MOUNTAIN VIEW COUNTY – While the recent sale of Crown land lease rights in the Sundre area doesn’t necessarily automatically mean neighbouring landowners should anticipate resource extraction operations to immediately begin, it certainly leaves open the door to the possibility of such developments.
In late August, the provincial government brought in some $40.4 million through a bidding process to access mineral and resource rights on Crown land in the area representing more than 55,000 hectares, with mineral and resource rights for two parcels near Sundre alone going for a combined $25.7 million.
In response to questions about the process as well as what the sale represents and whether the development could pave the way for some kind of resource extraction operation, Terry Curtis, communications director for the Ministry of Energy and Minerals, issued the following statement on behalf of minister Brian Jean’s office.
“Petroleum and natural gas mineral leases are purchased through a public offering that is held every two weeks,” reads the statement provided by Curtis shortly after the sale.
“The parcels in each public offering are requested by industry and the successful bidder is granted a five-year lease to win, work and recover the petroleum and natural gas. After the five years, they may apply to continue the agreement for different terms under the PNG Tenure Regulations; these terms vary from an additional six months to indefinitely.”
Follow-up questions sent to the ministry regarding whether plans might be in place to begin a resource-extracting operation were referred to the Alberta Energy Regulator (AER).
“Energy companies must apply for our approval to begin an energy development project or activity in Alberta,” Renato Gandia, media management specialist, replied by email in the fall.
“Every year, we receive about 40,000 applications, including everything from requests to access a parcel of land, to requests to drill a well, to requests to build a pipeline. Regardless of the request, we share applications with Albertans and encourage public participation in our decision-making.”
When then Albertan followed up to inquire whether it was possible to confirm if any applications had been submitted for the parcels in question, the AER said it was unable to provide further information and referred back to the regulator’s application process.
Auction sales for companies seeking rights to access resources on Crown lands is not an uncommon practice.
“This process is actually more common than you think,” said Adam Stewart, vice-president of Mineral Land, a department of Millennium Land Ltd.
Millennium Land Ltd. represented the buyer or buyers involved in the bid to acquire the Sundre-area leases.
“Every two weeks, minus a few holidays throughout the summer and Christmastime, the Crown hosts a Crown land sale,” Stewart told the Albertan shortly after the sale during a phone interview.
Throughout the year, he said companies keep an eye out on Crown land for parcels they may deem appealing to bid on when sales come up.
“Our clients – we represent quite a few different ones – will take the time and their geologists and their engineers to go through these areas, identify certain plays that they like, and then they’ll go on online,” he said, adding interested parties peruse potential opportunities on both Crown land as well as what are known as freehold rights, which are privately held either by corporations or even individual landowners such as farmers.
When it comes to Crown land, companies will identify areas of interest and subsequently post for those lands, which would then come up at the next Crown sale some two months later, he said.
“At that point, they can submit a bid through the ETS system, which is a certain price per hectare,” he said.
“It’s kind of like a silent auction, where multiple companies – whoever’s interested in the said parcels – will throw a bid out there. Nobody knows what everybody is bidding; only the Crown knows,” he said, adding the highest bidder of course gets the parcel(s).
Companies tend to turn to brokers like Millennium to maintain a competitive edge.
“In this process, everybody wants to stay confidential,” he said.
“Where we come into that play is because this process is so competitive, a lot of times, companies will hire brokers like us to kind of use our name and services to basically stay anonymous in the area because they want to be confidential to their respective competitors,” he said.
“It’s all about being strategic and not showing your entire deck of cards,” he said.
“They’ll use us just to make sure that they’re kind of staying behind the cloak a little bit and making their competitors guess on who’s there and what they’re trying to do and what type of strategies they’re trying to implement; it’s kind of a big cat and mouse game, for lack of a better term.”
As a result, Stewart could not impart any insight into what plans might be in place for the parcels near Sundre.
“What kind of strategy they’re employing in this area, or what they’re seeing, we’re not really privy to that,” he said. “A lot of those conversations are going to be happening in their boardroom; they’ll be coming up with what’s important to them.”
But once companies have acquired the rights, they essentially have five years to deploy their strategy, he said.
“In this case, in the Sundre area, I’m assuming that’s exactly what they’re doing; they secured a very large swath of land, and they’re going to probably implement a varied amount of different strategies in the area to try and effectively produce the area,” he said.
Although Stewart could not confirm the company or companies involved, he said that information would eventually come to light once they make their intentions known.
“Typically, they’re going to have a chance through the Crown lease to their own name to be able to get a well licence. And at that time, it’ll be pretty prevalent on who they are and what their plans are.”
So while the recent sale doesn’t necessarily automatically mean development is immediately forthcoming, it does potentially pave the path toward that possibility.
“If this client of ours came out into the area and they start to drill wells, you’re going to know right away who they are,” he said.
