Financial Statements in Respect of Exploratory Work Under Permit
21 (1) Where the rights and interests in a permit area are surrendered under section 44 or a permit is converted to one or more leases under section 20, the Executive Director may direct the permittee to submit to the band council and to the Executive Director, within 90 days after the date of surrender or conversion, as the case may be, an affidavit setting out an itemized statement, in a form prescribed by the Executive Director, of all expenditures incurred in respect of the exploratory work that was conducted under the permit.
(2) The Executive Director may, in writing, direct a permittee to submit, within a reasonable time, information in addition to that submitted pursuant to subsection (1) that relates to the specific purpose for which each expenditure was incurred.
(3) The Executive Director shall notify the band council of any direction that is made and of any information that is submitted pursuant to subsection (2).
22 Every person who proposes to drill for and produce oil and gas on Indian lands shall, before beginning any drilling or production activities, obtain a well licence referred to in section 11, a lease and a surface rights contract.
23 The holder of a lease may drill for, produce and treat oil and gas within the lease area, transport, market or sell that oil or gas, and carry on such operations as are necessarily incidental thereto.
24 (1) Except as otherwise specified in a lease or in a permit in respect of which a lease was granted pursuant to section 20, the initial term of a lease granted under subsection 10(1) or 20(1) shall be five years.
(2) On application in writing to the Executive Director, made before the end of the term of a lease and accompanied by any information additional to that described in section 25 that the lessee considers pertinent, the Executive Director shall, if the lessee is not in default under the lease, these Regulations or any direction given under these Regulations, grant a continuance or a further continuance of the lease for an additional five years in respect of any part of the lease area that
(a) is within a spacing unit, project, unit or pooled area that contains a well that is producing, or that is capable of producing, oil or gas in paying quantity;
(b) is determined by the Executive Director to be within the limits of an oil or gas pool;
(c) contains a service well approved pursuant to subsection 36(2);
(d) is an area for which a compensatory royalty is being paid; or
(e) is an area described in paragraph (5)(a) or (b) in which drilling has resulted in a well that is capable of producing oil or gas in paying quantity.
(3) Any part of a lease area in respect of which the term of the lease is extended pursuant to subsection (2) shall be restricted to zones down to and including the base of the deepest zone within the lease area that is producing, or that is capable of producing, oil or gas in paying quantity.
(4) A continuance that is granted in respect of a service well shall be restricted to the zone approved in respect of that well pursuant to subsection 36(2).
(5) Where, before the end of the term of a lease, drilling of a well is commenced on a spacing unit that comprises any part of the lease area, on application to the Executive Director by the lessee, the term of the lease shall be extended, for the period during which drilling is being conducted diligently and continuously to the satisfaction of the Executive Director, in respect of
(6) The Executive Director, in determining whether a lease area is within the limits of an oil or gas pool in accordance with paragraph (2)(b), shall consider only
(a) information submitted by the lessee in respect of an application under subsection (2) before the date on which the term of the lease was to end;
(b) information that has been submitted by the lessee at the request of the Executive Director to substantiate the lessee’s application;
(c) information that, on the date on which the term of the lease was to end, is contained in the records of Indian Oil and Gas Canada; and
(d) data produced on or before the date on which the term of the lease was to end.
(7) Where a lessee fails to submit an application pursuant to subsection (2) before the end of the term of a lease, the Executive Director may, after consulting with the band council, in respect of an area that otherwise meets the requirements of subsection (2), grant a continuance of the lease ,in writing, in respect of that area for an additional five years.
(8) Where the Executive Director is of the opinion that all or a part of a lease area in respect of which an application for a continuance is made does not meet the requirements of paragraphs (2)(a) to (e) or subsection (5), the Executive Director may, after consulting with the band council, grant a continuance of the term of the lease in respect of that area for such a period and on such terms and conditions as the Executive Director may specify in writing for the purpose of giving the lessee an opportunity to obtain and submit to the Executive Director additional information in support of the application.
(9) On receipt of any additional information submitted pursuant to subsection (8), the Executive Director shall consider the information and notify the lessee in writing as to whether the term of the lease in respect of the lease area referred to in that subsection qualifies for continuance.
(10) Where the term of a lease is not extended under this section in respect of any part of a lease area, the Executive Director shall amend the description of the lease area accordingly.
