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Alberta Landowners Guide, Documenting Costs

Landowners Guide Cover.jpg
3rd edition
Authors:            Duncan Kenyon, Nikki Way, Andrew Read, Barend Dronkers, Benjamin Israel, Binnu Jeyakumar, Nina Lothian
Publisher: Pembina Institute
Publish Date: October 2016
PDF Download: [Landowners' Guide]              [Landowners' Primer]                                                                    
Initiation Phase
Exploration Phase
Development Phase
Pipelines and Other Infrastructure
Environmental Impacts
Abandonment and Reclamation
Compensation, Rights, and Hearings
                Alberta Energy Regulator
                Other Alberta Departments
                Other Resources
                Legal Assistance
                Energy Industry Associations
                Provincial Non-profit Organizations
                Surface Rights and Local Groups
                Responsible Energy Development Act
                AER Oil and Gas Related Legislation
                AER Energy Related Legislation
                Other Provincial Acts
                Documenting Costs
                Glossary of Terms

Documenting Costs

Determining Compensation

As a landowner who may sign or has signed a surface lease agreement, you should track any time or expense that occurs as a result of having a well, pipeline or facility on your land.[1] You should start logging this as soon as the seismic equipment shows up, and finish when you have a reclamation certificate in hand that you are happy with.

A landowner’s compensation offer for a surface lease considers five main criteria:

  • the entry fee (fixed to $500 per acre)
  • land value
  • general disturbance such as initial nuisance, inconvenience, and noise (for the first year of the lease)
  • loss of use of the land
  • adverse effect

Although there may be other considerations specific to your situation, these are the criteria outlined in the Surface Rights Act.[2] For more information about compensation, refer to Compensation and Surface Rights Access.

Negotiation expenses

Compensation should be negotiated early in your discussions in order to ensure that you and the company can agree on the reasonable reimbursement for your time. Keep track of all your time and expenses while negotiating with the company including activities like phone calls, researching, dealing with the company’s representatives and surveyors, negotiations, preparing documentation, and reaching out to third parties, lawyers, and government representatives.

If you begin as early as the project conception, you can include your records as evidence toward the reimbursement of your costs. If you provide a reasonable and detailed outline of time and expenses, the company may be persuaded to reimburse you; if they do not, the Surface Rights Board might award your costs. The Surface Rights Board has determined in the past that even if compensation was negotiated outside the Surface Rights Board process, lessors should be granted reasonable costs incurred while negotiating.2

Table 8 provides an example of cost tracking for activities during negotiations that you can adapt for your own use. You should number for each item for ease of reference.

Table 8. Example cost tracker for negotiations

Ref # Date Description Expense Time
1 05-02-2015 Meeting with land agent to seismic testing, 1 hr
2 06-27-2015 Land agent kitchen table talks, discuss surface lease access 1.5 hr
3 06-28-2015 Research on company, phone call with AER 1 hr
4 06-29-2015 Research on company history, reclamation, enforcement orders
Environmental Enforcement Search history through Environmental Law Centre
$75 4 hr
5 06-30-2015 Cost of landowner consultant (preliminary investigation) ($250/hr) $250 (1 hr)
6 07-05-2015 Land agent kitchen table talks, cont. discuss concerns on well placement 1 hr
7 07-05-2015 Cost of landowner consultant (additional investigation) ($250/hr) $500 (2 hr)
8 07-02-2015 Printing costs of application and relevant documentation $25
9 07-15-2015 Land agent kitchen table talks, cont. discuss concerns on flaring 1 hr
10 07-15-2015 Cost of landowner consultant (kitchen table talks, preparation) ($250/hr) $500 (2 hr)
11 07-27-2015 Cost of landowner consultant (follow up to discussions) ($250/hr) $375 (1.5 hr)
12 08-07-2015 Travel to and from SRB ADR process ($0.505/km) $25.25 (50 km) 1 hr
13 08-08-2015 SRB ADR process negotiations 2.5 hr
14 08-09-2015 Surface Lease Agreement signed 1 hr

Adverse effect costs

Adverse effect is calculated at the time of signing for a surface agreement, and should consider probable effects in a future five-year period.

The Farmers’ Advocate Office has a good resource explaining the items that you may typically include in your adverse effect calculation. It captures tangible and intangible impacts as a result of the well, pipeline, or facility.[3] Additionally, you should consider past Surface Rights Board decisions, such as the decision to grant annual compensation for a pipeline agreement for several residents.[4]

Adverse effect could include:

  • Extra time to farm around the operation
  • Production losses (outside the lease) due to compaction, or extra turning of the combine to navigate around the lease site
  • Impact and change for on-farm management decisions
    • Impact to GPS operations
  • Adding strain on machinery
  • Effort and cost for effective weed control
  • Inconvenience to normal field operations
    • Extra care when in the vicinity of the obstruction, extra time
    • Time to supervise and inspect lands
    • Added stress on operator to not hit any structures
  • Impact of exposure to non-lethal H2S for landowner, livestock
  • General payment for a forced business relationship
  • Other items unique to this lease

As these are probable future effects, anticipated costs and expenses may be hard to justify if they are speculative. However, every surface lease can be renegotiated every five years. In order to prove additional adverse effects that were not captured in your first lease agreement, being diligent about documentation can help make you whole in the next surface lease agreement for all costs and time caused by dealing with the lease on your land. The Surface Rights Board may consider a reasonable hourly rate for your time.

Table 9 provides an example of cost tracking for adverse effects that you can adapt for your own use. You should number for each item for ease of reference.

Table 9. Example cost tracker for adverse effects

Ref # Date Description Expense Time
36 09-04-2015 Fence damaged by truck crews; repaired fence (include photos) $50 (barbed wire) 0.5 hr
37 09-10-2015 Cattle gate left open; rounded up escaped cattle (include photos) 1 hr
38 09-17-2015 Weekly rounds to check fencing, gate closing .25 hr
39 09-24-2015 Weekly rounds to check fencing, gate closing .25 hr
40 09-30-2015 Weekly rounds to check fencing, gate closing .25 hr
41 10-07-2015 Weekly rounds to check fencing, gate closing .25 hr
42 10-14-2015 Weekly rounds to check fencing, gate closing .25 hr
43 10-20-2015 Pump-valve failure - uncontrolled release; moved cattle upwind, closed gates, contacted company and AER 2.5 hrs
44 10-21-2015 Company trucks responding to release caused ruts in field; repaired ruts 4 hrs
45 10-28-2015 Weekly rounds to check fencing, gate closing .25 hr
65 06-01-2016 Controlled weeds on lands adjacent to lease road - scentless chamomile removal and disposal (include photos) 1.5
66 06-10-2016 Cattle gate left open; rounded up escaped cattle (include photos) 1 hr
67 06-11-2016 Phone call with AER and Company staff re: fencing .5 hr


  1. This material is from the Pembina Institute publication 'Landowners' Guide to Oil and Gas Development, 3rd edition (2016)'
  2. Alberta, Surface Rights Act, RSA 2000, c S-24, s 25.
  3. The Farmers’ Advocate Office summarizes the criteria for adverse effect on their website. Farmers’ Advocate Office, “Updated Definition of Adverse Effect Within a Surface Lease.” (August 27, 2015). https://www.alberta.ca/advisories.aspx. The information at this link has been removed since 2016 publication and may no longer be online.
  4. Farmers’ Advocate Office, Annual Compensation for Pipelines in Alberta (2008).
    https://www1.agric.gov.ab.ca/$department/deptdocs.nsf/all/ofa12451/$FILE/Annual-Pipeline-Compensation.pdf. The information at this link has been removed since 2016 publication and may no longer be online.