Canada Oil and Gas Operations Act (R.S.C., 1985, c. O-7)

Act current to 2017-12-11 and last amended on 2016-06-19. Previous Versions

PART IIProduction Arrangements

Interpretation

Marginal note:Definitions

 In this Part,

expert

expert means a person who is appointed under subsection 48.27(2) or an expert panel appointed under subsection 48.27(3); (expert)

perimeter

perimeter means

  • (a) the area in the offshore, as defined in section 48.01, that is within 20 km of the onshore;

  • (b) the area in Nunavut that is within 20 km of the limit of that territory; and

  • (c) the portion of the submarine area — consisting of the areas referred to in paragraphs 3(d) and (e) — that is within 10 nautical miles of the seaward limit of that area; (bande limitrophe)

pooled spacing unit

pooled spacing unit means the area that is subject to a pooling agreement or a pooling order; (unité d’espacement mise en commun)

pooled tract

pooled tract means the portion of a pooled spacing unit defined as a tract in a pooling agreement or a pooling order; (parcelle mise en commun)

pooling agreement

pooling agreement means an agreement to pool the interests of owners in a spacing unit and to provide for the operation or the drilling and operation of a well thereon; (accord de mise en commun)

pooling order

pooling order means an order made under section 31 or as altered pursuant to section 35; (arrêté de mise en commun)

regulator

regulator means a provincial government, a provincial regulatory agency or a federal-provincial regulatory agency that has administrative responsibility for the exploration for and exploitation of oil and gas in an area adjoining the perimeter; (organisme de réglementation)

royalty interest

royalty interest means any interest in, or the right to receive a portion of, any oil or gas produced and saved from a field or pool or part of a field or pool or the proceeds from the sale thereof, but does not include a working interest or the interest of any person whose sole interest is as a purchaser of oil or gas from the pool or part thereof; (droit à redevance)

royalty owner

royalty owner means a person, including Her Majesty in right of Canada, who owns a royalty interest; (titulaire de redevance)

spacing unit

spacing unit means the area allocated to a well for the purpose of drilling for or producing oil or gas; (unité d’espacement)

tract participation

tract participation means the share of production from a unitized zone that is allocated to a unit tract under a unit agreement or unitization order or the share of production from a pooled spacing unit that is allocated to a pooled tract under a pooling agreement or pooling order; (fraction parcellaire)

transboundary

transboundary means, in relation to a pool, extending beyond the National Energy Board’s jurisdiction under this Act or, in relation to a field, underlain only by one or more such pools; (transfrontalier)

unit agreement

unit agreement means an agreement to unitize the interests of owners in a pool or a part of a pool exceeding in area a spacing unit, or such an agreement as varied by a unitization order; (accord d’union)

unit area

unit area means the area that is subject to a unit agreement; (secteur unitaire)

unitization order

unitization order means an order made under section 41, 48.092 or 48.23; (arrêté d’union)

unitized zone

unitized zone means a geological formation that is within a unit area and subject to a unit agreement; (terrain)

unit operating agreement

unit operating agreement means an agreement, providing for the management and operation of a unit area and a unitized zone, that is entered into by working interest owners who are parties to a unit agreement with respect to that unit area and unitized zone, and includes a unit operating agreement as varied by a unitization order; (accord d’exploitation unitaire)

unit operation

unit operation means those operations conducted pursuant to a unit agreement or a unitization order; (exploitation unitaire)

unit operator

unit operator means a person designated as a unit operator under a unit operating agreement; (exploitant unitaire)

unit tract

unit tract means the portion of a unit area that is defined as a tract in a unit agreement; (parcelle unitaire)

working interest

working interest means a right, in whole or in part, to produce and dispose of oil or gas from a pool or part of a pool, whether that right is held as an incident of ownership of an estate in fee simple in the oil or gas or under a lease, agreement or other instrument, if the right is chargeable with and the holder thereof is obligated to pay or bear, either in cash or out of production, all or a portion of the costs in connection with the drilling for, recovery and disposal of oil or gas from the pool or part thereof; (intérêt économique direct)

working interest owner

working interest owner means a person who owns a working interest. (détenteur)

  • R.S., 1985, c. O-7, s. 29;
  • 1992, c. 35, s. 27(F);
  • 2014, c. 2, s. 24;
  • 2015, c. 4, ss. 23, 118.

