PNG alleges unfair treatment, sues Sask. government

An Innisfail-based oil and gas company that feels it’s been treated unfairly by the Saskatchewan government has launched a class action lawsuit to seek redress.

An Innisfail-based oil and gas company that feels it’s been treated unfairly by the Saskatchewan government has launched a class action lawsuit to seek redress.

PNG Exploration Ltd., which previously operated as Petroleum Prospectors Inc., is claiming damages for itself and other companies that have been denied exploration rights by the Saskatchewan Ministry of Energy and Resources.

Its statement of claim, which was filed in the Court of Queen’s Bench for Saskatchewan in October, alleges that government officials inappropriately rejected the highest bids for oil and gas exploration rights on certain lands by declaring that “no acceptable bids” had been received, without explaining their rationale.

“There appears to be no discernible pattern to the acceptance or rejection of bids, except that the plaintiff, and other small exploration and development companies, are systematically precluded from acquiring leases to any substantial land holdings for undisclosed reasons,” said the statement of claim.

Cory Lanterman, who is president of PNG Exploration, told the Advocate that his company has spent hundreds of hours researching development opportunities and preparing bids for land in Saskatchewan, but has been unable to acquire large enough areas of land for viable operations there.

He added that he is aware of other companies that are experiencing similar problems, but they are reluctant to take action that could adversely affect their future dealings with the Saskatchewan government.

Anthony Merchant of Merchant Law Group LLP is the lawyer acting on behalf of PNG Exploration and other class members. He said in a letter to the Advocate that the case revolves around whether Saskatchewan’s legislation related to the sale of oil and gas exploration rights is being properly administered.

The statement of claim asserts that ministry officials either “overstepped the jurisdictional boundaries established by the legislative scheme,” or they were required to explain why the highest bids were not acceptable. It said that the ministry was able to determine the identity of bidders through their GST registration numbers.

Paul Mahnic, director of the Saskatchewan ministry’s petroleum tenure branch, declined to comment on the lawsuit. But he said the process the ministry uses when selling exploration rights involves government engineers and geologists evaluating the subject lands and determining an anticipated bid value.

“It’s strictly economics.”

Mahnic added that many companies remain unidentified by submitting their bids through land agents, and that they’re not obligated to provide a GST registration number. He also said that the regulations allow the minister to reject any bid.

Gary Leach, president of the Explorers and Producers Association of Canada, also did not want to comment on the specifics of PNG Exploration’s lawsuit. But he said he wasn’t aware of any members of his association that have raised similar concerns.

PNG Exploration’s lawsuit is seeking a court order compelling disclosure of the reasons why past bids for land exploration rights have been rejected, a prohibition against similar action in the future without reason, and compensation for damages, among other relief.

Merchant said a hearing to determine if PNG Exploration’s lawsuit can be certified as a class action is expected to occur within the next six months. He’s inviting other oil and gas companies that have experienced difficulties with Saskatchewan’s land acquisition process to contact his firm at atibbs@merchantlaw.com.

Allegations contained in a statement of claim have not been proven in court.

hrichards@bprda.wpengine.com

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