Canada-Newfoundland Atlantic Accord Implementation Act (S.C. 1987, c. 3)

Marginal note:Requiring unitization to prevent waste

• 173. (1) Notwithstanding anything in this Part, where, in the opinion of the Chief Conservation Officer, the unit operation of a pool or part thereof would prevent waste, the Chief Conservation Officer may apply to the Committee for an order requiring the working interest owners in the pool or part thereof to enter into a unit agreement and a unit operating agreement in respect of the pool or part thereof, as the case may be.

• Marginal note:Hearing

  (2) Where an application is made by the Chief Conservation Officer pursuant to subsection (1), the Committee shall hold a hearing at which all interested persons shall be afforded an opportunity to be heard.

• Marginal note:Order

  (3) If, after the hearing mentioned in subsection (2), the Committee is of the opinion that unit operation of a pool or part thereof would prevent waste, the Committee may by order require the working interest owners in the pool or part thereof to enter into a unit agreement and a unit operating agreement in respect of the pool or part thereof.

• Marginal note:Cessation of operations

  (4) If, in the time specified in the order referred to in subsection (3), being not less than six months after the date of the making of the order, the working interest owners and royalty owners fail to enter into a unit agreement and a unit operating agreement approved by the Committee, all drilling and producing operations within the pool or part thereof in respect of which the order was made shall cease until such time as a unit agreement and a unit operating agreement have been approved by the Committee and filed with the Chief Conservation Officer.

• Marginal note:Permit to continue operations

  (5) Notwithstanding subsection (4), the Committee may permit the continued operation of the pool or part thereof after the time specified in the order referred to in subsection (3) if it is of the opinion that a unit agreement and unit operating agreement are in the course of being entered into, but any such continuation of operations shall be subject to any conditions prescribed by the Committee.

Marginal note:Who may apply for unitization order

• 174. (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 176.

• 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

• 175. (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.