Ruling In Scope Of Operatorship Rights

Copyright 2008, Blake, Cassels & Graydon LLP

Originally published in Blakes Bulletin on Energy–Oil & Gas: March 2008

In the recent application brought before the Alberta Court of Queen's Bench in Nexen Inc. v. Fort Energy Corp., that Court was asked to rule on matters pertaining to the scope of operatorship rights accorded to a non-operator of a joint venture who had commenced independent operations pursuant to the 1990 CAPL Operating Procedure (the Operating Procedure).

The facts were that Nexen Inc. (Nexen) commenced independent operations on certain lands (13-2) pursuant to a farmout arrangement with Fort Energy Corp. and 981405 Alberta Ltd. (collectively, Fort), as well as Canadian Natural Resources Limited (CNRL). Although the independent operations commenced by Nexen pertained to drilling on lands covered by the farmout arrangement among Nexen, Fort and CNRL, the well to be drilled