Indian Oil and Gas Regulations (SOR/2019-196)

Operations Under Exploration Licence

Marginal note:Exercise of rights conferred by licence

30 An exploration licence holder may exercise the rights conferred by the licence in a subsurface contract area, but in doing so must not interfere with any operations carried out under the subsurface contract.

Marginal note:Priority

31 Every exploration licence is subject to

• (a) any surface rights or interests granted under an Act of Parliament; and

• (b) any rights or interests related to the exploration or exploitation of minerals other than oil or gas in the licence area.

Marginal note:Maximum drilling depth

• 32 (1) An exploration licence holder must not drill to a depth of more than 50 m, unless authorized to do so by their licence.

• Marginal note:Holder’s obligations

  (2) The holder must

  • (a) ensure that all environmental protection measures included in the licence are implemented and complied with;

  • (b) identify and mark the location of every test hole and shot hole that is drilled under the licence;

  • (c) repair and recondition any roads or road allowances that are damaged as a result of the exploration work as soon as the circumstances permit after the damage occurs;

  • (d) as soon as the circumstances permit, plug any hole that is drilled under the licence and that, during or after completion of the exploration work, collapses or emits gas, water or another substance;

  • (e) within 90 days after the day on which the exploration work is completed, pay compensation for the exploration work that was carried out, based on the rates specified in the licence or a related subsurface contract; and

  • (f) within 90 days after the day on which the exploration work is completed, submit to the Minister and the council

    • (i) a mylar sepia copy and a legible paper copy of a map, on a scale of not less than 1:50 000, that shows the location and ground elevation of every vibrating equipment station, test hole and shot hole,

    • (ii) summaries of any geologist’s and driller’s logs, indicating the depth and thickness of formations bearing water, sand, gravel, coal and other minerals of possible economic value, and

    • (iii) all technical information obtained from the drilling of each test hole.

Marginal note:Exploration report

• 33 (1) An exploration licence holder must submit an exploration report to the Minister within 90 days after the day on which the exploration work is completed.

• Marginal note:Content of exploration report

  (2) The report must comply with any exploration reporting requirements of the relevant province and must include, in addition to the documents and information referred to in paragraph 32(2)(f),

  • (a) a copy of every aerial photograph taken during the period of exploration;

  • (b) two copies of a geological report on the explored area, including stratigraphic data and structural and isopach maps on a scale of not less than 1:50 000; and

  • (c) a geophysical report on the explored area.

• Marginal note:Content of geophysical report

  (3) The geophysical report must include

  • (a) if seismic work has been carried out,

    • (i) a mylar sepia copy and two legible paper copies of a map, on a scale of not less than 1:50 000, that shows contour lines drawn on the corrected time value at each source point for all significant reflecting horizons explored, with a contour line interval of not more than 10 m,

    • (ii) a mylar sepia copy and two prefolded paper copies of each stacked seismic cross-section, including migrated displays if that process has been carried out, with all significant reflecting horizons clearly labelled at both ends on one of the copies, and

    • (iii) two microfilm copies of all basic recorded data, including survey notes, chaining notes and observer reports;

  • (b) if a gravity survey has been carried out, two legible copies of a map, on a scale of not less than 1:50 000, that shows the location and ground elevation of each station, the final corrected gravity value at each station and gravity contour lines drawn on that value, with a contour line interval of not more than 2.5 µm/s²; and

  • (c) if a magnetic survey has been carried out, two legible copies of a map of the explored area, on a scale of not less than 1:50 000, that shows the location of the flight lines or grid stations and magnetic contour lines, with a contour line interval of not more than 5 nT.

• Marginal note:Exception

  (4) The holder may include maps at contour line intervals or scales other than those specified in subsections (2) and (3) if the alternative intervals or scales would enhance the interpretability of the maps.

• Marginal note:Information available to council

  (5) The Minister must make the information submitted under subsections (2) to (4) available to the council.

