Yukon News

Northern Cross sues YG over fracking ‘moratorium’

Pierre Chauvin Friday April 7, 2017

Ian Stewart/Yukon News


A Northern Cross site in Eagle Plains in February 2013.

Northern Cross is suing the Yukon government for up to $2.2 billion, claiming the government put a moratorium on hydraulic fracturing in 2015.

The oil and gas company claims the government effectively cancelled 15 oil and gas exploration permits in the Eagle Plains Basin and wants to be compensated.

Northern Cross filed the lawsuit in Yukon Supreme Court April 4.

While the newly elected Liberal government promised to put in a place a moratorium on fracking, it’s the previous Yukon Party government that closed off the Eagle Plains region to shale oil development.

In April 2015 the Yukon government announced it was adopting the recommendations of the select committee on hydraulic fracturing. It also said it was open to “responsible shale gas development opportunities in Yukon, but only in the Liard Basin.”

For Northern Cross, that’s akin to imposing a moratorium.

The company also said that the government already reimbursed $3.7 million it spent on exploration permit deposits.

“In recognition of the fact that the moratorium stripped Northern Cross of its sub-surface right to the oil and gas in the Subject Lands … the defendants reimbursed Northern Cross outstanding work deposits,” the lawsuit reads.

Northern Cross says it is within the government’s power to cancel oil and gas permits if further exploration or development are not in the public interest under the Oil and Gas Act.

But that same act says in that case the government has to compensate the company.

The moratorium essentially amounts to cancelling Northern Cross’ permits, the company said.

“If the moratorium and resulting cancellation of Northern Cross’ Dispositions are in the public interest … the cost of the moratorium should be borne by the public, rather than Northern Cross who has spent over $100,000,000 in capital expenditures in good faith to develop its oil and gas resources in the Yukon,” the lawsuit reads.

The company is seeking $395 million, including $4.6 million for rentals, $100 million for capital expenditures, $15 million for costs related to complying with regulations, and $190 million in capital costs.

The company also wants $1.8 billion for the “fair market value of the 8.6 billion barrels of unconventional resources proven to exist on the Subjected Lands.”

Throughout the statement of claim Northern Cross seeks to prove that the government knew from the start the company’s plan was to frack.

In 2006 and 2009 Northern Cross obtained exploration permits for lands with unconventional resources, which can only be extracted through fracking, the company said.

It also planned to drill exploration wells which are characteristic of unconventional resources because their depths are greater than for conventional oil plays.

In June 2011 the company said it met with Yukon government officials and presented them with plans to evaluate the unconventional resources in the Eagle Plains Basin.

“At no time during these discussions did the Defendant indicate that hydraulic fracturing might not be permitted,” the lawsuit reads.

It also conducted a study that showed the 8.6 million barrels of oil that could only be extracted through fracking. Northern Cross said it shared all of that information with the government.

But in its presentations to the select committee in 2015, Northern Cross wasn’t as categorical.

“Northern Cross presented information about its Eagle Plains program … that it had no immediate plans for hydraulic fracturing but would prefer if the option was left open,” the committee report reads.

Back in October 2016, a Chinese-owned oil company sold its 60 per cent stake in Northern Cross to a Canadian shareholder.

China National Offshore Oil Corporation (CNOOC) had invested $115 million in Northern Cross back in 2011.

At the time, Northern Cross president Richard Wyman wouldn’t say why CNOOC sold it stake but said the future of the company in the territory was “not certain at all.”

“The regulatory framework in the Yukon has got serious challenges,” he said. “And so I can’t tell you whether this is going to proceed or not. There’s a lot of uncertainty.”

In March 2016 Northern Cross sued YESAB over its decision to refer its oil and gas exploration project to a higher level of assessment after 20 months of review.

The government has not yet filed a statement of defence.

Contact Pierre Chauvin at .(JavaScript must be enabled to view this email address)


Sourdough wrote:
4:12pm Wednesday April 19, 2017

Just as a little piece of information; The 8.6 barrels of oil or gas is a “gestimate” by the company Geologists. What the experience with these getstimates show us in the last 15 years since fracking took of only 5 to 10 % is actually recoverable.
You may remember at the beginning of Obamas presidency he was bragging that there is oil and gas for the next 100 years in the USoA. 4 years later he corrected that estimate to 10 years.
NCY has no right to claim that much oil or gas, it is not proven that so much is there. Or actually that any is there.
They took a gamble and they drilled some duds.
We are in fast changing times and the fossil fuel industry is a laming dying horse that should not be feed anymore.
We have to invest into the future, into alternative renewable energy. Which by the way would bring much more local jobs and taxes then the O&G Industry ever would have brought to the Yukon.

