Anderson v. Amoco Canada Oil and Gas

Anderson v. Amoco Canada Oil and Gas

The reservation of petroleum divides ownership by the physical phase of the hydrocarbon as measured at initial pre-development reservoir (pool) conditions at the time of the original contract: petroleum owners are entitled to hydrocarbons that were liquid in situ at that time and non-petroleum owners are entitled to hydrocarbons that were gaseous in situ; subsequent phase changes on production do not alter that contractual division; the rule of capture cannot be used to defeat that contractually created division.

Citation
2004 SCC 49
Parties
Appellants: Carl Anderson et al.; Respondents: Amoco Canada Oil and Gas et al.; Intervener: Freehold Petroleum & Natural Gas Owners Association
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
16 July 2004
Procedural Posture
Appeal / Supreme Court of Canada on Appeal From Alberta Court of Appeal
Outcome
Appeal dismissed with costs to the respondents
Legal Topics
Split Title, Reservation of Petroleum, Phase Based Ownership, Rule of Capture, Borys Precedent
Source Language
English
Property Law Oil and Gas Law Contract Interpretation Split Title Reservation of Petroleum Phase Based Ownership Rule of Capture Borys Precedent

Case Brief

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Parties

Carl Anderson et al.

Appellants

Amoco Canada Oil and Gas et al.

Respondents

Freehold Petroleum & Natural Gas Owners Association

Intervener

Procedural Posture

Appeal / Supreme Court of Canada on Appeal From Alberta Court of Appeal

Legal Issues

  1. 1 Whether a reservation of petroleum in early 20th century land transfers divides subsurface ownership by phase of hydrocarbon at time of contract or at time of recovery
  2. 2 Whether evolved (secondary) gas belongs to petroleum owners or non-petroleum owners
  3. 3 Whether the rule of capture can defeat a contractual phase-based division of ownership

Ratio Decidendi

The reservation of petroleum divides ownership by the physical phase of the hydrocarbon as measured at initial pre-development reservoir (pool) conditions at the time of the original contract: petroleum owners are entitled to hydrocarbons that were liquid in situ at that time and non-petroleum owners are entitled to hydrocarbons that were gaseous in situ; subsequent phase changes on production do not alter that contractual division; the rule of capture cannot be used to defeat that contractually created division.

Court Disposition

Appeal dismissed with costs to the respondents

Orders

  • Appeal dismissed
  • Costs awarded to respondents