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

Marginal note:Additional lands, wells or facilities

61 Once a bitumen recovery project has been approved, the subsurface contract holder must obtain the approval of the Minister and the council before adding lands, wells or facilities to the project.

Drilling Over Expiry

Marginal note:Application for extension

• 62 (1) A subsurface contract holder may apply to the Minister, in the prescribed form, for an extension of the deadline for applying for approval of a selection of lands under subsection 54(1) or for continuation under section 64 if

  • (a) the holder has spudded or re-entered a well for the purpose of deepening it or completing a new zone, but cannot finish the operation before the relevant term expires;

  • (b) the application is submitted before the relevant term expires;

  • (c) the application identifies the well and indicates when it was spudded or re-entered; and

  • (d) the application includes the rent for the following year.

• Marginal note:Approval of extension

  (2) If an application is submitted in accordance with subsection (1), the Minister must extend the deadline for applying for approval of a selection of lands or for continuation to the 30th day after the day on which the spudded or re-entered well is rig-released. The Minister must send the council a notice of the extension.

• Marginal note:Rights during extension

  (3) During an extension, the holder may continue to produce from any wells in the contract area that are already producing, but must not spud or re-enter any other wells in that area.

• Marginal note:Transitional provision

  (4) This section applies to a permit or lease granted under the Indian Oil and Gas Regulations, 1995.

Continuation of Subsurface Contracts

Marginal note:Qualifying lands

• 63 (1) A subsurface contract may be continued with respect to the zones, identified in accordance with Schedule 4, that are in a spacing unit

  • (a) that contains a productive well;

  • (b) that is subject, in whole or in part, to a unit agreement that includes lands in which a productive well is located, or to an oil or gas storage agreement that has been approved by the provincial authority;

  • (c) that is subject to a bitumen recovery project that has been approved by the Minister;

  • (d) that is subject to a project, other than a bitumen recovery project, that has been approved by the provincial authority and includes lands in which a productive well is located;

  • (e) in respect of which an offset notice has been received in the six months before the day on which the application for continuation is submitted or in respect of which a compensatory royalty is being paid;

  • (f) that is not producing but is shown by mapping to be capable of producing from the same pool from which a well on an adjoining spacing unit is productive; or

  • (g) that is potentially productive.

• Marginal note:Horizontal and deviated wells

  (2) For the purposes of subsection (1), each spacing unit from which a horizontal well or deviated well is productive is deemed to contain a productive well.

• Marginal note:Potentially productive

  (3) For the purpose of paragraph (1)(g), a spacing unit is potentially productive if

  • (a) it contains a well that is in a mapped pool, is neither productive nor abandoned and

    • (i) was previously producing, or

    • (ii) contains evidence of the presence of hydrocarbons whose potential productivity has not been conclusively determined;

  • (b) it contains an abandoned well and any zone penetrated by the well has remaining oil or gas reserves; or

  • (c) it has not been drilled, there is evidence that it may be part of a productive pool and it is within a quarter-section in the case of oil — or a section in the case of gas — that adjoins any spacing unit referred to in paragraphs (1)(a) to (e).

Marginal note:Application for continuation

• 64 (1) An application for the continuation of a subsurface contract may be made to the Minister before the day on which the lease or the intermediate term of the permit expires.

• Marginal note:Content of application

  (2) The application must be in the prescribed form and include

  • (a) a description of the lands, including the zones, with respect to which continuation is sought;

  • (b) an indication of the basis for continuation under subsection 63(1) along with evidence of that basis; and

  • (c) the rent for the first year of the continuation.

Marginal note:Determination

• 65 (1) On receiving an application for continuation, the Minister must determine which lands described in the application are in a spacing unit referred to in any of paragraphs 63(1)(a) to (e) and must continue the contract with respect to those lands.

• Marginal note:Offer to continue

  (2) If the Minister determines that lands described in the application are in a spacing unit referred to in paragraph 63(1)(f) or (g), he or she must send the holder an offer to continue the contract with respect to those lands.

• Marginal note:Continuation

  (3) The Minister must continue the contract with respect to lands in a spacing unit referred to in paragraph 63(1)(f) or (g) if, within 30 days after the day on which the offer of continuation is received, the holder pays the Minister a bonus equal to the greater of

  • (a) $2,000, and

  • (b) $400 for each full or partial legal subdivision or, if the lands have not been divided into legal subdivisions, $400 for each unit of land equivalent to 16 hectares, rounded up to the nearest whole number of units.

