Canada is a federal state, with powers divided between the two orders of government, federal and provincial, according to the Canadian Constitution. The Constitution assigns to the provinces responsibility for non-renewable natural resources, property and civil rights, and local works and undertakings. Accordingly, property rights in relation to CCS predominantly fall under provincial jurisdiction, unless part or all of a CCS project takes place on federal lands or crosses provincial or international boundaries.
In Canada, ownership of the mineral interest may be separated from ownership of the surface estate. Mineral rights in Canada are privately held (freehold ownership) or owned by the provincial or federal Crown. This in contrast to countries such as Australia and most countries of the European Union and Latin America where they are exclusively state-owned. Additionally, a mineral interest in Canada may be split into titles for different minerals, e.g. coal, natural gas and petroleum. Due to this complexity, in many provinces there is uncertainty as to who definitively owns the rights to subsurface pore space. Does ownership accrue to the owner of the mineral interest or the surface estate or is it vested in the Crown? Some provinces have clarified pore space ownership for temporary storage operations but not for disposal purposes. Clarifying pore space ownership is crucial to CCS deployment in Canada since uncertain and discontinuous ownership of the subsurface could prevent storage operators from aggregating the necessary land for CO2 storage operation.
Federal
The federal government owns all federal Crown land. The majority of federal Crown land is found in the Canadian territories. A small amount of federally-controlled land is found in the provinces in the form of national and historic parks, First Nations reserves, and federal military bases. Where land claims or historic treaties between Aboriginal peoples and the federal government have been negotiated, the terms of the agreement may grant mineral interest ownership to the First Nation or ownership of the subsurface may remain with the federal Crown. (Similarly, land claims may have been negotiated with provincial governments.)
Legislation governing management of onshore federal Crown land does not make reference to pore space but contains provisions for leasing land for the purpose of mineral exploration and production.
The Territorial Lands Act (ss. 15 & 16) states that land grants reserve to the federal Crown all mines and minerals in or under territorial lands as well as rights to any body of water within, bordering or passing through the land. The Act allows the federal government to make regulations for the leasing of mining rights in, under or on territorial lands. It specifies that the regulations should provide for the protection of and compensation to surface rights holders.
The federal government also owns the land situated in submarine areas that are outside provincial boundaries, in the internal waters, in the territorial sea or in the continental shelf of Canada. Although private entities may be granted mineral rights in the offshore, the underlying seabed is held by the federal Crown.
The Oceans Act (s.8) clearly vests in the federal Crown the seabed and subsoil below the internal waters and the territorial sea of Canada.
Provincial
CCS projects in Canada are most advanced in the three western provinces, Saskatchewan, Alberta and British Columbia. Each province has varying measures to deal with pore space ownership, compulsory acquisition and surface access in relation to CCS.
Saskatchewan
Mineral rights in Saskatchewan are owned by either the provincial Crown or private parties. The provincial Crown owns about 78 per cent of all petroleum and natural gas rights and freehold owners own 18.5 per cent. The remainder is held by First Nations reserves or the federal Crown. Pore space associated with Crown minerals is clearly vested in the Crown by means of The Crown Minerals Act. This Act (s. 27.2) confirms ownership of spaces occupied or formerly occupied by a Crown mineral and allows the Crown to enter into agreements to lease this space. Pore space ownership where the mineral interest is privately held is less clear as no law clearly states whether pore space ownership accrues to the private mineral owner. Mineral owners have the right to inject CO2 for enhanced oil recovery (EOR) purposes, which implies the right to use pore space for any incidental CO2 storage that occurs in the course of EOR operations. However, legislation is silent on whether this right would extend to CO2 disposal projects or if the pore space ownership would be vested in the surface owner or in the Crown.
The Saskatchewan Watershed Authority Act, 2005 confirms that the property in and right to use all surface water and groundwater in the province is vested in the provincial Crown. It also states that water ownership is not transferred by any land grant. Groundwater is defined as water beneath the surface of the land, though saline water is not specified.
The existence of freehold mineral owners in Saskatchewan could create an issue for CCS operators seeking to acquire a particular land area for their storage operations. Guidelines issued by the provincial Ministry of Energy and Resources dealing with applications for natural gas storage provide that applications require the written consent of all freehold owners that may be reasonably adversely affected by the proposal. If the requirements for gas storage projects are extended to CCS projects, then it is possible that private owners could refuse to grant use of their subsurface for the purpose of CO2 storage. There is a compulsory unitisation mechanism in place in Saskatchewan (Part V of The Oil and Gas Conservation Act), but it is unlikely it would apply to CO2 storage operations as it is directed at oil and gas producing operations.
In terms of surface access, the above-mentioned provision regarding written consent from all freehold owners implies consent from the surface owner must be required as well. Surface access for oil and gas production purposes is regulated by The Surface Acquisition and Compensation Act, which allows an operator to apply to the Board of Arbitration for and order granting the necessary surface rights if an agreement cannot be reached with the surface owner. Compensation must be paid to the surface owner. However, the provisions of this Act only cover injection activities related to mineral production and may not extend to injection activities where there is no associated mineral production, as is the case with CCS projects.