At home in the Yukon wrote:
10:41am Wednesday April 19, 2017

I think Northern Cross deserves some compensation. M family has $5 for them, lets all pitch in a little.

I agree, however, I outbid your little.  I’ll give ‘em 2 cents.  I’m sure I can find some old pennies lying around somewhere.

ProScience Greenie wrote:
8:59am Sunday April 16, 2017

“More than 8000 signatures on a petition..” - Can someone clear up once and for all if that is true or if it was 4000 signatures in two petitions or something else. So many fabrications and exaggerations coming from all sides that it is getting harder and harder to believe anything.

Larry wrote:
8:39pm Thursday April 13, 2017

And Northern Cross came to OWN the alleged 8.6 million barrels of oil in the depths of the Yukon exactly how?
Did they PAY $1.8billion (which is more than $45,000 for each and every person living in the Yukon)?
At least, the CEO gets an extra point for cheekiness!

Alan wrote:
3:05pm Thursday April 13, 2017

I think Northern Cross deserves some compensation. M family has $5 for them, lets all pitch in a little.

Sourdough wrote:
11:00pm Wednesday April 12, 2017

More than 8000 signatures on a petition against O&G, Fracking and LNG tell something different then yes to an O&G industry in Yukon.
NCY gambled and gambled with kinked cards and people watched their hands. They should leave under their own power before they get kicked out the door.

Stick to facts wrote:
1:51pm Wednesday April 12, 2017

@Common sense - “Majority of the Yukoners say yes to oil and gas industry in the Yukon.” And you know that how exactly?

Jonathan Colby wrote:
1:47pm Tuesday April 11, 2017

Investors take risks. Getting into O&G development should carry the risk of citizen objection. Taxpayers shouldn’t have to subsidize business to express their priorities, nor should ecological policy be dictated in the slightest by investors. Investment, again, is RISKY. Don’t come clamoring for tax dollars because business sometimes fails.

patrick wrote:
11:52am Tuesday April 11, 2017

Northern Cross   was dishonest about their intent and now they want to sue us, the people of the Yukon. They want to take money away from our children’s children.

Do they have assets or an office here, lets protest this corporate blackmail and sent them back home.

The northern environment matters!

Have any one that comments wrote:
6:56am Tuesday April 11, 2017

seen the material coming from these wells. How can you make comments without knowing the facts.  Get a life.

Igor wrote:
5:53pm Monday April 10, 2017

  I remember some time ago a Northern Cross executive couple were talking about what great things they were going to do. The one stated that he was going to do something magical with diesel. I stated at the time I didn’t think he was going to do anything that refineries don’t already do. His diesel magic is still forthcoming and kind of told the story even back then. Snake Oil.

Sourdough wrote:
5:39pm Monday April 10, 2017

What a crooked company that Northern Cross Yukon is. They drilled 4 test wells with no real success. They wanted to frack because it would be the only way to get anything out of the shale below. Then vehement opposition occurs because though education about what harm fracking is doing they pull back in the YESAB application and say we won’t frack.
Then they set up One (1) public meeting in town with advertising poster who said sustainable fracking, (what a joke) Geologist try the public to explain how they can get the oil or gas out of the shale just by teasing it a bit. Every body started to have big questions in their heads about that.
Then Richard Wayman shuts the meeting down with “No we wont have a question period” done.
Now this clown thinks he can get Billions out of the Yukon Taxpayers. Good luck did anyone ever got blood out of a stone.
All I would give this guy is a one way ticket out of the Yukon.

Common sense is not to export wrote:
1:21pm Monday April 10, 2017

$3 billion dollars out of the Yukon into some ones else pockets in BC and Alberta or the US. Plus in-creditable tax revenues and jobs for Yukoners.
Yukon needs an oil and gas industry. Majority of the Yukoners say yes to oil and gas industry in the Yukon.
It is only the anti-development people and some people who done care about our children future finding jobs in the Yukon and say close to the their family’s.
Get a life.

comen sense wrote:
11:53am Monday April 10, 2017

Fracking was not an option read Tom joad’s comment with link, Richard W. Yes you will be paying anny court cost too. Read are lips WE DON"T WANT FRACKING HERE

Sandy Helland wrote:
6:10pm Sunday April 9, 2017

They planned to frack, even though they said they had no intentions of fracking. Look what comes out in the wash.

This could cost he Yukon Government wrote:
12:14pm Sunday April 9, 2017

up to $300 to $400 hundred million dollars. Yukon Government is in trouble on this one.