• Marginal note:Notice to holder and council

  (4) The Minister must send the holder and the council a notice of his or her determination and — if the contract is continued — a description of the lands, including the zones, with respect to which it is continued as well as the basis for continuation.

• Marginal note:Rights before determination

  (5) Before notice of the Minister’s determination is received, the holder may continue to produce from any wells in the contract area that are already producing, but must not spud or re-enter any other wells in that area.

• Marginal note:Refund

  (6) If the contract is not continued, the Minister must refund the rent submitted with the application. If the contract is continued only in part, the Minister must refund the rent for the lands with respect to which the contract is not continued.

Marginal note:Continuation requested by council

• 66 (1) The Minister may continue, for a maximum period of five years, a contract in respect of lands for which continuation was not granted under subsection 65(1) or lands for which continuation was granted under subsection 65(3) if

  • (a) the council requests the Minister to do so in a written resolution sent to the Minister that describes the lands, including the zones, to which the request relates and the requested period of continuation;

  • (b) a request for continuation under this subsection has not previously been made in respect of those lands;

  • (c) the written consent of the holder is sent to the Minister;

  • (d) the resolution and consent are sent

    • (i) in the case of a contract in respect of lands for which continuation was not granted under subsection 65(1), within 30 days after the day on which the notice referred to in subsection 65(4) is received, and

    • (ii) in the case of a contract in respect of lands for which continuation was granted under subsection 65(3), within 30 days after the day on which the continuation expires; and

  • (e) the holder has paid the rent for the first year of the continuation.

• Marginal note:Additional bonus

  (2) If the Minister determines that an additional bonus must be paid to reflect the fair value, determined in accordance with section 38, of the rights or interests to be continued, the Minister must not continue the contract unless that additional bonus is paid.

Marginal note:Failure to apply for continuation

• 67 (1) If a holder has not applied for continuation before the deadline referred to in subsection 64(1), the Minister must determine, as soon as the circumstances permit and on the basis of the information in his or her possession, whether their contract is eligible for continuation under any of paragraphs 63(1)(a) to (e).

• Marginal note:Notice of eligibility

  (2) If the contract is eligible for continuation, the Minister must send the holder a notice that includes the following information:

  • (a) a description of the lands, including the zones, with respect to which the contract is eligible for continuation;

  • (b) the basis for continuation; and

  • (c) the requirements for an application for continuation, as well as the deadline for submission.

• Marginal note:Application for continuation

  (3) A holder that has received a notice of eligibility may, within 30 days after the day on which the notice is received, apply to the Minister, in the prescribed form, for continuation of the contract with respect to any of the lands described in the notice.

• Marginal note:Content of application

  (4) The application must include a description of the lands, including the zones, with respect to which continuation is sought, the rent for the first year of the continuation and a late application fee of $5,000.

• Marginal note:Continuation to be granted

  (5) If the holder pays the required rent and fee, the Minister must continue the contract with respect to the lands described in the application and send the holder and the council a notice of the continuation that describes the lands, including the zones, with respect to which it is continued as well as the basis for continuation.

Marginal note:Indefinite continuation

• 68 (1) A contract that is continued on the basis of any of paragraphs 63(1)(a) to (e) continues so long as the lands that are subject to the contract continue to be eligible on that basis or until the contract is surrendered or cancelled.

• Marginal note:Continuation for one year

  (2) A contract that is continued under subsection 65(3) continues for a period of one year after the day on which the contract would have expired had it not been continued.

Marginal note:Non-productivity — oil and gas

• 69 (1) If a contract that is continued in respect of lands on the basis of paragraph 63(1)(a), (b), (d) or (e) ceases to be eligible for continuation on that basis, the Minister must send the holder a notice of non-productivity that describes those lands and indicates the basis on which the contract has ceased to be eligible.

• Marginal note:Non-productivity — expiry

  (2) A contract referred to in subsection (1) expires with respect to the lands described in the notice of non-productivity one year after the day on which the notice is received.

