ABCA confirms that coalbed methane forms part of natural gas title
In Encana Corporation v Devon Canada Corporation, 2012 ABCA 271, the Alberta Court of Appeal has confirmed that coalbed methane forms part of the natural gas title (and not the coal title) in Alberta.
Disputes had arisen among a number of parties as to who the correct owner of coalbed methane was. In order to address the issue, the Alberta legislature amended the Mines and Minerals Act in 2010 to provide that "Coalbed methane is hereby declared to be and at all times to have been natural gas".
The Court of Queen's Bench ruled in 2011 that the amendments to the Mines and Minerals Act were unambiguous and provided that the natural gas owners would have title to the natural gas, both in respect of crown leases and freehold lands.
The Court of Appeal agreed with that conclusion and ruled that both freehold and crown CBM was owned by the owner of the natural gas title:
We agree. Section 10.1(1) of the Mines and Minerals Act is clear. It declares that coalbed methane is and always has been natural gas. And the effect of section 10.1(2) is that unless there is a specific exclusion, exception or reservation of coalbed methane in the natural gas lease, the natural gas lessee has the right to recover the coalbed methane. And whether or not there had been a specific exclusion, exception or reservation of the coalbed methane turns on whether or not coalbed methane was expressly excluded, excepted or reserved in the natural gas lease, not on the intentions of the parties when the lease was granted.
And when one looks at the context and examines the words of subsections (2) and (3) of section 10.1, it is clear that section 10.1 was intended to apply to freehold mines and minerals. The use of phrases such as "the owner of the title to natural gas", and "the owner of the title to coal" indicate that freehold mines and minerals were contemplated. Owners of title to coal or natural gas includes holders of certificates of title issued by the province's two Land Registration District Offices (Land Titles). Such certificates of title are issued for freehold mines and minerals. So the Legislature must have intended the amendment to apply to freehold mines and minerals as well as Crown mines and minerals. The context not only "permits" such an interpretation; it demands it.