Indian Oil and Gas Regulations, 1995 (SOR/94-753)

Regulations are current to 2017-11-20

 Notwithstanding subsection 27(1), where the Executive Director has decided to grant a surface lease or right-of-way pursuant to subsection 27(4), the Executive Director may, in writing, authorize the commencement of surface operations prior to the issuance of the surface lease or right-of-way.

 Where the Executive Director determines that surface rights in respect of all or a part of the area of a surface lease or right-of-way are no longer required for the extraction, transportation or treatment of oil or gas, the Executive Director may, with the approval of the band council, terminate the surface lease or right-of-way in respect of that area by notice in writing to the contract holder and may direct the contract holder to conduct reclamation and abandonment operations in respect of any well or surface facility within that area.

  •  (1) Where in negotiations under subparagraphs 27(2)(b)(i) to (iii) an agreement cannot be reached in respect of the rent or compensation referred to in those subparagraphs, at the request of the band council, the applicant or any band member in lawful possession of the land, the Minister may determine the rent or compensation.

  • (2) A determination made under subsection (1) shall set out the terms and conditions of the surface lease on which the determination was based and may provide for periodic reviews of the rent or compensation determined and the manner in which further reviews are to be conducted.

  • (3) Where an agreement cannot be reached in a renegotiation of rent under subsection 27(6), at the request of the band council, the applicant or any band member in lawful possession of the land, the Minister may determine the rent.

 Notwithstanding sections 6 and 27, with the permission of the band council and any band member in lawful possession of the land in respect of which surface rights are required, a person may enter on that land to locate proposed facilities or conduct surveys or for any other purpose necessary for the completion of an application under that section.

Right of Entry

  •  (1) Notwithstanding subsection 27(1), where an applicant

    • (a) has applied for surface rights pursuant to section 27,

    • (b) requests a right of entry onto the land in advance of the granting of a surface lease, and

    • (c) posts security in an amount that, in the opinion of the Executive Director, is sufficient to compensate for the use of the land before the granting of the surface lease and for any potential damages,

    the Executive Director may grant to that applicant a right of entry onto the land for such time, in such a manner and on such terms and conditions as the Executive Director may in writing specify.

  • (2) The security posted under paragraph (1)(c) shall be applied to payments agreed on pursuant to section 27 or determined pursuant to section 30, or to payment for the use of the land, on the same basis as that set out in subparagraph 27(2)(b)(i).

  • (3) The Executive Director shall return to the applicant any portion of the security that is in excess of the amount applied to payments under subsection (2).

Royalties

  •  (1) Except as otherwise provided in a special agreement under subsection 4(2) of the Act, a lessee shall pay a royalty on oil and gas obtained from or attributable to a lease area in the preceding month, in an amount calculated in accordance with Schedule I.

  • (2) A lessee shall pay a royalty referred to in subsection (1) or set out in a special agreement under subsection 4(2) of the Act on or before the twenty-fifth day of each month or at such other intervals as are specified in the lease.

  • (3) At the time a royalty is paid pursuant to subsection (1), or within such a period thereafter as the Executive Director may permit, a lessee shall submit to the band council and to the Executive Director a report and a financial statement, in such form as the Executive Director may require.

  • (4) Subject to subsection (5), every sale of oil or gas that is obtained from or attributable to a lease area shall include the sale on behalf of the Crown of any oil or gas that is the royalty payable under this section.

  • (5) At any time after giving reasonable notice in writing to the operator and giving due consideration to any obligations that the operator may have in respect of the sale of oil or gas, the Executive Director may, with the approval of the band council, direct that all or a part of the oil or gas that is a royalty payable under this section be paid in kind for a specified or indefinite period or until the Executive Director directs otherwise.

  • (6) Where the Executive Director determines that oil or gas that is a royalty payable under this section was sold at a price that was less than the fair market value at the time and place of production, the Executive Director, in consultation with the band council, may direct that compensation be paid, at the time that the next royalty payment is paid pursuant to subsection (1), in an amount that is equal to the royalty on the difference between the price at which the oil or gas was sold and its fair market value.

