8 November 2006
Freehold Mineral Owners Allege Multi-Billion Dollar Ploy by Encana to Deprive Natural Gas Rights Sold to Alberta Pioneers
Calgary Alberta - In the early 1900's, the Canadian
Pacific Railway Company (the CPR) sold farm-sized parcels of its railway grant lands to
Alberta's early homesteaders. The railway grant lands included rights to
subsurface coal, petroleum and natural gas but, in land sales to settlers in
the 1902 - 1912 period the CPR reserved only coal or coal and petroleum rights
for itself. The homesteaders acquired the surface and the natural gas rights.
This gave rise to "split title" lands. According to Alberta's highest court,
at the time the CPR was operating under the "mistaken belief natural gas was a
worthless and noxious substance". Now natural gas is a highly valuable
commodity and Encana Corp., the CPR's successor, wants it back.
According to the Alberta Energy and Utilities Board (the EUB), there are
500 trillion cubic feet of natural gas in place in the subsurface coals of
Alberta. The areas identified by the EUB as most prospective for development
of the multi-billion dollar coal bed methane resource include more than
two million acres of split title lands, most of which are owned by ordinary
Albertans.
The Freehold Owners Association (FHOA) represents the interests of
thousands of individuals who are the descendants of the Province's earliest
settlers and hold title to natural gas beneath split title lands. FHOA is
currently intervening in an EUB hearing to determine the entitlement to coal
bed methane beneath these lands.
Without producing one shred of documentary evidence, Encana claims that
coal bed methane had commercial value to the CPR in the early 1900's. Encana
also claims the CPR retained the natural gas in coal because it recognized
that natural gas was dangerous and wanted to protect the settlers. And coal
bed methane in the ground is not really gas at all, it is either liquid-like
or solid claims Encana's technical expert.
And what does Encana want from the EUB? On 30 May 2006, the EUB
announced a moratorium on drilling on split title lands pending its ruling on
CBM entitlement. Encana wants the EUB to extend this moratorium until a court
decides who owns coal bed methane or the natural gas owners agree to Encana's
terms for sharing the resource.
David Speirs, Chairman of the Freehold Owners Association's (FHOA's)
Technical Sub-Committee says: "Encana has acknowledged in the hearing that it
may take a decade or more for a judicial decision on coal bed methane
ownership. If the EUB grants Encana's request for an indefinite extension of
the drilling moratorium, individual freehold owners of natural gas whose
resources are being drained by wells on adjacent lands will have no choice but
to accede to the demands of Encana."
Else Pedersen, FHOA's President says: "Encana holds itself out as a
champion of open, honest and ethical business practices. It seems to me that
Encana is using the regulatory process to further its own business interests
at the expense of thousands of individual Albertans."
The coal bed methane issue will be one of the topics on the agenda at
FHOA's next mineral rights information seminar to be held at Festival Place,
Sherwood Park on the evening of 14 Nov 2006.
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