ERCB Approves Hunt's Application for Enhanced Recovery Scheme

The Energy Resources Conservation Board (ERCB) released its decision on December 23, 2008 in the matter of Hunt Oil Company of Canada, Inc. Hunt had applied to the ERCB for an enhanced recovery scheme in one of the most lucrative oil pools in the province.

Hunt owned most of the acreage over the oil pool. However, a competitor, Galleon Energy Inc., owned a proportion of the acreage over the pool and had two successful wells drilled into the edges of the pool. Galleon and Hunt each had earlier approval for their own enhanced recovery schemes. Because of the rules governing the production of oil in the Province of Alberta, and the requirement to maintain pressure in oil pools, the ERCB required that Galleon and Hunt only extract from the pool barrels of oil equivalent to the barrels of water injected into the pool. The Galleon enhanced recovery scheme was more successful at water injection than the approved Hunt scheme, and Galleon was able to inject more water into the pool, and thereby extract more oil.

Galleon opposed Hunt's application on the basis that it was not the optimal scheme for the oil pool and could prematurely water-out Galleon's wells.

The matter was heard in a week-long hearing in September 2008. In its decision, the ERCB approved the Hunt scheme, with conditions to address Galleon's right to produce its wells in a manner consistent with the ERCB's conservation mandate.

Galleon was represented by Burnet, Duckworth & Palmer LLP's John Lowe and Jerrad Kubik.
Blake, Cassels & Graydon LLP acted for Hunt, with a team comprised of David Tupper, Gavin Matthews, Rosemary Duffy (who has since joined a client of Blakes, TransCanada PipeLines Ltd.), Karen McGlone and Dorothy Foster.