Ostrander Point Wind Project Returns to the Environmental Review Tribunal

Paul Neville and James Wilson -

On April 20, 2015, the Court of Appeal for Ontario released its decision in Prince Edward County Field Naturalists v. Ostrander Point GP Inc. As previously reported (on appeal to the Divisional Court) the case concerns a decision of the Environmental Review Tribunal (Tribunal) to revoke a Renewable Energy Approval (REA) granted by the Ministry of the Environment (MOE) to Ostrander Point GP Inc. (Ostrander), permitting Ostrander to construct nine wind turbines (the Project) at Ostrander Point, about fifteen kilometres south of Picton, Ontario.

The Tribunal revoked the REA on the basis of submissions by the Prince Edward County Field of Naturalists (PECFN) that the Project would seriously and irreversibly harm a species of turtle called the Blanding’s turtle.

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Significant oil and gas M&A and finance transactions in Q1 2015

Chip Johnston, Carolyn Simpson, Jennifer McPherson, Erin Dand -

In the first quarter of 2015, M&A and financing activity in the oil and gas sector was unsurprisingly slow. As we predicted early in the year, purchasers have paused to see if prices continue to fall, and targets are trying to avoid selling at the bottom of the cycle. As low commodity prices continue, we expect to see M&A activity pick up as well capitalized participants move to consolidate and expand their asset bases.

Following is a summary of M&A and financing transactions that occurred in the first quarter of 2015, with a transaction value of $150 million or greater.

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Key developments in Canadian private M&A law for the oil and gas industry - Q1 2015

Chip Johnston, Carolyn Simpson, Jennifer McPherson, Brandon Leitch -

The first 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 since January 1, 2015 that may be of particular interest.

Oil & Gas and Regulatory

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Premier Kathleen Wynne officially announces Ontario cap-and-trade regime

P. Jason Kroft and Tamir Birk -

As anticipated, Ontario Premier Kathleen Wynne formally announced plans Monday morning to join Quebec and California in building a cap-and-trade system for greenhouse gas emissions. Calling climate change “one of the greatest challenges mankind has faced”, Ontario will soon impose sector-specific limits on emissions. Once the details are finalized over the next six months, the Province will sell or auction permits to companies that represent the right to emit a stated volume of pollution. Companies that pollute more than their limit must purchase permits from other companies that plan to emit less. As such, proponents of cap-and-trade argue that market forces incentivize businesses to adopt cleaner and more efficient practices. “The action we take today will help secure a healthier environment, a more competitive economy and a better future for our children and grandchildren,” Wynne said.

Opponents of the system argue that cap-and-trade is simply a carbon tax by another name. Increasing costs to businesses, they argue, will invariably lead to consumers paying more for a wide variety of goods and services. The University of California Berkeley, for example, estimates that cap-and-trade will add 2.6 cents per litre to the price of gasoline in Ontario.

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Reality Bites: Status of BC LNG

Jonathan Drance and Brandon Mewhort -

During 2014, many of the significant LNG projects proposed for the West Coast of British Columbia seemed to be making progress.

Required environmental and other regulatory approvals at the federal and provincial levels, including LNG export licenses, were granted in the ordinary course without the delays and absent the passionate opposition that proposed oil pipeline projects experienced.  Indeed, in November, provincial Environmental Assessment Certificates were issued for three LNG projects in northern BC: the Westcoast Connector Gas Transmission pipeline, the Pacific NorthWest LNG export facility in Port Edward and the Prince Rupert Gas Transmission pipeline.

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Plan nord 2.0

Erik Richer La Flèche -

On April 7, 2015, Premier Philippe Couillard and Minister of Energy and Natural Resources Pierre Arcand unveiled The Plan Nord toward 2035, 2015-2020 Action Plan.

This Plan Nord 2.0 is an updated and more sober version of the Plan Nord announced with considerable fanfare by Premier Jean Charest in 2012. Mr. Charest's plan was long on promise, short on detail and studiously ignored during Ms. Pauline Marois 19-month premiership (2012-2014).