• Marginal note:Information to be kept

  (6) In addition to the information submitted under this section, the holder must keep any information that was obtained as a result of the exploration work carried out in the contract area, including any printout, or magnetic digital display, of raw seismic data or interpreted seismic data, and must make it available for review by the Minister at the holder’s office during business hours after the later of

  • (a) if the holder also holds a subsurface lease or permit in lands in the licence area, 90 days after the day on which the lease expires or is continued, the initial term of the permit expires or, in the case of a permit issued under the Indian Oil and Gas Regulations, 1995, the permit is converted to one or more leases, and

  • (b) one year after the day on which the exploration work is completed.

Marginal note:Remediation and reclamation

34 When exploration work under an exploration licence is no longer being carried out, whether or not the licence has ended, the licence holder must ensure that all the lands on which the work was carried out are remediated and reclaimed.

Subsurface Rights or Interests

Grants of Subsurface Rights or Interests

General Rules

Marginal note:Subsurface contracts

• 35 (1) Oil and gas rights or interests in First Nation lands may be granted by the Minister under one of the following subsurface contracts:

  • (a) an oil and gas permit;

  • (b) an oil and gas lease.

• Marginal note:Process

  (2) A subsurface contract must be granted in accordance with the public tender process set out in sections 39 to 42 or the negotiation process set out in sections 44 to 46, as chosen by the council. The negotiation process may be preceded by a call for proposals in accordance with section 43.

• Marginal note:No splitting of rights

  (3) When granting a subsurface contract, the Minister must grant all the rights to the oil and gas in each zone included in the contract area.

Marginal note:Priority

36 A subsurface contract holder’s rights or interests are subject to the right of an exploration licence holder to carry out exploration work in, and the right of any other subsurface contract holder to work through, the subsurface contract area.

Marginal note:Multiple holders

• 37 (1) A subsurface contract may be granted to no more than five persons, each having an undivided right or interest in the contract of at least 1%. The right or interest must be expressed in decimal form to no more than seven decimal places.

• Marginal note:Liability

  (2) If two or more persons have an undivided right or interest in a subsurface contract, they are jointly and severally, or solidarily, liable for all obligations under the contract, the Act and these Regulations.

Marginal note:Fair value

38 In determining the fair value of the rights or interests to be granted under a subsurface contract, the Minister must, in consultation with the council, consider the bonuses paid for grants of oil and gas rights or interests in other lands, which may be adjusted to take into account the following factors:

• (a) the size of the other lands and their proximity to the First Nation lands;

• (b) the time when the rights or interests in the other lands were granted;

• (c) current oil and gas prices and the prices when the rights or interests were granted;

• (d) the results of recent drilling operations in the vicinity of the other lands;

• (e) similarities and differences in the geological features of the other lands and the First Nation lands; and

• (f) any other factors that could affect the fair value of the rights or interests.

Public Tender Process

Marginal note:Public tender

39 The Minister may grant the oil and gas rights or interests in First Nation lands by way of public tender only if the council requests or consents to that process.

Marginal note:Minister’s duties

• 40 (1) When oil and gas rights or interests are to be granted by way of public tender, the Minister must, after consulting with the council, prepare a notice of tender.

• Marginal note:Notice of tender

  (2) The notice of tender must include the following information:

  • (a) the type of subsurface contract to be granted;

  • (b) the terms and conditions of the contract, other than those set out in these Regulations, or the address of a website where the terms and conditions are set out, including

    • (i) a description of the lands to be included in the contract area and the oil and gas rights or interests to be granted,

    • (ii) the surface rates and seismic rates,

    • (iii) the initial and intermediate terms of the permit or the term of the lease, as the case may be,

    • (iv) in the case of a permit, the earning provisions for the initial term, including the drilling commitment and deadline for completion, the target zone or depth to which each earning well must be drilled and a description of the lands to be earned by each, and

    • (v) the royalty to be paid, if it differs from the royalty provided for in these Regulations;

  • (c) the instructions for submitting a bid, including any information to be provided by bidders, the place where a bid may be submitted and the deadline for submission; and

  • (d) a statement indicating that the bidder acknowledges that they have reviewed and understood the terms and conditions of the contract to be granted and will be bound by those terms and conditions if theirs is the winning bid.

• Marginal note:Publication of notice of tender

  (3) The Minister must submit a copy of the proposed notice of tender to the council before publishing it and, if it is approved, must publish it

  • (a) in a publication known to the industry, such as the Daily Oil Bulletin published by JuneWarren-Nickle’s Energy Group; or

  • (b) on a website on which the Minister publishes information about oil and gas in First Nation lands.