When governments makes wrote:
12:10pm Sunday April 9, 2017

changes in policy, that affect, private sector investment, which is in the millions, with total value of billions in revenues and 100’s of jobs, the government will pay. This issue, has been seen over and over in Canada. For example Windy Cracky mine site south of Haines Junction costs the BC government $159 to pay out investors.
Put your feet in the investors shoes, of the Peel, say you put in a $1000. If you were one of the investors and the Yukon Government told you, we are closing you down and you will not get your investment back, as an investor, because the government will not permit your project to go ahead, so you can get your investment back, plus profits. What would you do, but sue for your investment and its return.
This is normal investment.
You put your money into a RRSP or pension funds, you want it to grow, for you. Pension funds invest in all kinds of different investments, including resources like oil and gas, mining, etc.
Oil and gas and mining has made our retirement funds $10’s of billions of dollars for every one that contributes, to these invest.
I can see. people do not understand, all sides of the issue. Wilf Carter

Clown wrote:
10:47am Sunday April 9, 2017

@PSG - they’re not being ‘shut down’. NC stated on more than one occasion that they would not frack. So why expect compensation for something they didn’t plan to do?

And what’s all this about ‘compassion for fellow Yukoners’? We have to approve all developments so folks can stay in work? Sound more like Trump…..

Groucho d'North wrote:
5:40pm Saturday April 8, 2017

Screw em, they’re making noise and posturing.

ProScience Greenie wrote:
12:03pm Saturday April 8, 2017

I’d rather not see oil and gas in the Yukon more because the industry sucks rather than the fracking bogeyman and other enviro fear-mongering but Northern Cross has a point - they are basically being shut down so some compensation might be due.

And if we are going to shut down resource development here as many in the anti-everything crowd are asking for, then we should look at a hefty royalty equivalent on the tourism, ecotourism and cultural industries so we can be a little less dependent on annual welfare payments from Ottawa. We will also need to figure out what to do with all the YTG compliance, inspection, policy analyst and scientific staff that we will have to lay off at EMR. They have families to feed. Same with all the Yukon contractors, consultants and workers in the resource industry. They are our friends, neighbors and family after all. Surely the anti-everything crowd has a bit of compassion for their fellow Yukoners?

WhitehorseGuy wrote:
9:43am Saturday April 8, 2017

In other words: Corporate execs make terrible investment decisions, make desperate attempt to rob taxpayers to pay off shareholders

alan wrote:
6:42pm Friday April 7, 2017

So happy to see a company want to challenge a policy that young and old and first nation people want. If we say no they say you owe us.

Just proves the resources in the ground belong to companies. I guess every tine there are proven resources and a social ruling against development the average person will have to pay.

I am glad we are in Canada. In the developing world they would likely be armed and bribe the government and deal with dissent the ugly way.

bb wrote:
4:53pm Friday April 7, 2017

And this my friends, is why resource industry should never be welcome in the Yukon.  They leave destruction, we clean up the mess.  They leave environmental disasters, our waters and lands are poisoned, our fish die.  They can’t get what they want?  They sue not only for money they chose to spend on an unsure deal, but also for the ‘value’ of whatever it is they decided to rip out of the ground.

Get lost.  And thank you for making the point a lot of us have been trying to make to the hold outs who still think resource extraction has anything to offer this territory in terms of net benefits.

Tom Joad wrote:
4:52pm Friday April 7, 2017

Probably shouldn’t have publicly said they didn’t plan on fracking: http://whitehorsestar.com/News/fracking-not-part-of-northern-cross-drilling-horizon

YXY wrote:
4:38pm Friday April 7, 2017

Careful who you invite into your home.

PLO wrote:
4:05pm Friday April 7, 2017

Glad we’re not doing business with this company. I hope the government doesn’t settle and humiliates them in court.

AtticusFinch wrote:
3:55pm Friday April 7, 2017

Over-inventive corporate lawyers with wild, untamed tundra-like imaginations , pulling numbers out of the thin, frozen Eagle Plains air like guessing at lottery numbers. Pathetic really.

Clowns wrote:
3:37pm Friday April 7, 2017

And I thought it was only the new film “It” that was giving clowns a bad name….....

BnR wrote:
3:34pm Friday April 7, 2017

Big Oil: can’t you just smell the money.

Pierre wrote:
1:20pm Friday April 7, 2017

<<The company also wants $1.8 billion for the “fair market value of the 8.6 billion barrels of unconventional resources proven to exist on the Subjected Lands.”>>

Cool story bro.

Jonathan Colby wrote:
11:42am Friday April 7, 2017

Oh, I’m so excited, I never get to see late-stage capitalism in my own backyard!

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