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17 July 2004

Companies Entitled to Share of Gas from Former Railway Lands, Says Supreme Court

BP Canada and many other energy companies will be allowed to keep a share of natural gas taken from former Canadian Pacific Railway lands, the Supreme Court ruled Friday.
 
The Court's decision puts closure on a dispute that originated back in the 1900s when the railway sold lands and split the title between surface and mineral rights. And with thousands of kilometres of land involved, the ruling translates into "many millions of dollars" going to the oil and gas companies, said Lenard Sali, the lawyer who represented BP's Amoco Canada division.
 
"This has been a dispute that's been festering for about 20 years," said Sali, a lawyer with the Bennett Jones law firm in Calgary.
 
The case focused on whether natural gas that is in liquid form deep below the surface should be defined as "petroleum".
 
Under terms of the split-title and an earlier ruling in the 1950s, petroleum liquids belong to the energy companies that leased the rights from the Canadian Pacific Railway. Gases belonged to the landowners.
 
In a 5-0 decision released Friday, the Supreme Court ruled that the term "petroleum" included all hydrocarbons in a liquid form, including natural gas.
 
The decision affects more than 20 separate lawsuits by about 85 individual landowners against BP's Amoco Canada and many other of Canada's largest energy companies including Petro-Canada, Imperial Oil Ltd. and Suncor Energy.
 
Sali said the decision could also have future ramifications as the development of coalbed methane, or natural gas trapped in coal seams, becomes more common in Canada.