Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act (S.C. 1988, c. 28)

Act current to 2019-06-20 and last amended on 2017-06-22. Previous Versions

PART IIIPetroleum Operations (continued)

DIVISION IIProduction Arrangements (continued)

Compulsory Unitization

Marginal note:Who may apply for unitization order

  •  (1) One or more working interest owners who are parties to a unit agreement and a unit operating agreement and own in the aggregate sixty-five per cent or more of the working interests in a unit area may apply for a unitization order with respect to the agreements.

  • Marginal note:Application for unitization order

    (2) An application under subsection (1) shall be made to the Board which shall refer the application to the Committee for the purpose of holding a hearing thereon in accordance with section 181.

  • Marginal note:Application by proposed unit operator

    (3) An application under subsection (1) may be made by the unit operator or proposed unit operator on behalf of the working interest owners referred to in subsection (1).

Marginal note:Contents of unitization application

  •  (1) An application for a unitization order shall contain

    • (a) a plan showing the unit area that the applicant desires to be made subject to the order;

    • (b) one copy each of the unit agreement and the unit operating agreement;

    • (c) a statement of the nature of the operations to be carried out; and

    • (d) a statement showing

      • (i) with respect to each proposed unit tract, the names and addresses of the working interest owners and royalty owners in that tract, and

      • (ii) the tracts that are entitled to be qualified as unit tracts under the provisions of the unit agreement.

  • Marginal note:Details required of unit agreement

    (2) The unit agreement referred to in subsection (1) shall include

    • (a) a description of the unit area and the unit tracts included in the agreement;

    • (b) an allocation to each unit tract of a share of the production from the unitized zone not required, consumed or lost in the unit operation;

    • (c) a provision specifying the manner in which and the circumstances under which the unit operation shall terminate; and

    • (d) a provision specifying that the share of the production from a unit area that has been allocated to a unit tract shall be deemed to have been produced from that unit tract.

  • Marginal note:Details required of unit operating agreement

    (3) The unit operating agreement referred to in subsection (1) shall make provision

    • (a) for the contribution or transfer to the unit, and any adjustment among the working interest owners, of the investment in wells and equipment within the unit area;

    • (b) for the charging of the costs and expenses of the unit operation to the working interest owners;

    • (c) for the supervision of the unit operation by the working interest owners through an operating committee composed of their duly authorized representatives and for the appointment of a unit operator to be responsible, under the direction and supervision of the operating committee, for the carrying out of the unit operation;

    • (d) for the determination of the percentage value of the vote of each working interest owner; and

    • (e) for the determination of the method of voting on any motion before the operating committee and the percentage value of the vote required to carry the motion.

Marginal note:Hearing on application

  •  (1) Where an application made under section 179 is referred by the Board to the Committee, the Committee shall hold a hearing thereon at which all interested persons shall be afforded an opportunity to be heard.

  • Marginal note:Unitization order

    (2) If the Committee finds that

    • (a) at the date of the commencement of a hearing referred to in subsection (1)

      • (i) the unit agreement and the unit operating agreement have been executed by one or more working interest owners who own in the aggregate sixty-five per cent or more of the total working interests in the unit area, and

      • (ii) the unit agreement has been executed by one or more royalty owners who own in the aggregate sixty-five per cent or more of the total royalty interests in the unit area, and

    • (b) the unitization order applied for would accomplish the more efficient or more economical production of petroleum from the unitized zone,

    the Committee may order

    • (c) that the unit agreement be a valid contract enuring to the benefit of all the royalty owners and working interest owners in the unit area and binding on and enforceable against all such owners, and

    • (d) that the unit operating agreement be a valid contract enuring to the benefit of all the working interest owners in the unit area and binding on and enforceable against all such owners,

    and, subject to section 182, the unit agreement and the unit operating agreement have the effect given them by the order of the Committee.

  • Marginal note:Variation by unitization order

    (3) In a unitization order, the Committee may vary the unit agreement or the unit operating agreement by adding provisions or by deleting or amending any provision thereof.

Marginal note:Effective date of unitization order

  •  (1) Subject to subsection (2), a unitization order becomes effective on the day that the Committee determines in the order, but that day shall be not less than thirty days after the day on which the order is made.

  • Marginal note:Effective date when unit agreement or unit operating agreement varied

    (2) Where a unit agreement or unit operating agreement is varied by the Committee in a unitization order, the effective date prescribed in the order shall be a date not less than thirty days following the day the order is made, but the order becomes ineffective if, before the effective date, the applicant files with the Committee a notice withdrawing the application on behalf of the working interest owners or there are filed with the Committee statements in writing objecting to the order and signed

    • (a) in the case of the unit agreement by

      • (i) one or more working interest owners who own in the aggregate more than twenty-five per cent of the total working interests in the area and were included within the group owning sixty-five per cent or more of the total working interests as described in subparagraph 181(2)(a)(i), and

      • (ii) one or more royalty owners who own in the aggregate more than twenty-five per cent of the total royalty interests in the unit area and were included within the group owning sixty-five per cent or more of the total royalty interests as described in subparagraph 181(2)(a)(ii); or

    • (b) in the case of the unit operating agreement, by one or more working interest owners who own in the aggregate more than twenty-five per cent of the total working interests in the unit area and were included within the group owning sixty-five per cent or more of the total working interests as described in subparagraph 181(2)(a)(i).

  • Marginal note:Revocation of order

    (3) Where a unitization order becomes ineffective under subsection (2), the Committee shall forthwith revoke the order.

  • 1988, c. 28, s. 182
  • 1992, c. 35, s. 116(E)

Marginal note:Technical defects in unitization order

 A unitization order is not invalid by reason only of the absence of notice or of any irregularities in giving notice to any owner in respect of the application for the order or any proceedings leading to the making of the order.

Marginal note:Amending unitization order

  •  (1) A unitization order may be amended on the application of a working interest owner, but before amending a unitization order the Committee shall hold a hearing at which all interested parties shall have an opportunity to be heard.

  • Marginal note:Voluntary proposal for amendment by owners

    (2) If the Committee finds that, at the date of the commencement of a hearing of an application for the amendment of a unitization order, one or more working interest owners who own in the aggregate sixty-five per cent or more of the total working interests and one or more royalty interest owners who own in the aggregate sixty-five per cent or more of the total royalty interests in the unit area have consented to the proposed amendment, the Committee may amend the unitization order in accordance with the amendment proposed.

Marginal note:Protection of tract participation ratios

 No amendment shall be made under section 184 that will alter the ratios between the tract participations of those tracts that were qualified for inclusion in the unit area before the commencement of the hearing, and, for the purposes of this section, the tract participations shall be those indicated in the unit agreement when it became subject to a unitization order.

 
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