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Ontario to implement cap-and-trade system

P. Jason Kroft and Tamir Birk -

As recently reported to the Globe and Mail newspaper by government sources, Ontario Premier Kathleen Wynne is preparing to implement a cap-and-trade system for greenhouse gas emissions as part of the Province’s strategy to combat climate change. The initiative would be tied to Quebec and California’s existing cap-and-trade system, which held its first joint auction of greenhouse gas allowances in December, 2014, and its second in March, 2015. An official announcement is expected by Ontario Environment Minister Glen Murray in the near future, with further details to come later this spring and summer.

Under a cap-and-trade system, Ontario would limit the amount of carbon that can be emitted by certain businesses and raise money by selling or auctioning emissions permits that represent the right to emit a specific volume of carbon. Permits are then traded on secondary markets. Companies that wish or need to emit more carbon than the regulated cap or than the permits they then hold must purchase permits from other companies that plan to emit less than the limit. Proponents of a cap-and-trade system will note that forward looking businesses can adopt cleaner or more efficient energy uses and thus profit under a cap-and-trade system by holding excess emissions permits that are available for sale. Under the current joint Quebec-California program, companies are able to trade carbon allowances across jurisdictions to comply with local greenhouse gas emission limits. A Quebec company, for example, could purchase allowances from a certified greenhouse gas emissions reduction project in California in order to comply with its own Quebec provincial targets, and vice versa. Initial estimates indicate that a cap-and-trade system in Ontario could raise between $1 billion and $2 billion per year which would then likely be invested in green programs.

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Ontario appoints John Godfrey as special advisor for climate change, creates climate action group

P. Jason Kroft and Tamir Birk -

On March 9, 2015, former Liberal MP John Godfrey was appointed special advisor to the Ontario government on climate change and chair of the government’s new climate action group. Godfrey’s role will include providing strategic advice and recommendations to Glen Murray, Minister of the Environment and Climate Change, to help Ontario meet its greenhouse gas emission targets and transition to a prosperous, low-carbon economy. 

As discussed here, Ontario is currently in the midst of a 45-day public review and comment period on climate change, following the government’s release of its climate change discussion paper. The paper, which identifies the risks and challenges associated with climate change in Ontario, and the public comment period will help inform the government’s decision on its climate change strategy, as it weighs which carbon pricing mechanism to adopt in the province. Currently, Quebec utilizes a cap-and-trade system while British Columbia has a carbon tax.

Quebec has conventional oil, now what?

Erik Richer La Fleche -

Quebec runs a chronic trade deficit (2013: C$30 billion).  Lower oil prices coupled with higher exports to a resurgent US should narrow the deficit but it will remain high until certain structural issues are addressed. Oil is Quebec’s number one import. Quebec’s oil consumption is rising and it is expected to do so for some time to come.

Quebec’s two refineries meet nearly all of Quebec’s needs for refined products. They even export some products.  Quebec’s refineries represent approximately 20% of Canada’s refining capacity.

Junex Inc. and Petrolia Inc., two Quebec-based juniors listed on the Toronto Venture Exchange (TSV), recently issued separate press releases indicating that their test wells located on the Gaspé peninsula had daily oil flows of 316 and 340 barrels, respectively.

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Bill C-52 - Changes to the liability and compensation regime for shipping crude oil by rail

Brandon Mewhort and Cameron Anderson

On February 20, 2015, Parliament introduced Bill C-52, an Act to amend the Canada Transportation Act and the Railway Safety Act. Bill C-52 is meant to strengthen the liability and compensation regime for federally regulated railway companies. Particularly, the Bill will, among other things:

  • establish minimum insurance levels for freight railway operations;
     
  • establish that a railway company is liable, without proof of fault or negligence, subject to certain defences, for damages resulting from an accident involving crude oil, up to the level of the company’s minimum liability insurance coverage; and
     
  • establish a fund that is financed by levies on shippers to cover the damages resulting from a railway accident involving crude oil that exceed the minimum liability insurance coverage.
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