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How JL Energy defended a patent challenge from major oil, pipeline companies

Don Horne   


JL Energy Transportation Inc. (JETI) successfully defended a federal court challenge to its gas transportation patent, with the court confirming the validity of its key patent terms.

This endorsement clears the way for JETI’s continuation of its licence and patent infringement claims against an alliance of major Canadian and U.S. pipeline and gas processing companies.

“We are very pleased to have the federal court validate the key claims in our patent,” says John Lagadin, president of JETI. “This endorsement allows us to continue our already lengthy quest for justice, and we look forward to a successful outcome once the courts have been presented with the facts in the case. We remain appreciative to have Bentham on board to successfully defend our patent and fund our continuing actions as their significant due diligence, capital at risk, and proven track record, validates our confidence in our long standing claims.”

The defendant companies currently include: Alliance Pipeline Limited Partnership, Alliance Pipeline Ltd., Alliance Pipeline L.P., Alliance Pipeline Inc., (collectively, Alliance), Aux Sable Liquid Products LP (formerly known as Alliance Pipeline NGL, LP) and Aux Sable Liquid Products Inc. (formerly known as Alliance Pipeline NGL Inc.)(together, Aux Sable).


As previously announced on March 6, JETI is claiming significant damages as a result of Alliance’s and Aux Sable’s alleged infringements of JETI’s licences and intellectual property rights (See related article, JETI finds new support in court action against Canadian, U.S. pipeline and gas companies).


In the early 1990s a team led by John Lagadin, the founder of JETI, invented an innovative method for more efficiently and cost-effectively transporting enriched natural gas via a single pipeline carrying both natural gas and natural gas liquids (NGLs) from the Western Canadian Sedimentary Basin to the lucrative U.S. mid-western natural gas and NGL market.

It was a ground-breaking invention that caught the eye of 22 producers, including some of North America’s largest energy companies. These companies subsequently formed the “Alliance Pipeline” which went into service December 1, 2000.

JETI licensed the technology (subsequently patented in a number of jurisdictions around the world) to the Alliance and Aux Sable companies, who between 1996 and 2000 planned and constructed a 3,848 km pipeline from B.C. and Alberta to Chicago, Ill. as part of an integrated energy system to export Western Canadian enriched natural gas to be processed at the U.S. market hub.  The Alliance Pipeline was one of the most significant infrastructure projects in North America at the time, and has since delivered an average of 1.6 billion cubic feet of enriched gas every day to the Chicago market (more than one-fifth of Canada’s natural gas exports).

This major success story of Canadian innovation, built on the entrepreneurialism of the JETI team, has provided Canada access to a valuable export market and contributed billions of dollars to Canada’s GDP and Alberta’s royalty revenues.


JETI alleges in Alberta Court of Queen’s Bench Court File No. 1601-06322 that Alliance and Aux Sable have in recent years used its proprietary and patented technology to transport and process rich natural gas on additional pipelines in British Columbia, Alberta and North Dakota without licence or authorization.

Aux Sable subsequently challenged one of JETI’s patents in Federal Court File No. T-1612-16.

The Federal Court invalidated claims nine and 10, but decided that all of claims one through eight of the patent are valid, being the key elements of the technology upon which the Alliance/Aux Sablesystem is built and continues to operate.

About the Defendants

The Alliance Pipeline system consists of an approximately 3,848-kilometre (2,391-mile) integrated Canadian and US natural gas transmission pipeline system, delivering rich natural gas from the Western Canadian Sedimentary Basin and the Williston Basin to the Chicago market hub. The Alliance system delivers, on average, about 45.3 million standard cubic metres (or 1.6 billion standard cubic feet) of natural gas per day.

Aux Sable commenced operation as part of the Alliance Pipeline and Aux Sable dense phase gas system. At that time, two companies were established, one in the United States, and one in Canada, to manage the natural gas liquids business associated with the Alliance Pipeline.

In 2010, a second U.S. company, Aux Sable Midstream (ASM) was established to focus on other midstream developments in the United StatesAux Sable owns and operates a world-scale natural gas liquids extraction and fractionation facility in Illinois near the terminus of the Alliance Pipeline. The facility is currently capable of processing 2.1 billion cubic feet per day of natural gas and can produce approximately 107,000 barrels per day of specification natural gas liquid products. Aux Sable’s rich gas premiums provide market access to rich gas producers in Canada and the U.S. that cannot be realized through conventional field extraction and local NGL sales.



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