MLL316 Mining & Energy Law
MLL316 Mining & Energy Law Jessica Crowe - Summary
1. Ownership of Minerals and Natural Resources 1.1. Common Law & Ownership of Sub-Surface Land 1.1.1.Energy Law: The allocation of rights and duties concerning the exploitation of all energy resources between individuals, between individuals and the government, between government and the states. Energy law includes finite and non-finite energy resources: oil, natural gas, coal, uranium, solar energy, wind power, wave energy, tidal energy etc. Nature of the interest in resources: minerals, petroleum and oil are private ownership rights upon extraction. Renewable energy resources are not an issue of ownership but access. 1.1.2.Common law basic principle: culus est solum eius ets usque ad coleum et ad inferos That the person who owns the land owns everything above and below them as well. Generally, the registered freehold proprietor of the surface will also be the owner of the strata beneath the earth, including minerals, unless there is an express or implied alienation (Aitkens LJ in Bocardo). A) Star Energy UK v Bocardo [2009] Facts: Star Energy had been granted a licence to search for and extract petroleum. In doing so, the pipelines installed were drilled at an angle, which ended up extracting oil from beneath the land of a neighbouring property between 800 and 2800 feet. Issue: Was trespass committed by Star Energy, and if so, what damaged should be awarded? Held: At no point in installing the pipes, extracting the oil or pumping in water did any physical or other actual damage occur to Bocardo. “The whole exercise did not affect the use and enjoyment of the estate one iota.” However, neither Star nor its predecessors had ever sought a right of access through agreement with Bocardo or legislative ancillary right. A trespass had occurred in technicality only, as Bocardo had lost no rights. The damages awarded for the trespass and in lieu of an injunction for future trespass were assessed at 1000 pounds. On Appeal [2010]: Decision confirmed, but the rate of damages at 9% was applied not to the total amount of petroleum product produced, but only to that that could be identified as having been found on Bocardo’s property. See 1A Readings for detailed reasoning.
1.2. Statutory Vesting of Minerals in the Crown 1.3.1
Royal Prerogative - Ownership of gold and silver vests in the Crown pursuant to royal prerogative rather than a statutory vesting provision, established under the Case of Mines (1568). They remain the property of the Crown unless expressly conveyed. - Applied automatically to Crown lands. Applied to private lands only where the right to minerals was expressly reserved in the Crown grant. In Victoria all minerals are vested in the Crown under the Mineral Resources (Sustainable Development) Act 1990 (Vic) s9 (MRSD). - s4 MRSD defines ‘mineral’ to include all shale, coal, alluvial minerals and naturally occurring hydro-carbons contained in oil shale or coal (including coal seam gas). Mineral Resources (Sustainable Development) Act 1990 (MRSD) s9 - Ownership of Minerals 1) The Crown owns all minerals except – a. Those in respect of which a minerals exemption is current, and b. Those in which the property has passed under section 11 2) A minerals exemption continues in operation after the commencement of this section until the exemption expires or is revoked. 3) The minister may, after giving 14 days written notice to the person who benefits from a minerals exemption, transfer, vary or evoke that exemption. 4) The person who benefits from a minerals exemption ay apply to the Minister for a transfer variation or revocation of the exemption, and the Minister may grant or refuse the application. 5) Ownership of the minerals…reverts to the Crown when the exemption expires or is revoked.
1.3. Statutory Vesting of Minerals in the Crown 1.3.2
Royal Prerogative - Ownership of gold and silver vests in the Crown pursuant to royal prerogative rather than a statutory vesting provision, established under the Case of Mines (1568). They remain the property of the Crown unless expressly conveyed. - Applied automatically to Crown lands. Applied to private lands only where the right to minerals was expressly reserved in the Crown grant. In Victoria all minerals are vested in the Crown under the Mineral Resources (Sustainable Development) Act 1990 (Vic) s9 (MRSD). - s4 MRSD defines ‘mineral’ to include all shale, coal, alluvial minerals and naturally occurring hydro-carbons contained in oil shale or coal (including coal seam gas).
