Public & operator interests in offshore petroleum resources data: Where will the balance be struck? in Geophysical Service Incorporated (GSI) v. Encana Corporation
November 9, 2016
By Daniel Watt, at McInnes Cooper
The balance between the public’s interest in accessing offshore petroleum resources data and operators’ commercial interests is at the heart of the dispute between Geophysical Service Incorporated (GSI) and Encana Corporation (and a number of others). In April 2016, Alberta’s superior court decided just where the law strikes that balance. But that could change: on November 9, 2016, the Alberta Court of Appeal will hear GSI’s appeal and the outcome will either end years of uncertainty and litigation or expose the boards and many others to significant liability, threaten public access to seismic and other data and lead to a proliferation of similar litigation – including possible appeals to the Supreme Court of Canada.
Here’s the balance the court struck and the implications of that balance being thrown off.
THE CURRENT BALANCING ACT
GSI obtained seismic data through offshore marine surveys in the Atlantic and Arctic waters. It licences that seismic data to oil and gas companies primarily for exploration purposes. As a condition of regulatory approval for the surveys and as required by legislation and policy, GSI submitted the seismic data to the National Energy Board (NEB), the Canada-Newfoundland and Labrador Offshore Petroleum Board (CNLOPB) and the Canada-Nova Scotia Petroleum Board (CNSOPB). After the expiry of the confidentiality periods in the legislation, the boards publicly released copies of the data. GSI started 25 lawsuits in Alberta against the NEB, the CNLOPB and numerous exploration, production and other companies claiming (among other things) it owns the copyright in the data, and these parties infringed that copyright by disclosing or copying the date without GSI’s consent. GSI started similar lawsuits in Newfoundland and Labrador, Nova Scotia and in the Federal Court. The Alberta Court of Queen’s Bench ordered a trial of two issues common to the 25 Alberta cases: whether seismic data can be copyrighted; and the effect of the offshore regulatory regimes on that copyright. On April 21, 2016, the Alberta court decided just where the balance between the public’s interest in access to Canada’s offshore petroleum resources data, and operators’ commercial interests lies:
Seismic data can be protected by copyright. The court agreed that seismic data can be, and normally would, be protected by copyright. The data comprised both raw and processed seismic data and could constitute original “works” within the meaning of the Copyright Act: seismic crews used the necessary “skill and judgment” when designing and conducting surveys and processors of raw data used skill and judgment to create a useable final product.
The offshore petroleum regulatory regime overrides that copyright. The court decided, however, that after the expiration of a statutory confidentiality period, the legislation governing offshore petroleum activities allows the regulatory boards to disclose – and the public to copy – the seismic data:
- The specific overrides the general. The Canadian offshore petroleum regulatory regime is a “complete and specific code that applies to all oil and gas property in the offshore and frontier lands, including seismic data”; this more specific regime overrides the general Copyright Act and provides a complete defence to GSI’s copyright infringement claims.
- Regulatory regime internally balances the interests – even if it seems unfair. The regulatory regime and determined is intended to allow the public disclosure of seismic data, after a set period of confidentiality, to stimulate exploration and development. The confidentiality period gives seismic operators the opportunity to commercialize the data, accounting for their interest in obtaining a return on the investment required to conduct offshore surveys. The regulatory regime achieves an “internal balance between allowing for commercialization of the information and the public interest in the wider dissemination of that information” – even if that balance might seem “unfair.”
THROWING THE BALANCE OFF
This dispute reveals the tension that exists between the public interest in disseminating data about Canada’s offshore petroleum resources, and seismic operators’ interest in covering its costs and profiting from its enterprise. And the real life impact is already being felt: two months after this decision, the Alberta court followed it in deciding a photocopy company (612469 Alberta Limited) isn’t liable for copying GSI data that it accessed from the NEB.
This is the first time a court has confirmed that copyright can subsist in seismic data. However, it merely validates industry supposition and the common practice of including in seismic license agreements an express acknowledgement by the licensee that the seismic data is copyrighted.
The dispute over the regulatory regime’s effect, however, is far more significant and an outcome that throws the balance off carries big implications for industry regulators and participants and the public:
A failed appeal. On one hand, if the decision survives this (any any subsequent) appeal, it will confirm the industry understanding that seismic data submitted to the boards can be freely copied after the confidentiality period expires. And this will end years of uncertainty and costly litigation.
A successful appeal. On the other hand, if the decision is overturned, the boards and anyone who has copied GSI’s data may be exposed to significant liability: GSI’s collective claims approach $1B. It could also lead to a proliferation of similar claims: the current offshore regulatory regime requires the submission, and permits disclosure, of information about all sorts of topics (including exploratory, delineation and development wells exploratory wells, delineation wells, development wells, geological work, engineering or feasibility studies, contingency planning and diving reports). And aside from the money at stake, the ability of the boards, industry and the public to access submitted seismic data for regulatory, exploratory, research or other purposes is threatened and this information won’t be available for wider public access and use.
Please contact your McInnes Cooper lawyer or any member of the Energy & Natural Resources Team @ McInnes Cooper to discuss this topic or any other legal issue.
McInnes Cooper has prepared this document for information only; it is not intended to be legal advice. You should consult McInnes Cooper about your unique circumstances before acting on this information. McInnes Cooper excludes all liability for anything contained in this document and any use you make of it.
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