan Nord territory as well as in electricity production in remote and isolated northern communities. Status: Ready.

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Hybrid Debt Structure for Public Issuers

Julie D’Avignon and Doug Richardson - 

A recent public issuance of hybrid debt provides an innovative opportunity for public entities seeking to raise funds.  TransCanada PipeLines Limited (TCPL) recently raised US$750,000,000 through a public issuance of hybrid debt notes by TransCanada Trust (the Trust).  The Trust is a Canadian resident trust, all of the units of which are owned by TCPL.  The issuance of the hybrid debt notes (the Notes) provided TCPL with a cost-effective means of raising capital, which qualified for Basket “C” equity treatment by Moody’s and intermediate equity credit with S&P.  It was anticipated that the Notes would be issued primarily to U.S. residents. 

The offering of the Notes closed on May 20, 2015.  The Trust in turn used the proceeds from the offering to acquire subordinated notes (the Sub Notes) from TCPL.  As a result, the money borrowed under the offering was available to TCPL.

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Key developments in Canadian private M&A law for the oil and gas industry - Q2 2015

Erin Dand, Alisha Bhanji, Jennifer McPherson and Chip Johnston - 

The second quarter of 2015 saw a number of legal developments that may specifically affect private companies in the oil and gas industry. Below, we’ve compiled a list of key developments in Canadian law and regulatory practice from April 1 to June 30, 2015 that may be of particular interest.

Oil & Gas and Regulatory

  • Federal law now requires Canadian oil and gas companies to make annual disclosure of payments to all levels of domestic and foreign governments.
  •  Petronas made its final investment decision to proceed with the Pacific Northwest LNG project, subject to certain federal and provincial approvals, which are expected by the end of 2015.
  • New federal regulations require stronger tanks with enhanced safety features to be used when transporting oil and ethanol by rail.
  • The Alberta Energy Regulator (AER) clarified the process for coordinating the reviews of the AER and the Aboriginal Consultation Office, which manages Crown consultation with aboriginal groups, of energy development projects.
  • The federal government advanced legislation imposing unlimited liability on pipeline operators who release hydrocarbons into the environment.
  • The Saskatchewan Court of Appeal ruled that the province does not have a duty to consult when granting exploration rights to oil sands resources located beneath treaty lands which do not involve the sale of surface rights. Operators must acquire surface rights from the landowner or by application to the Saskatchewan Surface Rights Board.
  • Alberta increased its carbon levy and added requirements for large emitters to meet certain emission reduction targets. Emitters of less than 100,000 annual tons are not affected.
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Alberta's Royalty Review

Glenn Cameron, Zhuo Chen, Leland Corbett, Frederick Erickson and Jonathan Drance

Alberta’s NDP Government is proceeding with its review of the Province’s oil and gas royalty system, fulfilling a promise made during last spring’s election campaign.

The Government’s stated objective in this review is to design a royalty system that Albertans can trust. It hopes to do this through “an open, frank discussion about how our royalty system can better serve Albertans, industry and the good jobs industry creates for generations to come.”

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Analysis on Quebec mining, oil and gas transparency measures bill published on our mining blog

Many of our readers will be interested in a post by our colleagues on our mining law blog which provides an overview of Quebec’s proposal on the regulation of mining, oil and gas companies with respect to payments in the course of exploration and development activities under Bill 55 An Act respecting transparency measures in the mining, oil and gas industries.  The post also includes an analysis in light of the Federal government’s  Extractive Sector Transparency Act which we’ve previously written about.

Gas in a Low-Carbon Environment

Jason Kroft, Allison Sears and Jonathan Drance

The Energy Information Administration (EIA), an agency of the US Department of Energy, has prepared an Analysis of the Impacts of the Clean Power Plan (the EIA Study) to study the impact of the Environmental Protection Agency’s (EPA) proposed 2014 Clean Power Plan on the fuel mix used to power the US electricity generating fleet.  The Clean Power Plan would establish rules and requirements, to be implemented on a state-by-state basis, to reduce carbon emissions from the US electricity generating fleet by roughly 30% from 2005 levels by 2030.

The EIA Study included historical information as well as a variety of projections (Projections) over the period from 2015 to 2040 (the Projection Period) including:

  • as a base case, a Clean Power Plan Projection, assuming the Clean Power Plan was implemented at the start of, and remained in effect throughout, the Projection Period; and
  • a Clean Power Plan and High Oil and Gas Resource Projection combining the projected effects of the Clean Power Plan together with a Projection assuming that natural gas remains relatively cheap (less than $4.50/mmbtu measured in constant 2013 dollars) over the Projection Period.
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Drafting Rules and Governing Provisions for Oil & Gas Agreements

Chip Johnston, Carolyn Simpson and Brad Ashkin

The drafting process has certain elements which can sometimes be seen as routine – governing provisions and the mechanics of the contract don’t get as much attention as other issues in a negotiation.  Although these elements of legal service can be seen as immaterial and uninteresting, they can create serious problems when they don’t work. 

We have prepared Drafting Rules and Governing Provisions for Oil & Gas Agreements as a quick reference guide to these issues which is designed to assist counsel in enhancing drafting quality and streamlining the drafting process.

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