Pipeline Observer

Want Free Use of Other People’s Property?

Published in October, 2018

Unbalanced Surface Rights Act is a giveaway to mineral owners

By Stephanie Fradette

Owning property beneath somebody else’s property—with no access—is far from ideal. It’s like owning a room in someone’s basement, but not being allowed through the door.

This is the problem the Saskatchewan Surface Rights Act (SRA) is supposed to solve for mineral owners.

At the least, the Act should ensure that the mineral owner can access and extract his product from the ground. But it’s doing much more than that. The SRA grants rights of entry to the mineral owner that enables far more than just exploration and extraction.

The Act grants rights of entry for storage (tank farms), processing (battery sites), waste disposal (injection wells), water wells and transportation (flowlines). The SRA stretches far—really far—beyond protecting the mineral owners’ property rights to transferring wealth from the landowner to the mineral owner.

How so?

Once the mineral owner has his mineral on the surface with access to a public road, his property rights have been fulfilled. He has unimpeded access to his property. And he can transport it freely with trucks, just as the landowner can move his property (say grain or livestock or milk) freely.

But according to the SRA, that’s just not good enough. If the mineral owner cannot move his product quickly enough, he needs extra storage. He could work out an agreement to purchase a parcel of land or sign a rental agreement with the landowner, but there is no need. The SRA can grant access to additional private property to build a tank farm or storage facility. The landowner cannot say no.

No need for agreement

Now the mineral owner is able to increase the value of his product by processing it. For this he needs a battery site. Once again, he could purchase land for his factory site or work out a rental agreement with a landowner, but there is no need. The SRA can grant access to more private land for the mineral owner to build his production facilities. The landowner cannot say no.

Water is necessary in oil production. As it is in most industries, including agriculture. In ag, if a landowner needs water, he has to develop it on his own land. He cannot simply develop it on his neighbour’s land. He cannot put a flowline in across his neighbour’s land to move water. But a mineral owner can. Right of entry exists for the development of water wells if it’s needed for drilling, completion or production. If a mineral owner wants a water well, the landowner cannot say no.

With production comes waste. Some oilfield waste can be pumped back underground for storage into injection wells. This is yet another land use for which the mineral owner can be granted right of entry. The landowner cannot say no.

(It is interesting to note that at the time the SRA was written, solid oilfield waste was typically landspread. Disposal pits did not exist. As a result, disposal pits were not included in rights of entry. Solid waste disposal pits have become a lucrative business opportunity for many people.)

Now, if the mineral owner wants to move his product more cheaply or efficiently (say by pipeline), the SRA can grant right of access across the landowner’s private property for the construction and operation of a pipeline/flowline. You guessed it:  The landowner cannot say no.

Granting access to private land

As you can see, the SRA does a bang-up job protecting the mineral owners’ property rights. A mineral owner does not have to worry that his access will be hampered. He also doesn’t have to worry about building relationships and partnerships to expand or improve his business.

If he needs more land to store, process, dispose or transport his materials he doesn’t need to deal with the landowner. He doesn’t need to buy or rent land. He can go to the Surface Rights Board and be granted access to private land for his business operations.

The landowner can make his case. He can present reasons, evidence and arguments in hopes that the board will rule in his favour. He can be right. But the landowner cannot say no.

The Surface Rights Act protects mineral owners’ rights and goes one better by granting them the use and enjoyment of other people’s property.

Time for a review

The original Saskatchewan Surface Rights Act was implemented in 1968 (almost 50 years ago) and was last revised in 1978. A lot has changed since then.

Directional drilling is a common practice. It can be argued that with technological advances like directional drilling, right of entry doesn’t need to exist at all. It is reasonable to expect that most, if not all, projects would move forward smoothly without any right of entry.

That said, we don’t need a full swing of the pendulum to where mineral owners’ property rights are compromised. And, that upstairs/downstairs neighbour relationship is tricky. So, maybe a third-party resolution system is necessary to protect the mineral owners’ access.

Landowners, better than anyone, know the frustration that goes along with losing control of their property. They do not wish this for mineral owners. Landowners do not want to hijack or prevent development. They want to partner in and benefit from development. They, like the mineral owners, want to profit from owning property.

Landowners have been compromised by this government-facilitated land grab for far too long. There needs to be a re-alignment between mineral owners and landowners.

Landowners’ property rights can no longer be neglected in favour of the enrichment of mineral owners. The Saskatchewan Surface Rights Act is due for a review. A real review. It would an opportunity for mineral owners to recognize who their future business partners could be. It would be an opportunity for property rights to mean something in Saskatchewan.

PUBLISHED in PIPELINE OBSERVER FALL 2017