Sask. landowners calling for modernization of 50-year-old oil drilling law

In Saskatchewan, it is not uncommon to come across an oil pump jack in a farmer’s field when driving through certain parts of our province.

The placement of this infrastructure is covered by surface rights legislation, which regulates how oil companies operate on farm and ranch land and how contracts are to be established.

However, the legislation is considered by many to be outdated. It was passed into law in 1968. In the past 50 years, both the oil and agriculture industry have seen major changes.

“The legislation, I don’t think it was good from the start,” Stephanie Fradette said. “In my opinion the purpose of the legislation should be to balance the rights; the property rights of the mineral holder and the property rights of the landowner.”

Fradette runs a cattle ranch, Spring Coolie Enterprises, with her family near Lake Alma, Sask. The ranch is at the edge of the Bakken Play, one of the most active areas in Saskatchewan’s oil industry.

Her land has about a dozen pump jacks on it, plus two battery sites.Those battery sites are part of Fradette’s main issues with legislation; specifically right of entry to the land.

“I think right of entry should be limited to the right to drill and extract oil. I don’t think they should have rights of entry for secondary processes, like battery sites and flow lines,” she said.

“It’s secondary to drilling. It’s part of their business and they should negotiate it like a business contract, same as they do with acquiring the pipe or a trucking contract.”

Fradette is not alone in wanting to see this change. The Agriculture Producers Association of Saskatchewan (APAS) is lobbying the provincial government to update the act.

“You really can’t say no to the company, they have a right to be there and you negotiate terms and a contract with them for the surface rights. In a majority of cases that’s where most farmers get their money from, is those surface rights,” APAS president Todd Lewis said.

Lewis doesn’t have any oil infrastructure himself on his farm near Gray, Sask. However, if he did have anything on his land, inheriting the liabilities would be a major concern.

“There’s concern about liabilities and the land we’re farming is worth a lot of money too and it’s a big part of the provincial economy as well. So there’s got to be a balance there,” Lewis said.

The province was looking at doing just that in 2013 and going into 2014. They held consultations, and legislation was scheduled to be introduced. However, the price of oil dropped and the modernization was put on hold while the oil sector struggled.

Energy and Resource Minister Bronwyn Eyre said that they are still open to reviewing the existing surface rights legislation and having updated discussions with stakeholders.

However, she said that while the price of oil has stabilized and activity is up, now is not the time to change surface rights legislation.

“Industry is I think far from assured and that it’s absolutely a stable time,” Eyre said. “It’s all about the timing and we’re not through the woods yet in terms of the challenges that the sector is facing. It’s not only about one factor in isolation, there are also other ongoing issues around everything from differential and that stems to pipeline transportation concerns, all kinds of issues.”

Instability such as the uncertainty around pipeline projects like the Trans Mountain expansion, Eyre added.

The minister acknowledged that a lot has changed since 1968, which is why the opposition NDP’s Trent WOtherpsoon said now is the time to modernize surface rights.

“Certainly you need to be reasonable in making sure that we have a strong energy sector within our province, and so you need to make sure there is predictability and that the rules are fair, but the current legislation, the current rules, were developed 50 years ago,” he said.

“The industry has changed, the energy sector has changed, the technology has changed – so too has agriculture. It’s important we improve rights for landowners, for producers, all across Sask.”

As for Fradette, she is supportive of the oil industry as it is a major driver economic in the southernmost part of the province, but she doesn’t agree with Eyre’s take.

“I don’t think it’s a legitimate one. This legislation is old, this legislation needs to be reviewed and I don’t think updating the relationship between landowners and mineral companies would affect production at all,” Fradette said.

“It would just be a re-alignment of where the legislation always should have been.”