Alberta
In Alberta, the provincial Crown owns 81 percent of the province's mineral resources, with the remainder held by private owners. The province also has exclusive rights to saline aquifers. Pore space ownership was made explicit with the Carbon Capture and Storage Amendment Act 2010, which amended the Mines and Minerals Act. The Act (s. 15.1) vests all pore space in Alberta in the provincial Crown, with the exception of federal Crown land in Alberta. To reaffirm this declaration, the Act states that no agreement, past or future, granting rights to land has conveyed or will convey title to the pore space within the land. It also states that pore space is considered to be an exception contained in the original land grant from the provincial Crown, as described in section 61(1) of the Land Titles Act (s. 61(1)). The Act also contains clauses that deem the statutory vesting of pore space not to be an expropriation of land, and as such, prohibits anyone from claiming compensation or damages from the Crown as a result of the vesting.
Alberta had previously vested the rights to pore space for the purpose of natural gas storage in the owners of the mineral interest (Mines and Minerals Act, s. 57). However, this vesting did not necessarily encompass disposal of captured CO2 nor did it explicitly include pore space in saline aquifers. Furthermore, it did not address the problem of potential holdouts that could arise from fragmented mineral interest ownership.
Surface access provisions for CCS projects are similar to those for other resources granted by the Surface Rights Act. A CCS operator must obtain access permission from the surface owner, but if he cannot obtain consent he may apply to the Surface Rights Board for a right of entry order (s. 13(2)).
British Columbia
As in Alberta and Saskatchewan, the majority of subsurface mineral rights are held by the provincial Crown, with a minority held in freehold. The Land Act (s. 50) states that no granting of Crown land conveys the right to any petroleum, gas, coal, mineral or geothermal resource found in the land.
The legislative framework for CO2 storage rights are based on the framework for natural gas storage rights, under which rights to pore space may vest in either the surface or mineral rights owner. The Petroleum and Natural Gas Act (s. 127-129) allows the provincial government to designate land as a storage area for the purpose of disposal, storage or recovery of petroleum, natural gas, produced water waste. Ninety days after this designation, the right to the identified storage reservoir is vested in the provincial Crown, including any water inside the storage reservoir. The government may then grant these storage rights to an operator. In 2008, the Petroleum and Natural Gas Act was amended to expand the definition of a storage reservoir to include "prescribed substances" such as CO2. A private owner whose right, title or interest in land has been vested in the provincial Crown by means of this process may apply to the province for compensation.
Analysis and key questions
Legal frameworks for CO2 storage in Canada are largely built on regimes that have been put in place for analogous hydrocarbon operations, mainly natural gas storage. In adapting natural gas ownership laws to CO2, the temporal and spatial scale of CO2 storage operations must be considered. A CO2 storage operation is, more precisely, permanent disposal of CO2, whereas natural gas storage is temporary. Moreover, the volumes of CO2 injected into a reservoir for a commercial CO2 storage operation are likely to require a larger geographical extent, making it more likely to encounter multiple landowners. Injection activities could also continue over a longer period than for a natural gas storage project.
The statutory vesting of pore space in Alberta provides the most certainty for CCS operators as they are able to deal with a single owner, the Crown. The regime in British Columbia provides a reasonable amount of confidence for an operator seeking a storage site since the Crown owns much of the subsurface and has a compulsory acquisition-type system in place accompanied by compensation to affected landowners. The Saskatchewan situation presents the most risk to operators as the compulsory unitisation mechanism does not apply to CO2 storage and there is no means of addressing situations where there are private holdouts.
Vesting of the pore space in the Crown for the purpose of CO2 storage may interfere with existing or planned land use. For example, the owner of a mineral interest in natural gas may argue that use of pore space for CO2 storage will preclude his ability to produce gas from a given reservoir. Matters are further complicated in Alberta where the natural gas storage right is vested in the mineral interest holder, which may be a private entity. Creating a tenure process for CO2 storage rights that takes into consideration multiple and competing land uses is crucial. Alberta has explicitly dealt with this by including a new provision in the Oil and Gas Conservation Act (s.39), which states that no CO2 disposal operation will be approved unless government is satisfied that injection of CO2 will not interfere with recovery or conservation of oil or gas or an existing use of the underground formation for oil or gas storage. While existing tenure regimes may exist for other resources (e.g. coal vs. natural gas), they may not take into account the specific nature of CCS projects. For example, while production of oil and natural gas may not be mutually exclusive, CO2 storage may not be compatible with certain land uses, such as coal mining.
Cases of illegitimate entry or interference with the enjoyment of land may arise in the course of a CCS project. Unless a province has indemnified a CCS operator from this type of liability, which is unlikely until the post-closure stage of a project, trespass and nuisance claims would be dealt with through tort law. There have been few cases of subsurface trespass in Canadian law from which to draw lessons for CCS, though cases of nuisance are more common and may also be relevant to CCS activities. Where regulatory regimes require operators to notify or seek permission from potentially affected parties before carrying out injection and storage activities (such as in Saskatchewan), the risk of parties bringing forward cases of trespass could be lower. This is assuming stored CO2 behaves as anticipated. Unintended migration of CO2 that interferes with the use of land or causes damages to property could still be brought forward as negligence or nuisance.