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

Marginal note:Notice from Canadian Energy Regulator

• 48.13 (1) If the Canadian Energy Regulator receives a notice from a regulator indicating the regulator’s determination as to whether a pool exists in an area adjoining the perimeter and, if applicable, whether there is reason to believe the pool extends into the perimeter, the Commission of the Canadian Energy Regulator shall, within 90 days after the day on which the notice is received, inform the regulator of its agreement or disagreement with the content of the notice.

• Marginal note:Reasons

  (2) If the Commission of the Canadian Energy Regulator disagrees with the content of the notice, it shall provide the regulator with the reasons for its disagreement.

Marginal note:Delineation

• 48.14 (1) If, after receiving a notice under section 48.12 or 48.13, the Commission of the Canadian Energy Regulator and the regulator in question agree that a pool exists, the Commission and that regulator shall jointly determine whether that pool is transboundary and, if so, they shall jointly delineate its boundaries.

• Marginal note:Disagreement

  (2) The Commission of the Canadian Energy Regulator or the regulator may, if they disagree about whether a pool exists, whether the pool is transboundary or its delineation, refer the matter to an expert, no later than 180 days after the day on which the Commission issues a notice under section 48.12, or the regulator issues an equivalent notice.

Agreements Relating to Development

Marginal note:Appropriate regulator

48.15 For the purposes of sections 48.16 to 48.27, the appropriate regulator is the regulator that has jurisdiction in an area into which the transboundary pool or field in question extends.

Marginal note:Joint exploitation agreement

48.16 The Minister and the appropriate regulator may enter into a joint exploitation agreement providing for the development of a transboundary pool or field as a single field. The agreement shall include any matters provided for by regulation.

Marginal note:Development as a single field

• 48.17 (1) If a joint exploitation agreement has been entered into, the transboundary pool or field may only be developed as a single field. The development of that field is subject to the following agreements having been entered into and subsequently approved under subsection 48.2(2) or 48.23(4):

  • (a) a unit agreement that includes the details referred to in paragraphs 40(2)(a) to (d); and

  • (b) a unit operating agreement that includes the details referred to in paragraphs 40(3)(a) to (e).

• Marginal note:Joint exploitation agreement prevails

  (2) The joint exploitation agreement prevails over the unit agreement and the unit operating agreement to the extent of any inconsistency between them.

Marginal note:Intention to start production

• 48.18 (1) If an interest owner — as defined in the Canada Petroleum Resources Act — advises the Minister or the Canadian Energy Regulator, including by way of an application under paragraph 5(1)(b) of this Act or under section 38 of the Canada Petroleum Resources Act, that it intends to start production from a transboundary pool or field, the Minister shall notify the appropriate regulator as soon as feasible of the interest owner’s intention.

• Marginal note:Referral to expert

  (2) If the Minister and the regulator have attempted to enter into a joint exploitation agreement but have been unsuccessful, the Minister or the regulator may, 180 days after the day on which the Minister gives notice under subsection (1), refer the matter to an expert to determine the particulars of the agreement. They may, however, agree to refer the matter to an expert at any time before the end of those 180 days.

Marginal note:Unit agreement

• 48.19 (1) The royalty owners and the working interest owners in a transboundary pool or field that is to be developed as a single field may enter into a unit agreement and, once approved, shall operate their interests in accordance with it, including any amendment to it.

• Marginal note:Applicable provisions

  (2) Subsections 37(2) and (3) apply to the unit agreement.

Marginal note:Condition precedent

• 48.2 (1) A unit agreement and unit operating agreement are to be jointly approved by the Minister and the appropriate regulator before an authorization is issued under paragraph 5(1)(b) for a work or activity proposed to be carried on in relation to the development of a transboundary pool or field as a single field.

• Marginal note:Approval

  (2) The Minister and the appropriate regulator may approve the unit agreement if all the royalty owners and all the working interest owners in the pool or field are parties to it; the Minister and the appropriate regulator may approve the unit operating agreement if all the working interest owners in the pool or field are parties to it.

Marginal note:Application for unitization order

• 48.21 (1) One or more working interest owners who are parties to a unit agreement and a unit operating agreement and own in total 65% or more of the working interests in a transboundary pool or field that is to be developed as a single field may apply for a unitization order with respect to the agreements.

• Marginal note:Contents

  (2) The application shall be submitted to both the Minister and the appropriate regulator. It shall include the documents and statements referred to in subsection 40(1) and may be made by the unit operator or proposed unit operator on behalf of the working interest owners.

• Marginal note:Appointment of expert

  (3) The Minister and the regulator shall, for the purposes of section 48.22, appoint an expert in accordance with subsections 48.27(2) to (4).

Marginal note:Hearing

• 48.22 (1) Once seized of an application made under section 48.21, the expert shall hold a hearing at which all interested persons shall be given an opportunity to be heard.

• Marginal note:Conclusion of hearing

  (2) On the conclusion of the hearing, the expert shall request that the Minister and the appropriate regulator

  • (a) order that the unit agreement is a valid contract enuring to the benefit of all the royalty owners and working interest owners who have an interest in the unit area and binding on and enforceable against all such owners, and that the unit operating agreement is a valid contract enuring to the benefit of all the working interest owners who have an interest in the unit area and binding on and enforceable against all such owners; and

  • (b) include in the order any variations to the unit agreement or unit operating agreement that the expert determines are necessary to allow for the more efficient or more economical production of oil or gas from the unitized zone.

• Marginal note:Exception

  (3) Despite subsection (2), the expert shall end the hearing and request that the Minister and the appropriate regulator take the measure outlined in paragraph (2)(a) if the expert finds that,

  • (a) on the day on which the hearing begins,

    • (i) the unit agreement and the unit operating agreement have been executed by one or more working interest owners who own in total 65% 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 total 65% or more of the total royalty interests in the unit area; and

  • (b) the unitization order applied for would allow for the more efficient or more economical production of oil or gas from the unitized zone.

Marginal note:Unitization order

• 48.23 (1) The Minister shall issue an order in accordance with the expert’s request under subsection 48.22(2) or (3).

• Marginal note:Effect of unitization order

  (2) The unit agreement and the unit operating agreement have the effect given to them by the Minister’s order.

• Marginal note:Equivalent order

  (3) A unitization order becomes effective only if the appropriate regulator has issued an equivalent order.

• Marginal note:Joint approval

  (4) The issuance of a unitization order by the Minister and of an equivalent order by the regulator is deemed to be their joint approval of the unit agreement and the unit operating agreement.

• Marginal note:Effective date of unitization order

  (5) Subject to subsections (3) and (6), a unitization order becomes effective on the date set out in the order, but that date shall not be less than 30 days after the day on which the order is made.

• Marginal note:Order revoked

  (6) The Minister shall immediately revoke a unitization order that varies a unit agreement or a unit operating agreement if, before the effective date of that order, the applicant files with the Minister a notice withdrawing the application on behalf of the working interest owners or there are filed with the Minister statements 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 total more than 25% of the total working interests in the unit area and are part of the group that owns 65% or more of the total working interests as described in subparagraph 48.22(3)(a)(i), and

    • (ii) one or more royalty owners who own in total more than 25% of the total royalty interests in the unit area and are part of the group that owns 65% or more of the total royalty interests as described in subparagraph 48.22(3)(a)(ii); or

  • (b) in the case of the unit operating agreement, by one or more working interest owners who own in total more than 25% of the total working interests in the unit area and are part of the group that owns 65% or more of the total working interests as described in subparagraph 48.22(3)(a)(i).

• Marginal note:Application of sections 43 and 46

  (7) Sections 43 and 46 apply to the unitization order.