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NEW TOOLS FOR RESOLVING DISPUTES IN THE OIL AND GAS INDUSTRY

Companies in the oil and natural gas industry are being encouraged to try mediation, principled negotiation, and other means of conflict management for company-to-company disputes.  These approaches could be used instead of resorting to litigation or relying on regulatory bodies to solve issues.

The new tools for resolving disputes in the oil and natural gas industry are outlined in a handbook entitled "Let's Talk".  This handbook is a creation of the C2C ADR Council in Calgary.

C2C ADR Council is a Calgary corporation with representation from 13 industry organizations, which formed a task force that wrote the handbook.

The handbook outlines appropriate dispute resolution techniques that can be used in the oil and natural gas industry.  It encourages companies to look at their conflict management strategies, negotiating styles, and dispute resolution mechanisms.

The handbook is organized into subject areas such as accounting and auditing issues, joint venture and facility regulation, operating procedure and issues, jumping pound (custom fees) issues, and regulatory issues and compliance.  Each subject area is further broken down to provide alternative dispute resolution tools, ideas, and strategies for that particular area.  As well, examples of frequently encountered scenarios are given.

According to some reviews of the handbook, it is a breakthrough for companies in the oil patch.

The project evolved out of the Alberta Energy and Utilities Board's (AEUB) dispute resolution program.  This program started as a pilot project about 3 years ago and was started as it was believed that stakeholders in the industry wanted an alternative to the AEUB formal process.  Concern had been expressed over the time delays and lack of flexibility in the formal process.  However, the handbook does acknowledge that in certain situations the AEUB hearing process (or even litigation) may be the most appropriate process for certain situations.

This initiative comes at a time when the oil and natural gas industry is becoming increasingly busy and increasingly competitive.  There are many mergers and acquisitions going on.  There is also downsizing happening in the industry.  Increased workloads, short-sited views by management, and diminishing loyalty to private sector companies can and are leading to disputes.  While some companies will find success in the regulatory process and the Courts, others may not.  This handbook outlines other mechanisms that are available and that are designed to meet with success as well.

By Stacey M. Johnson
January 5, 2005