Oil and gas companies in Alberta primarily access agricultural land through lease agreements and regulatory processes rather than outright land purchases, though recent policy interpretations have created new challenges for foreign investors seeking to acquire existing facilities.
Oil and gas companies regularly purchase mineral rights through public auctions held every two weeks by the provincial government2. In a recent example near Sundre, companies paid $40.4 million for mineral and resource rights covering over 55,000 hectares of Crown land, with two parcels alone going for $25.7 million2. These five-year leases grant companies the right to "win, work and recover" petroleum and natural gas, with potential extensions available2.
Rather than purchasing farmland outright, companies typically negotiate pipeline easements with landowners, providing financial compensation in exchange for allowing pipeline construction across agricultural properties3. These agreements are usually obtained before the Alberta Energy Regulator approves pipeline construction applications3.
Recent interpretations of Alberta's foreign ownership regulations have created uncertainty for international companies. Under provincial rules, foreign-controlled companies and private equity are restricted from buying or leasing private land outside cities and towns, though exceptions exist for pipelines, manufacturing facilities, and power plants1.
The Foreign Ownership of Land Administration (FOLA) office has recently taken a narrower view of these rules, potentially requiring foreign investors to obtain special cabinet approval through an order in council—a process that could take four to eight months—to acquire existing oil and gas facilities1. This has created what lawyers describe as "a chill on property sales and heightened risk to developers and investors"1.
Pipelines represent the largest driver of agricultural land loss in Alberta, using approximately 1,800 hectares between 2019 and 202159. The province contains an estimated 110,000 kilometres of pipeline crossing farmland, with crop production on disturbed pipeline areas typically reduced to only 60-80% of pre-pipeline levels7.
Alberta has approximately 120,000 abandoned well sites on agricultural land that require reclamation7. While companies must reclaim unsuccessful well sites at no cost to landowners, the soil cannot be returned to its original state even after proper reclamation procedures7.
The Surface Rights Act requires mineral owners or operators to obtain either landowner consent or a Right of Entry order before accessing private land for resource development4. The Alberta Energy Regulator serves as the full lifecycle regulator for oil, gas, and pipeline projects, reviewing approximately 40,000 applications annually for various energy development activities3.
Companies must provide landowners with project descriptions, construction schedules, and address concerns about soil handling and site reclamation3. However, farmers often face ongoing challenges, including soil warming from pipeline friction that can cause crops to mature unevenly and potential contamination from leaks6.
Citations:
- https://financialpost.com/commodities/energy/oil-gas/alberta-farmland-rules-foreign-buyers-deterring-investment
- https://www.thealbertan.com/sundre-news/257-million-resource-rights-lease-sale-could-lead-to-more-oil-gas-development-9517939
- https://www.aer.ca/understanding-resource-development/enerfaqs-and-fact-sheets/enerfaqs-landowner
- https://www.alberta.ca/development-operations-and-closure
- https://www.albertafarmexpress.ca/news/study-finds-renewable-energy-footprint-light-on-agricultural-lands/
- https://thenarwhal.ca/hidden-danger-life-for-farmers-atop-albertas-400000-kilometres-of-pipelines/
- https://www.topcropmanager.com/loss-of-agricultural-land-on-the-prairies-14214/
- https://elc.ab.ca/Content_Files/Files/NewsBriefs/ConflictBetweenOiL-V17-2.pdf
- https://www.pembina.org/pub/land-use-pressures-alberta
- https://www.cbc.ca/news/canada/edmonton/renewables-pose-little-threat-to-agriculture-environment-alberta-commission-report-1.7143335
- https://thenarwhal.ca/grain-country-gas-land/
- https://open.alberta.ca/dataset/64b0c08e-ae4f-46f5-9e78-99a7a73c0fc4/resource/d2408091-0bdf-49a8-a73f-f9318af9dfe2/download/planning-farm-ownership-sales-guide-albertans.pdf
- https://dealstream.com/oil-lease/alberta
- https://www.alberta.ca/surface-rights-and-renewable-energy
- https://www.lacombecounty.com/en/news/survey-renewable-energy-projects-on-agricultural-lands.aspx
- https://majorprojects.alberta.ca
- https://cdnsciencepub.com/doi/10.1139/cjss-2019-0020
- https://oilandgasinfo.ca/patchworks/land-sales-the-bidding-process/
- https://open.alberta.ca/dataset/c5d47da8-658b-420a-a726-cd5d1c985a23/resource/3b56779e-1047-453e-94de-eaf75f08811f/download/ersfseduatenure.pdf
- https://www.stalbertgazette.com/alberta-news/ovintiv-moves-deeper-into-montney-region-with-33b-asset-purchase-from-paramount-9806876
- https://www.benoitoilfield.ca
- https://www.aer.ca/applications-and-notices/application-processes/application-legislation/public-lands-act
- https://www.alberta.ca/farm-fuel-and-rural-utility-programs
- https://www.reddeeradvocate.com/home/rural-municipalities-of-alberta-pushing-for-unpaid-energy-industry-taxes-7562940
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