1A. Readings 1.1 Article: T.J. Logan ‘Carbon Down Under – Lessons from Australia: Two Recommendations for Clarifying Sub-surface Property Rights to Facilitate Onshore Geologic Carbon Sequestration’ (2010)
The regulatory regime created by the Vic GS Act was designed to encourage development of GS; re the Act goal: ‘to facilitate and regulate the injection of greenhouse gas substances into underground geological formations for the purpose of permanent storage of those gases’. The Act increases regulatory certainty by clearly identifying and defining ‘underground geological storage formation… including “any sea or reservoir of an underground geological formation” and “any associated geological attributes or features of an underground geological formation”. o This facilitates a flexibility of interpretation as it allows for unanticipated future changes or technological advances. The clear allocation of subsurface formation ownership to the government establishes a monopoly on the resource, eliminating the risk of one owner blocking storage to an entire formation and ensuring the efficient administration of the regime.
1.2 Star Energy Weald Basin Ltd v Bocardo SA [2010]
Facts: Palmers Wood Oil Field was a naturally occurring reservoir of petroleum and petroleum gas, the north eastern part (and apex) located on the Oxted Estate, of which Bocardo was the freehold owner, the rest was under different ownerships. Star Energy Weald Basin had a licence under the relevant legislation to search and mine for petroleum. It is usually most efficient to obtain petroleum as close to the apex of the field as possible. Star Energy sunk three wells diagonally for the extraction of petroleum, which entered below Bocardo’s property at 1,300, 800 and 950 feet below the surface, and which ended at 2,900, 2,800 and 1,400 feet respectively. The last was used for the injection of water to maximise and speed recovery. Star Energy ‘s predecessors (Conoco UK Ltd) did not seek permission or contractual negotiations from Bocardo at any point during the drilling and construction of wells and pipelines or the extraction of petroleum/petroleum gas, nor did they apply for any statutory right to do so under any relevant acts at the time (Mines Act 1966 or Pipelines Act 1962). Star Energy also failed to do so upon acquiring Conoco’s production licence. Bocardo was unaware until July 2006 that petroleum and petroleum gas were being extracted from below its property. Issues: 1) Was the drilling under Bocardo’s land an actionable trespass? 2) If it was an actionable trespass, what was the correct measure of damages? Held [First Instance[2008] and Appeal [2009],[2010]]: First instance judge held that there was an actionable trespass, as did the court of appeal, but the court of appeal did not agree with the measure of damages adopted by the trial judge, reducing Bocardo’s damages, and to which they are currently appealing.
1. Ownership of Minerals and Natural Resources 1.1. Common Law & Ownership of Sub-Surface Land 1.1.1.Energy Law: The allocation of rights and duties concerning the exploitation of all energy resources between individuals, between individuals and the government, between government and the states. Energy law includes finite and non-finite energy resources: oil, natural gas, coal, uranium, solar energy, wind power, wave energy, tidal energy etc. Nature of the interest in resources: minerals, petroleum and oil are private ownership rights upon extraction. Renewable energy resources are not an issue of ownership but access. 1.1.2.Common law basic principle: culus est solum eius ets usque ad coleum et ad inferos That the person who owns the land owns everything above and below them as well. Generally, the registered freehold proprietor of the surface will also be the owner of the strata beneath the earth, including minerals, unless there is an express or implied alienation (Aitkens LJ in Bocardo). A) Star Energy UK v Bocardo [2009] Facts: Star Energy had been granted a licence to search for and extract petroleum. In doing so, the pipelines installed were drilled at an angle, which ended up extracting oil from beneath the land of a neighbouring property between 800 and 2800 feet. Issue: Was trespass committed by Star Energy, and if so, what damaged should be awarded? Held: At no point in installing the pipes, extracting the oil or pumping in water did any physical or other actual damage occur to Bocardo. “The whole exercise did not affect the use and enjoyment of the estate one iota.” However, neither Star nor its predecessors had ever sought a right of access through agreement with Bocardo or legislative ancillary right. A trespass had occurred in technicality only, as Bocardo had lost no rights. The damages awarded for the trespass and in lieu of an injunction for future trespass were assessed at 1000 pounds. On Appeal [2010]: Decision confirmed, but the rate of damages at 9% was applied not to the total amount of petroleum product produced, but only to that that could be identified as having been found on Bocardo’s property. See 1A Readings for detailed reasoning.
