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Devon Energy v. Walter & Teresa Skrocki

Blaw Devon v. Skrockis Assignment

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Business Law Devon Vs. Ranchers

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Page 1: Blaw Devon v. Skrockis Assignment

Devon Energy v. Walter & Teresa Skrocki

Page 2: Blaw Devon v. Skrockis Assignment

Case Facts• The Lessor is: Walter Skrocki and Teresa Skrocki

(Skrockis)• The Lessee is: Devon Canada Corporation (Devon)

• Surface Lease signed in 1979 → Andex Oil Co. Ltd. – Expired shortly after

• March 2007 Devon → Field Tests – Wireline Rig conduct test ↓

• September 2007 → Skrockis file Damage Claim Application

Page 3: Blaw Devon v. Skrockis Assignment

Timeline of Events• March 2007 → Wirelining for suspended well• Aug 20 2007 → Devon weed sprays the well

site• Aug 23 2007 → Skrockis change concerns from

weed spray to oil left on the ground• Aug 28 2007 → Energy Utilities Board inspects

the well site. Devon commences with remediation of oil on ground and weeds sprayed

Page 4: Blaw Devon v. Skrockis Assignment

Timeline of Events• Sept 2007 → Damage claim filed by Skrockis

• Aug 2008 → Devon takes soil samples for oil, and take pictures for evidence of cattle fecal staining

• Sept 9 2008 → The Board has the hearing for the damages claim

Page 5: Blaw Devon v. Skrockis Assignment

The Situation Room

• The Skrockis are suing Devon for Damages for:Cattle weight loss → occurred in the grazing season

• Skrockis claim → insecure wellhead caused Oil Spill and damages to Cattle

• Cattle + Devon Oil = Diarrhea = ↓ weight of cattle

Page 6: Blaw Devon v. Skrockis Assignment

Issues to be Decided

1. Did the damages alleged by the lessor arise out of the operations of the Operator?

2. If so, what is reasonable compensation for these damages?

Page 7: Blaw Devon v. Skrockis Assignment

Skrockis Damage Claim

Loss of gain

• $17,600  

“Cost of alternative feeding”

•  $6,300  

“Crippled Heifer”• $800

Compensation for crippled heifer

“Veterinary Bill

• $80

Page 8: Blaw Devon v. Skrockis Assignment

Skrockis Exhibits

Page 9: Blaw Devon v. Skrockis Assignment

Devon’s Issues• Speculation – oil found near wellhead was

from lubricating wirelining rig in Mar 2007• Veterinarian Assessment and Devon’s

pictures of the cattle found insignificant evidence

• Due to insufficient evidence Devon is not responsible for the replacement costs of any feed or alleged tractor hours

Page 10: Blaw Devon v. Skrockis Assignment

Devons Issues• Heifer was crippled due to Skrockis

incompetence

• Weed spraying - Devon halted when Skrockis requested and then remediated affected area

• Vet bill is not Devon’s responsibility

Page 11: Blaw Devon v. Skrockis Assignment

Devons Exhibits

0.0449kg of Crude Oil → 1 kg feedstuffs500kg → 25kg feedstuffs per day 25kg of feedstuff → 1.12kg 1.12kg → 500kg 500kg → 1100lbs

1100lbs → 2.49L Oil

Page 12: Blaw Devon v. Skrockis Assignment

Legislation• Under The Canadian Oil & Gas Operations Act

– 25(6) A person authorized and directed to take over the management and control of any work or activity under subsection (5) shall manage and control that work or activity and take all reasonable measures in relation to the spill that are referred to in subsection…

• Under The Canadian Environmental Protection Act

– Section 95. (1) Where there occurs or is a likelihood of a release into the environment of a substance specified on the List of Toxic Substances in Schedule 1 in contravention of a regulation made under section 92.1 or 93 or an order made under section 94, any person described in subsection (2) shall, as soon as possible in the circumstances…

– (a) subject to subsection (4) and any regulations made under paragraph 97(b), notify an enforcement officer or any other person designated pursuant to the regulations and provide a written report on the matter to the enforcement officer or other person;

– (b) take all reasonable measures consistent with the protection of the environment and public safety to prevent the release or, if it cannot be prevented, to remedy any dangerous condition or reduce or mitigate any danger to the environment or to human life or health that results from the release of the substance or may reasonably be expected to result if the substance is released; and…

Page 13: Blaw Devon v. Skrockis Assignment

What’s The VERDICT ?

Page 14: Blaw Devon v. Skrockis Assignment

Decision

• The Board denied the entire Damage claim–Devon conducted due diligence on their

part of the drilling and completions project, and found insufficient evidence of the accusations that the Skrockis claimed

Page 15: Blaw Devon v. Skrockis Assignment

Reasons for Decision• The claim based on estimates → not

supported by factual evidence• Devon’s veterinary statement concludes

→ Cow needs to consume 2.5 liters of oil per 1100 pounds

• 1/3 of cattle displayed fecal staining → veterinary

• No firm evidence was presented

Page 16: Blaw Devon v. Skrockis Assignment

Reasons continued• Visual Soil Analysis was inconclusive

• Tall buttercup plant can cause diarrhea

• The herd was left grazing too long in the affected area

Page 17: Blaw Devon v. Skrockis Assignment

End

Questions ?