Marginal note:Submission of bids

• 41 (1) All bids must be submitted in accordance with the instructions set out in the notice of tender, be sealed and include

  • (a) the subsurface contract application fee set out in Schedule 1;

  • (b) the rent for the first year of the contract;

  • (c) the bonus; and

  • (d) the name and address for service of each proposed contract holder and the percentage share of each.

• Marginal note:Certified funds

  (2) The fee, rent and bonus must be paid in certified funds unless the notice of tender specifies a different form of payment.

Marginal note:Opening of bids

• 42 (1) After the tender closes, the Minister must without delay open the bids, exclude any bids that do not meet the requirements of section 41, identify the bid with the highest bonus and send the council notice of that bid.

• Marginal note:Presence at opening

  (2) The council or a person designated by the council may be present when the Minister opens the bids.

• Marginal note:Tied bid

  (3) If the highest bonus is included in more than one bid, the Minister must republish the notice of tender.

• Marginal note:Council’s decision

  (4) The council may, within 15 days after the day on which the tender closes, notify the Minister by written resolution that it rejects the bid with the highest bonus. If such a notice is received, all bids must be rejected.

• Marginal note:Irrevocable decision

  (5) If a council notifies the Minister that it approves the bid with the highest bonus, that bid cannot later be rejected under subsection (4).

• Marginal note:Acceptance of highest bid

  (6) If a notice rejecting the bid is not received, the Minister must accept it and send the winning bidder a notice of acceptance. The contract takes effect on the day on which the tender closes.

• Marginal note:Publication of tender results

  (7) The Minister must publish the name of the winner and the winning bonus amount or, if no bid was accepted, a notice to that effect, in the publication or on the website where the notice of tender was published.

• Marginal note:Confidentiality

  (8) Except for the name of the winning bidder and bonus amount, the information in bids must be kept confidential.

• Marginal note:Contract granted

  (9) The Minister must prepare the subsurface contract and send a copy to the council and the winning bidder.

• Marginal note:Unsuccessful bids

  (10) The Minister must return the fee, rent and bonus included in each unsuccessful bid to the person that submitted it.

Call for Proposals Process

Marginal note:Call for proposals

43 For the purpose of soliciting interest in rights or interests in First Nation lands, either the council, or the Minister jointly with the council, may make a call for proposals. The call may be made by public notice or by other means and must include the following information:

• (a) the type of subsurface contract to be granted;

• (b) a description of the lands to be included in the contract area and the oil and gas rights or interests to be granted;

• (c) the terms and conditions of the contract, other than those set out in these Regulations;

• (d) the elements that will be considered in evaluating the proposals;

• (e) a statement that the proposals that are received will form the basis for negotiations with the council and the Minister; and

• (f) a statement that, in addition to the terms and conditions negotiated, the contract will include the terms and conditions set out in these Regulations.

Negotiation Process

Marginal note:Application for subsurface contract

• 44 (1) A person may apply to the Minister for a subsurface contract that confers oil and gas rights or interests in one or more zones in First Nation lands.

• Marginal note:Preliminary negotiation

  (2) Before applying for a subsurface contract, an applicant and the council must agree on the following terms and conditions:

  • (a) the type of subsurface contract to be applied for;

  • (b) a description of the lands to be included in the contract area and the oil and gas rights or interests to be granted;

  • (c) the amount of the bonus to be paid;

  • (d) the initial and intermediate terms of the permit or the term of the lease, as the case may be;

  • (e) in the case of a permit, the earning provisions for the initial term, including the drilling commitment and deadline for completion, the target zone or depth to which each earning well must be drilled and a description of the lands to be earned by each; and

  • (f) the royalty to be paid, if it differs from the royalty provided for in these Regulations.

• Marginal note:Content of application

  (3) The application to the Minister must be in the prescribed form, set out the terms and conditions negotiated by the applicant and the council and be accompanied by the subsurface contract application fee set out in Schedule 1.

• Marginal note:Confidentiality

  (4) Any information that is disclosed during the negotiations referred to in subsection (2) or in an application referred to in subsection (3) must be kept confidential.