Pooling

Marginal note:Voluntary pooling
  •  (1) Where one or more working interest owners have leases or separately owned working interests within a spacing unit, the working interest owners and the royalty owners who own all of the interests in the spacing unit may pool their working interests and royalty interests in the spacing unit for the purpose of drilling for or producing, or both drilling for and producing, oil and gas if a copy of the pooling agreement and any amendment thereto has been filed with the Chief Conservation Officer.

  • Marginal note:Pooling agreement by Her Majesty

    (2) The Minister may, on behalf of Her Majesty, enter into a pooling agreement on any terms and conditions that the Minister deems advisable and, despite anything in this Act, the Territorial Lands Act, the Federal Real Property and Federal Immovables Act, the Canada Petroleum Resources Act or any regulations made under those Acts, the pooling agreement is binding on Her Majesty.

  • R.S., 1985, c. O-7, s. 30;
  • R.S., 1985, c. 36 (2nd Supp.), s. 124;
  • 1991, c. 50, s. 35;
  • 2001, c. 4, s. 163.
Marginal note:Application for pooling order
  •  (1) In the absence of a pooling agreement, a working interest owner in a spacing unit may apply for a pooling order directing the working interest owners and royalty owners within the spacing unit to pool their interests in the spacing unit for the purpose of drilling for and producing, or producing, oil or gas or both from the spacing unit.

  • Marginal note:Hearing by Committee

    (2) An application under subsection (1) shall be made to the Minister who shall refer the application to the Committee for the purpose of holding a hearing to determine whether a pooling order should be made and at that hearing the Committee shall afford all interested parties an opportunity to be heard.

  • Marginal note:Matter to be supplied Committee on hearing

    (3) Prior to a hearing held pursuant to subsection (2), the working interest owner making application shall provide the Committee, and such other interested parties as the Committee may direct, with a proposed form of pooling agreement, and the working interest owners who have interests in the spacing unit to which the proposed pooling agreement relates shall provide the Committee with such information as the Committee deems necessary.

  • Marginal note:Order of Committee

    (4) After a hearing held pursuant to subsection (2), the Committee may order that all working interest owners and royalty owners who have an interest in the spacing unit shall be deemed to have entered into a pooling agreement as set out in the pooling order.

  • R.S., c. O-4, s. 22.
Marginal note:Contents of pooling order

 Every pooling order shall provide

  • (a) for the drilling and operation of a well on the spacing unit or, where a well that is capable of or that can be made capable of production has been drilled on the spacing unit before the making of the pooling order, for the future production and operation of that well;

  • (b) for the appointment of a working interest owner as operator to be responsible for the drilling, operation or abandoning of the well whether drilled before or after the making of the pooling order;

  • (c) for the allocation to each pooled tract of its share of the production of the oil or gas from the pooled spacing unit that is not required, consumed or lost in the operation of the well, which allocation shall be on a prorated area basis unless it can be shown to the satisfaction of the Committee that that basis is unfair, whereupon the Committee may make an allocation on another more equitable basis;

  • (d) in the event that no production of oil or gas is obtained, for the payment by the applicant therefor of all costs incurred in the drilling and abandoning of the well;

  • (e) where production has been obtained, for the payment of the actual costs of drilling the well, whether drilled before or after the making of the pooling order, and for the payment of the actual costs of the completion, operation and abandoning of the well; and

  • (f) for the sale by the operator of any oil or gas allocated pursuant to paragraph (c) to a working interest owner where the working interest owner thereof fails to take in kind and dispose of the production, and for the deduction out of the proceeds by the operator of his expenses reasonably incurred in connection with the sale.

  • R.S., c. O-4, s. 22;
  • 1976-77, c. 55, s. 5(E).
 
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