As Alberta-specific legislation, it probably comes as no surprise that there are sections of the Builders’ Lien Act that specifically address liens on oil and gas well sites. An oil and gas lien is an anomaly among the lien categories as it is defined not so much by the legal interests being liened but rather the type of improvements that is being worked on. While most oil and gas liens are also mineral liens, not all are. Oil and Gas Liens are also unique in that the Builders’ Lien Act provides for an entirely different set of timelines that all other lien categories. This is a difference enacted by the Legislation to address the special circumstances of oil and gas resources extraction invoicing and payment practices in Alberta.
When a lien fits the criteria provided for a lien under s. 6.1 of the Builder’s Lien Act, and the lien is in respect to improvements to an oil or gas well or to an oil or gas well site, then a lien can be classified as “oil and gas line”. While the general rules for registration of surface liens also apply to oil and gas liens, oil and gas liens do have special properties attached to them, which differentiate oil and gas liens from surface lines and other types of mineral liens.
First, a lien in respect to improvements to an “oil and gas well” or “oil or gas well site” must be filed within 90 days (rather than 45 days) with respect to the work done. “Oil and gas well” and “oil and gas well site” are not defined terms in the Builders’ Lien Act, and so there has been legal uncertainty as to what sites and what extraction methods benefit from the 90-day rule.
(i) Place of registration
Non-mineral interests: If the work or materials supplied are: (a) supplied directly for the owner, or for a contractor or subcontractor of the owner; and (b) are not provided in preparation to, or in connection with, the recovery of a mineral, then an oil and gas lien must be filed at the Land Titles Office.
Mineral freehold interest: Where an oil or gas lien is made respecting work done or material furnished (a) preparatory to; (b) in connection with; or (c) for an abandonment operation in connection with; the recovery of a mineral and the minerals are owned by “freehold” interests, a mineral lien must be filed at the Land Titles Office; and
Mineral crown leases: Where an oil or gas lien is made respecting work done or materials furnished (a) preparatory to; (b) in connection with; or (c) for an abandonment operation in connection with; the recovery of a mineral and the minerals are owned by the Crown, a mineral lien must be filed at the Ministry of Energy.
(ii) Special Rules:
To qualify as an oil and gas lien, the line must be in respect of an improvement to an oil or gas well or to an oil or gas well site.
(iii) Time for registration of an oil or gas line (preserving an oil or gas lien) – 90 days
Lien for materials: with respect to improvements to an oil or gas well or to an oil or gas well site at any time within the period commencing when the lien arises and terminating 90 days from the day that the last of the materials is furnished or the contract to furnish the materials is abandoned.
Lien for Services: With respect to improvements to an oil or gas well or to an oil or gas well site at any time within the period commencing when the lien arises and terminating 90 days form the day that the performance of the services is completed or the contract to provide the service is abandoned.
Lien for wages: with respect to improvements to an oil or gas well or to an oil or gas well site at any time within the period of commencing when the line arises and terminating 90 days from the day that the work for which the wages are claimed is competed or abandoned.
Catch-all: With respect to improvements to an oil or gas well or to an oil or gas well site, at any time within the period commencing when the lien arises and terminating 90 days from the day the contract or subcontract, as the case may be, is completed or abandoned.
(iv) Expiry of an unregister oil or gas lien (perfecting an oil or gas lien) – 90 days
If the lien is not filed during the registration period, it ceases to exist. Completion of the contract is total completion and not substantial performance. The time limit for registering a lien is not extended by reason only that something is improperly done or omitted to be done in respect of the (i) work done; or (ii) materials furnished, which is correct or done at a later date.
(v) Expiry of registred oil or gas lien (perfecting an oil or gas lien) – 180 days
A lien that has been registered ceases to exist unless, within 180 days from the date it is registered, (a) an action is commenced under the Builders’ Lien Act to realize on the line, or in which the lien may be realized, and (b) the lien claimant registers a certificate of lis pendens in respect of the claimant’s lien in the appropriate land titles office.
(vi) Holdback period – 90 days
With respect to improvements to an oil or gas well or to an oil or gas well site irrespective of whether a contract provides for instalment payments or payments of completion of the contract, an owner who is liable on a contract under which surface lien may arise shall, when making payment on the contract, retain an amount equal to 10% of the value of the work actually done and materials actually furnished for a period of 90 days form (a) the date of issue of a certificate of substantial performance of the contract, in a case where a certificate of substantial performance is issued, or (b) the date of completion of the contract, in case where a certificate of substantial performance is not issued.