1.2. Statutory Vesting of Minerals in the Crown 1.3.1
Royal Prerogative - Ownership of gold and silver vests in the Crown pursuant to royal prerogative rather than a statutory vesting provision, established under the Case of Mines (1568). They remain the property of the Crown unless expressly conveyed. - Applied automatically to Crown lands. Applied to private lands only where the right to minerals was expressly reserved in the Crown grant. In Victoria all minerals are vested in the Crown under the Mineral Resources (Sustainable Development) Act 1990 (Vic) s9 (MRSD). - s4 MRSD defines ‘mineral’ to include all shale, coal, alluvial minerals and naturally occurring hydro-carbons contained in oil shale or coal (including coal seam gas). Mineral Resources (Sustainable Development) Act 1990 (MRSD) s9 - Ownership of Minerals 1) The Crown owns all minerals except – a. Those in respect of which a minerals exemption is current, and b. Those in which the property has passed under section 11 2) A minerals exemption continues in operation after the commencement of this section until the exemption expires or is revoked. 3) The minister may, after giving 14 days written notice to the person who benefits from a minerals exemption, transfer, vary or evoke that exemption. 4) The person who benefits from a minerals exemption ay apply to the Minister for a transfer variation or revocation of the exemption, and the Minister may grant or refuse the application. 5) Ownership of the minerals…reverts to the Crown when the exemption expires or is revoked.
1.3. Statutory Vesting of Minerals in the Crown 1.3.2
Royal Prerogative - Ownership of gold and silver vests in the Crown pursuant to royal prerogative rather than a statutory vesting provision, established under the Case of Mines (1568). They remain the property of the Crown unless expressly conveyed. - Applied automatically to Crown lands. Applied to private lands only where the right to minerals was expressly reserved in the Crown grant. In Victoria all minerals are vested in the Crown under the Mineral Resources (Sustainable Development) Act 1990 (Vic) s9 (MRSD). - s4 MRSD defines ‘mineral’ to include all shale, coal, alluvial minerals and naturally occurring hydro-carbons contained in oil shale or coal (including coal seam gas).
1A. Readings 1.1 Article: T.J. Logan ‘Carbon Down Under – Lessons from Australia: Two Recommendations for Clarifying Sub-surface Property Rights to Facilitate Onshore Geologic Carbon Sequestration’ (2010)
The regulatory regime created by the Vic GS Act was designed to encourage development of GS; re the Act goal: ‘to facilitate and regulate the injection of greenhouse gas substances into underground geological formations for the purpose of permanent storage of those gases’. The Act increases regulatory certainty by clearly identifying and defining ‘underground geological storage formation… including “any sea or reservoir of an underground geological formation” and “any associated geological attributes or features of an underground geological formation”. o This facilitates a flexibility of interpretation as it allows for unanticipated future changes or technological advances. The clear allocation of subsurface formation ownership to the government establishes a monopoly on the resource, eliminating the risk of one owner blocking storage to an entire formation and ensuring the efficient administration of the regime.
1.2 Star Energy Weald Basin Ltd v Bocardo SA [2010]
Facts: Palmers Wood Oil Field was a naturally occurring reservoir of petroleum and petroleum gas, the north eastern part (and apex) located on the Oxted Estate, of which Bocardo was the freehold owner, the rest was under different ownerships. Star Energy Weald Basin had a licence under the relevant legislation to search and mine for petroleum. It is usually most efficient to obtain petroleum as close to the apex of the field as possible. Star Energy sunk three wells diagonally for the extraction of petroleum, which entered below Bocardo’s property at 1,300, 800 and 950 feet below the surface, and which ended at 2,900, 2,800 and 1,400 feet respectively. The last was used for the injection of water to maximise and speed recovery. Star Energy ‘s predecessors (Conoco UK Ltd) did not seek permission or contractual negotiations from Bocardo at any point during the drilling and construction of wells and pipelines or the extraction of petroleum/petroleum gas, nor did they apply for any statutory right to do so under any relevant acts at the time (Mines Act 1966 or Pipelines Act 1962). Star Energy also failed to do so upon acquiring Conoco’s production licence. Bocardo was unaware until July 2006 that petroleum and petroleum gas were being extracted from below its property. Issues: 1) Was the drilling under Bocardo’s land an actionable trespass? 2) If it was an actionable trespass, what was the correct measure of damages? Held [First Instance[2008] and Appeal [2009],[2010]]: First instance judge held that there was an actionable trespass, as did the court of appeal, but the court of appeal did not agree with the measure of damages adopted by the trial judge, reducing Bocardo’s damages, and to which they are currently appealing.