(11) Notwithstanding anything in this section, the Executive Director may, with the approval of the band council, by agreement with the lessee, extend the term of a lease in respect of all or a part of the lease area that does not meet the requirements of paragraphs (2)(a) to (e) and subsection (5), on such terms and conditions as are specified in the agreement, for a period not exceeding five years.
(12) The Executive Director shall notify the band council of every lease, or part thereof, that qualifies for continuance or in respect of which a continuance is not granted pursuant to this section.
(a) data that indicates any wells in the lease area that are capable of producing oil or gas in paying quantity from one or more specified zones;
(b) identification of any relevant unit operation and unitized zone underlying the lease area;
(c) geological, geophysical or engineering data that demonstrate the extent of the productive area for each zone that the lessee claims is capable of producing oil or gas in paying quantity, including
(i) a geological evaluation of the oil and gas potential for all prospective zones within the lease area,
(ii) an estimate of the amount of original oil and gas in place,
(iii) an estimate of the amount of original recoverable oil and gas reserves,
(iv) the oil and gas production volumes to date, and
(v) an estimate of the remaining recoverable oil and gas reserves;
(d) any future development plans; and
(e) identification of any service wells approved pursuant to section 36 and any data that demonstrate benefits to the band that are attributable to those wells.
(2) Before the end of the initial term of a lease and each succeeding continuance of a lease, the lessee shall make a presentation to the band council and the Executive Director in respect of any developments that relate to the lease, including the information referred to in subsection (1).
26 Except as otherwise provided in a lease, the annual rent for a lease is the greater of $5 per hectare of the lease area and $100, payable in advance.
27 (1) Every person who proposes to engage in any surface operations that are related to the exploitation of oil or gas on Indian lands, including an operator who operates under a permit or a lease, shall, before commencing those operations, on application to, and in the form approved by, the Executive Director,
(2) A person who makes an application under subsection (1) shall
(a) deliver to the band council and to any band member in lawful possession of land in respect of which surface rights are required a copy of the application and a paper print of a survey plan prepared pursuant to section 40;
(b) negotiate the terms and conditions of the proposed surface lease or right-of-way with the band council and any band member in lawful possession of the land, including
(i) the consideration to be paid, based on the fair market value of the rights granted under the surface lease or right-of-way,
(ii) if a surface lease is required for the purpose of above-ground structures, an annual rent based on loss of use, adverse effect and rents received by other lessors in the locality for lands of similar area and character that are used for similar purposes, and
(iii) compensation for any anticipated incidental damages, inconvenience and nuisance and injurious affection; and
(c) after obtaining the approval of the band council and the consent of any band member in lawful possession of the land, deliver to the Executive Director
(i) the consideration and compensation negotiated under paragraph (b) and the fee set out in Schedule II and, in the case of a surface lease, the first of any annual rents,
(ii) four additional copies of the application on which are indicated the approval of the band council and the consent of that band member, and
(iii) a sensitized polyester base film copy and four paper prints of a survey plan prepared pursuant to section 40.
(3) Unless otherwise specified in the surface rights contract, the term of a surface lease or right-of-way shall be for such a period as is necessary to allow for the exploitation of the oil or gas in respect of which the surface rights granted thereunder are required.
(4) On receipt and evaluation of the material referred to in subsection (2) and on payment of the fee set out in Schedule II, if, in the opinion of the Executive Director, the applicant requires a surface lease or right-of-way to exercise rights under a permit or lease and the terms and conditions negotiated under paragraph (2)(b) are satisfactory, the Executive Director may grant a surface lease or right-of-way to the applicant, subject to such additional terms and conditions as may be agreed to by the Executive Director, the band council, any band member in lawful possession and the applicant.
(5) A surface lease or right-of-way granted under subsection (4) shall include the signatures of a quorum of the band council.
(6) The holder of a surface lease that requires that an annual rent be paid pursuant to subparagraph (2)(b)(ii) shall, unless otherwise provided in the surface lease, renegotiate the amount of that rent with the band council, any band member in lawful possession of the land and the Executive Director, on the same basis as that set out in that subparagraph, at the end of the lesser of every
(7) The holder of a surface lease that has been renegotiated pursuant to subsection (6) shall submit to the Executive Director evidence of the approval of the band council to the renegotiated rent, accompanied by payment of any additional moneys owing in respect of the renegotiated rent.
(8) On receipt of the evidence and any moneys submitted pursuant to subsection (6), the Executive Director shall, if the Executive Director is satisfied that the renegotiated terms are based on the criteria set out in subparagraph (2)(b)(ii), amend the surface lease accordingly.
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