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Indian Oil and Gas Regulations (SOR/2019-196)

Regulations are current to 2019-08-15 and last amended on 2019-08-01. Previous Versions

Subsurface Rights or Interests (continued)

Continuation of Subsurface Contracts

Marginal note:Qualifying lands

  •  (1) A subsurface contract may be continued with respect to the zones, identified in accordance with Schedule 4, that are in a spacing unit

    • (a) that contains a productive well;

    • (b) that is subject, in whole or in part, to a unit agreement that includes lands in which a productive well is located, or to an oil or gas storage agreement that has been approved by the provincial authority;

    • (c) that is subject to a bitumen recovery project that has been approved by the Minister;

    • (d) that is subject to a project, other than a bitumen recovery project, that has been approved by the provincial authority and includes lands in which a productive well is located;

    • (e) in respect of which an offset notice has been received in the six months before the day on which the application for continuation is submitted or in respect of which a compensatory royalty is being paid;

    • (f) that is not producing but is shown by mapping to be capable of producing from the same pool from which a well on an adjoining spacing unit is productive; or

    • (g) that is potentially productive.

  • Marginal note:Horizontal and deviated wells

    (2) For the purposes of subsection (1), each spacing unit from which a horizontal well or deviated well is productive is deemed to contain a productive well.

  • Marginal note:Potentially productive

    (3) For the purpose of paragraph (1)(g), a spacing unit is potentially productive if

    • (a) it contains a well that is in a mapped pool, is neither productive nor abandoned and

      • (i) was previously producing, or

      • (ii) contains evidence of the presence of hydrocarbons whose potential productivity has not been conclusively determined;

    • (b) it contains an abandoned well and any zone penetrated by the well has remaining oil or gas reserves; or

    • (c) it has not been drilled, there is evidence that it may be part of a productive pool and it is within a quarter-section in the case of oil — or a section in the case of gas — that adjoins any spacing unit referred to in paragraphs (1)(a) to (e).

Marginal note:Application for continuation

  •  (1) An application for the continuation of a subsurface contract may be made to the Minister before the day on which the lease or the intermediate term of the permit expires.

  • Marginal note:Content of application

    (2) The application must be in the prescribed form and include

    • (a) a description of the lands, including the zones, with respect to which continuation is sought;

    • (b) an indication of the basis for continuation under subsection 63(1) along with evidence of that basis; and

    • (c) the rent for the first year of the continuation.

Marginal note:Determination

  •  (1) On receiving an application for continuation, the Minister must determine which lands described in the application are in a spacing unit referred to in any of paragraphs 63(1)(a) to (e) and must continue the contract with respect to those lands.

  • Marginal note:Offer to continue

    (2) If the Minister determines that lands described in the application are in a spacing unit referred to in paragraph 63(1)(f) or (g), he or she must send the holder an offer to continue the contract with respect to those lands.

  • Marginal note:Continuation

    (3) The Minister must continue the contract with respect to lands in a spacing unit referred to in paragraph 63(1)(f) or (g) if, within 30 days after the day on which the offer of continuation is received, the holder pays the Minister a bonus equal to the greater of

    • (a) $2,000, and

    • (b) $400 for each full or partial legal subdivision or, if the lands have not been divided into legal subdivisions, $400 for each unit of land equivalent to 16 hectares, rounded up to the nearest whole number of units.

  • Marginal note:Notice to holder and council

    (4) The Minister must send the holder and the council a notice of his or her determination and — if the contract is continued — a description of the lands, including the zones, with respect to which it is continued as well as the basis for continuation.

  • Marginal note:Rights before determination

    (5) Before notice of the Minister’s determination is received, the holder may continue to produce from any wells in the contract area that are already producing, but must not spud or re-enter any other wells in that area.

  • Marginal note:Refund

    (6) If the contract is not continued, the Minister must refund the rent submitted with the application. If the contract is continued only in part, the Minister must refund the rent for the lands with respect to which the contract is not continued.

Marginal note:Continuation requested by council

  •  (1) The Minister may continue, for a maximum period of five years, a contract in respect of lands for which continuation was not granted under subsection 65(1) or lands for which continuation was granted under subsection 65(3) if

    • (a) the council requests the Minister to do so in a written resolution sent to the Minister that describes the lands, including the zones, to which the request relates and the requested period of continuation;

    • (b) a request for continuation under this subsection has not previously been made in respect of those lands;

    • (c) the written consent of the holder is sent to the Minister;

    • (d) the resolution and consent are sent

      • (i) in the case of a contract in respect of lands for which continuation was not granted under subsection 65(1), within 30 days after the day on which the notice referred to in subsection 65(4) is received, and

      • (ii) in the case of a contract in respect of lands for which continuation was granted under subsection 65(3), within 30 days after the day on which the continuation expires; and

    • (e) the holder has paid the rent for the first year of the continuation.

  • Marginal note:Additional bonus

    (2) If the Minister determines that an additional bonus must be paid to reflect the fair value, determined in accordance with section 38, of the rights or interests to be continued, the Minister must not continue the contract unless that additional bonus is paid.

Marginal note:Failure to apply for continuation

  •  (1) If a holder has not applied for continuation before the deadline referred to in subsection 64(1), the Minister must determine, as soon as the circumstances permit and on the basis of the information in his or her possession, whether their contract is eligible for continuation under any of paragraphs 63(1)(a) to (e).

  • Marginal note:Notice of eligibility

    (2) If the contract is eligible for continuation, the Minister must send the holder a notice that includes the following information:

    • (a) a description of the lands, including the zones, with respect to which the contract is eligible for continuation;

    • (b) the basis for continuation; and

    • (c) the requirements for an application for continuation, as well as the deadline for submission.

  • Marginal note:Application for continuation

    (3) A holder that has received a notice of eligibility may, within 30 days after the day on which the notice is received, apply to the Minister, in the prescribed form, for continuation of the contract with respect to any of the lands described in the notice.

  • Marginal note:Content of application

    (4) The application must include a description of the lands, including the zones, with respect to which continuation is sought, the rent for the first year of the continuation and a late application fee of $5,000.

  • Marginal note:Continuation to be granted

    (5) If the holder pays the required rent and fee, the Minister must continue the contract with respect to the lands described in the application and send the holder and the council a notice of the continuation that describes the lands, including the zones, with respect to which it is continued as well as the basis for continuation.

Marginal note:Indefinite continuation

  •  (1) A contract that is continued on the basis of any of paragraphs 63(1)(a) to (e) continues so long as the lands that are subject to the contract continue to be eligible on that basis or until the contract is surrendered or cancelled.

  • Marginal note:Continuation for one year

    (2) A contract that is continued under subsection 65(3) continues for a period of one year after the day on which the contract would have expired had it not been continued.

 
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