Equitable Oil or Gas Production

  •  (1) Where the band council and the Executive Director jointly determine that there may be production or drainage of oil or gas from a permit or lease area by a well outside that area, the Executive Director, in consultation with the band council, may, by notice in writing, direct the permittee or lessee

    • (a) to commence drilling, within 90 days after the notice or such longer period as is specified in the notice, one or more wells into the zone or formation from which the production or drainage may be occurring and thereafter to continuously and diligently work to place those wells on production; or

    • (b) from the ninetieth day after receipt of the notice or the end of any longer period specified in the notice until the time that the wells referred to in paragraph (a) are drilled and placed on production or are otherwise proven to be not productive in paying quantity, to pay a compensatory royalty that is equal to

      • (i) during the first year, one half of the royalty that would be payable under section 33 if the wells were producing from the permit or lease area, based on the fair market value of the oil or gas, and

      • (ii) after the first year, the royalty that would be payable under section 33 if the wells were producing from the permit or lease area.

  • (2) The Executive Director may direct a permittee or lessee referred to in subsection (1) to submit a development and production plan in respect of the permit or lease area to the Executive Director, in the form specified in the notice, within 90 days after receipt of the notice or within such longer period as may be specified in the notice.

  • (3) On receipt of a development and production plan submitted pursuant to subsection (2), the band council and the Executive Director shall jointly consider it and the Executive Director shall forthwith notify the permittee or lessee in writing that the development and production plan

    • (a) is approved as submitted; or

    • (b) is approved subject to such modifications as are specified in the notice.

  • (4) A permittee or lessee whose development and production plan is approved pursuant to subsection (3) shall, within 90 days after the approval or within such longer period as may be specified in the approval, complete the development and production of the permit or lease area in accordance with that plan or pay the compensatory royalty referred to in paragraph (1)(b).

 A permittee or lessee is not required to comply with section 34 if the permittee or lessee surrenders the portion of the permit or lease area from which production or drainage may be occurring

  • (a) within the period set out in paragraph 34(1)(a); or

  • (b) if the Executive Director directs the permittee or lessee to submit a development and production plan, within the period set out in subsection 34(2).

Service Wells

  •  (1) A lessee who wishes to use a well as a service well shall

    • (a) obtain surface and subsurface rights for the site of the well; and

    • (b) make an application therefor to the Executive Director, accompanied by

      • (i) a copy of an approval for the use of the well as a service well given by the provincial authority that is responsible for such approvals, and

      • (ii) any data that demonstrate benefits to the band.

  • (2) The Executive Director may, with the approval of the band council, approve a service well in respect of a specified zone for a period of up to five years.

Plans

 Every permittee or lessee shall, on receipt of a written direction from the Executive Director, submit to the Executive Director plans and diagrams, on a scale that is specified in the direction, that show plant or other facilities that are used in the development, production, treatment or transportation of, or other operations incidental to the exploitation of, oil and gas.

Notice of Discovery or Abandonment

  •  (1) If oil or gas is discovered in significant quantities during drilling or other operations in a permit or lease area, the permittee or lessee shall forthwith notify the band council and the Executive Director of the discovery.

  • (2) A permittee or lessee shall not abandon a well that has been cased and from which the original drilling rig has been removed without first obtaining the written approval of the Executive Director given in consultation with the band council.

Crude Bitumen

  •  (1) Notwithstanding section 23, a permittee or lessee shall not commence production of crude bitumen, other than the extraction of substances under a pilot testing operation, unless specifically authorized to do so under a lease.

  • (2) Where a deposit of crude bitumen is identified in a permit or lease area, the permittee or lessee may make an application to the band council and to the Executive Director for

    • (a) an amendment to the permit or lease to provide for production of crude bitumen, including an amendment to

      • (i) the term of the permit or lease,

      • (ii) the rental payable under the permit or lease,

      • (iii) the permit or lease area, or

      • (iv) any restriction to specified geological zones; and

    • (b) a variation, pursuant to subsection 4(2) of the Act, in the basis of calculation of royalties payable under the permit or lease.

  • (3) The Executive Director may, with the approval of the band council, amend a permit or lease in respect of which an application has been made under subsection (2) and a special agreement has been entered into pursuant to subsection 4(2) of the Act.

 
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