Decision Date:  May 22, 2013

Panel:  Alan Andison

Keywords: Oil and Gas Activities Act – s. 72(2); permit; pipeline; land owner; application for costs

Willis Shore appealed a decision of the Oil and Gas Commission (“Commission”) to issue a permit authorizing Murphy Oil Company Ltd. (“Murphy Oil”) to construct and operate a pipeline on the parcels of land (the “Lands”) that are owned by Mr. Shore. The pipeline consists of three flow lines that would be situated in a 15-metre right of way.

Portions of the Lands contain sand and gravel deposits. In May 2012, Mr. Shore received a permit under the Mines Act authorizing a sand and gravel quarry on part of the Lands. However, the Lands are within the Agricultural Land Reserve, and the Agricultural Land Commission must approve the gravel removal before work can commence at the quarry. In addition, Mr. Shore advised that he plans to subdivide a portion of the Lands, but he has no approvals to do so.

In May 2011, Murphy Oil first approached Mr. Shore about the possibility of the pipeline crossing his land. Murphy Oil and Mr. Shore attempted to negotiate an agreement on the matter, but were unsuccessful. Murphy Oil then considered several alternate pipeline routes, but it ultimately decided that none of the alternate routes were viable.

In January 2012, Murphy Oil notified Mr. Shore that it intended to apply for a permit to construct and operate a pipeline that would cross the Lands. In response, Mr. Shore made several written submissions to the Commission expressing his concerns that the pipeline would prevent the development of part of the quarry, would interfere with his subdivision plans, and could affect natural drainage and waterways. Murphy Oil responded to each of Mr. Shore’s written submissions.

In March 2012, Murphy Oil applied for the pipeline permit. In support of its application, Murphy Oil provided the Commission with a consultation report that included Mr. Shore’s written submissions, Murphy Oil’s responses, and comments received from other land owners who would be affected by the alternate routes.

In July 2012, the Commission issued the permit, subject to a condition that Murphy Oil ensure a minimum three-metre distance between the outside edge of the pipe and the boundary of the quarry.

Mr. Shore appealed the permit on the basis that the Commission failed to: (1) consider that Mr. Shore had presented a reasonable alternative route for the pipeline; and, (2) require Murphy Oil to fully consider all reasonable alternatives. He also submitted that the Commission was biased or acted in bad faith. He requested that the permit be cancelled, and that there be a full and fair consideration of his concerns before a new determination is made. He also requested that the Tribunal order the Commission to pay his costs in relation to the appeal.

Both the Commission and Murphy Oil opposed the appeal. They submitted that the concerns raised by Mr. Shore were given due regard by the Commission, and there was no evidence that the Commission was biased or acted in bad faith towards him.

The Tribunal considered whether the Commission’s determination to issue the permit was made without due regard to Mr. Shore’s submissions and the viability of alternate pipeline routes. The Tribunal reviewed the evidence on each of the points raised in Mr. Shore’s submissions.

Specifically, the Tribunal found that the Commission gave due regard to the quarry that was the subject of the Mines Act permit, and the fact that no further approvals had been sought or issued to develop the quarry or any other deposits on the Lands. The Tribunal noted that developing the quarry would require approval from the Agricultural Land Commission, which may or may not grant approval. Further, the Tribunal noted that the issue of compensation for the impact of the pipeline on the development of sand and gravel resources on the Lands was a matter for the Surface Rights Board. Similarly, the Tribunal found that the Commission considered Mr. Shore’s submissions regarding his subdivision plans for the Lands, and that it was appropriate for the Commission to consider the existing land use on that portion of the Lands, given that no subdivision approvals had been sought or issued. Further, the issue of compensation for any impact that the pipeline may have on the Lands’ subdivision potential was a matter for the Surface Rights Board. The Tribunal also found that the Commission gave due regard to Mr. Shore’s concerns about natural drainage and waterways, as well as the risk of erosion arising from the construction of the pipeline.

Next, the Tribunal considered each of the alternate pipeline routes. The Tribunal noted that, in response to Mr. Shore’s concerns, the Commission had sent questions to Murphy Oil about the alternate routes, and Murphy Oil had responded. The Tribunal concluded that the Commission had carefully considered Mr. Shore’s objections, Murphy Oil’s responses, and the correspondence from other land owners who would be affected by the alternative routes. The Tribunal found that the permitted pipeline route was chosen as the most viable option, after carefully weighing information from consultations, maps, site visits, surveys, and the social, economic, and environmental risks associated with each potential route. Further, the Tribunal found that there was no evidence that the Commission was biased or acted in bad faith, or failed to consider the social, economic or environmental impacts of the pipeline. The Tribunal concluded that Mr. Shore was most concerned about receiving compensation from Murphy Oil, which was a matter for the Surface Rights Board, and not the Tribunal.

Finally, the Tribunal held that there was no basis to award costs to Mr. Shore, given that his appeal was unsuccessful and there were no special circumstances that would justify awarding costs.

Accordingly, the appeal was dismissed, and the application for costs was denied.