• Marginal note:Non-productivity — continuation

  (3) Before the expiry of a contract with respect to lands described in a non-productivity notice, the holder may apply under section 64 to have the contract continued with respect to those lands on the basis of any of paragraphs 63(1)(a) to (e) other than the basis mentioned in the notice.

• Marginal note:Application for continuation

  (4) Before the expiry of a contract continued under subsection 65(3) or section 66, the holder may apply under section 64 to have the contract continued on the basis of any of paragraphs 63(1)(a) to (e).

Marginal note:Inadequate productivity — bitumen

• 70 (1) In the case of a contract continued under paragraph 63(1)(c), if the annual minimum level of production of bitumen from the lands that are subject to the bitumen recovery project is not achieved in any three years, whether or not the years are consecutive, the Minister must send the holder a notice of inadequate productivity with respect to those lands.

• Marginal note:Termination and expiry

  (2) If the annual minimum level of production of bitumen from the lands that are subject to the bitumen recovery project is not achieved in any year following the day on which the notice of inadequate productivity is received,

  • (a) the project terminates on the final day of that year; and

  • (b) the contract expires on the final day of that year, unless it is continued under subsection (3).

• Marginal note:Minister’s determination

  (3) When the Minister becomes aware that the annual minimum level of production of bitumen from the lands that are subject to a bitumen recovery project will not be achieved in a year and the contract may expire under paragraph (2)(b), he or she must determine, as soon as the circumstances permit and on the basis of the information in his or her possession, whether the contract is eligible for continuation under any of paragraphs 63(1)(a), (b), (d) or (e) and, if so, must continue the contract on that basis.

Marginal note:Transitional provision — continuation

• 71 (1) Sections 63 to 68 apply to the continuation of any subsurface lease that was granted under the Indian Act or the Act before these Regulations came into force.

• Marginal note:Transitional provision — non-productivity

  (2) Section 69 applies to a subsurface lease that was continued under the Indian Act or the Act before these Regulations came into force if the lands in the lease area cease to be eligible for continuation on the basis on which the lease was continued.

• Marginal note:Transitional provision — inadequate productivity

  (3) Section 70 does not apply if the lands that are subject to the bitumen recovery project are the subject of an authorization under section 42 of the Indian Oil and Gas Regulations, 1995.

Surface Rights or Interests

Marginal note:Authorization

• 72 (1) A person may carry out surface operations on First Nation lands for the purpose of exploiting oil and gas if

  • (a) in the case of operations that require crossing over or going through First Nation lands, they hold a right-of-way in those lands; and

  • (b) in the case of operations that require the exclusive occupation and use of the surface of First Nation lands, they hold a surface lease in respect of those lands.

• Marginal note:Right of entry

  (2) A person that intends to apply for a surface contract in respect of First Nation lands to carry out operations referred to in subsection (1) may, with the authorization of the council and any First Nation member in lawful possession of those lands, enter on the lands to determine the location of proposed facilities, conduct surveys and carry out any operation necessary to submit an application under section 75.

Marginal note:Preliminary negotiation

• 73 (1) Before applying for a surface contract, the applicant must provide the council, and any First Nation member in lawful possession of lands in the proposed contract area, with a survey sketch of that area and must reach an agreement with them on the following:

  • (a) the lands to be included in the contract area;

  • (b) the operations that will be carried out on those lands;

  • (c) the surface rates, if they have not already been fixed by the Minister in a related subsurface contract; and

  • (d) if a service well is to be drilled or an existing well is to be used as a service well, the permitted uses of the well and the amount of compensation to be paid in respect of the well.

• Marginal note:Surface rates — right-of-way

  (2) In the case of a right-of-way, the surface rates consist of

  • (a) a right-of-entry charge of $1,250 per hectare, subject to a minimum charge of $500 and a maximum charge of $5,000; and

  • (b) initial compensation based on the fair value of lands that are similar in size, character and use.

• Marginal note:Surface rates — surface lease

  (3) In the case of a surface lease, the surface rates consist of

  • (a) the right-of-entry charge referred to in paragraph (2)(a);

  • (b) initial compensation based on the fair value of lands that are similar in size, character and use, the loss of use of the lands, adverse effects and general disturbance; and

  • (c) the annual rent for subsequent years, based on the loss of use of the lands and adverse effects.