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

Marginal note:No agreement — royalty owners and working interest owners

48.094 If the royalty owners and the working interest owners in respect of a straddling resource do not enter into an agreement in respect of the redetermination under section 48.093 within 90 days after the day on which the request is made, the Minister or the Government of the Northwest Territories may notify the other of their intention to refer the matter to an independent expert for a decision in accordance with section 48.095.

Marginal note:Independent expert

• 48.095 (1) Within 90 days after the day on which the Minister or the Government of the Northwest Territories is notified under subsection 5.1(8) or section 48.091 or 48.094, the Minister and the Government shall appoint the independent expert.

• Marginal note:Qualifications

  (2) The independent expert must be impartial and independent and have knowledge or experience relevant to the matter.

• Marginal note:Appointment — drawing lots

  (3) If the Minister and the Government of the Northwest Territories do not appoint the expert in accordance with subsection (1), each shall — within 30 days after the day on which the time to appoint an expert expires — submit to the other the names of up to two persons with the qualifications set out in subsection (2); they shall within 30 days after the day of submission select the independent expert from those persons by drawing lots and appoint that person as the independent expert.

• Marginal note:Absence of submission, selection or appointment

  (4) If the Minister or the Government of the Northwest Territories does not submit, select or appoint as required by subsection (3), they are deemed to make the same submission, selection or appointment — as the case may be — as the other and are bound by the decision of the independent expert.

• Marginal note:Preliminary decision

  (5) Within 90 days after the day on which they are seized of the matter or within any other period agreed to by the Minister and the Government of the Northwest Territories, the independent expert shall render a preliminary decision and the Minister and the Government are to be provided with it and the reasons for it, including any supporting documentation.

• Marginal note:Clarification or reconsideration

  (6) The Minister or the Government of the Northwest Territories may — within 60 days after being provided with the preliminary decision — request the independent expert to clarify or reconsider that decision and make additional submissions to the independent expert.

• Marginal note:Further submissions

  (7) If the Minister or the Government of the Northwest Territories does so request and make such submissions, they shall provide the other with a copy of those submissions. The other may — within 15 days after the day on which they receive that copy — make further submissions and shall provide the other with a copy of them.

• Marginal note:Final decision

  (8) Within 120 days after the day on which they render a preliminary decision, the independent expert shall render a final decision and the Minister and the Government of the Northwest Territories are to be provided with it and the reasons for it, including any supporting documentation.

• Marginal note:Decision is final and binding

  (9) An independent expert’s final decision is final and binding on the Minister and the Government of the Northwest Territories and is not to be challenged on appeal or judicial review in any court except on the ground that the independent expert erred in law or exceeded the independent expert’s jurisdiction.

• Marginal note:Legal proceedings

  (10) If a person acts as an independent expert,

  • (a) the person is not to be called to give evidence, and is not compellable as a witness, in any legal proceedings related to the matter; and

  • (b) the person’s records related to the matter are not admissible as evidence in any legal proceedings related to the matter.

Marginal note:Regulations — Inuvialuit lands

48.096 The Governor in Council may, if the Inuvialuit Regional Corporation agrees in writing under subsection 3.3(b) of the Agreement to be bound by a provision of Article 5 of the Agreement, make regulations adapting the definitions Agreement, Inuvialuit Settlement Region and straddling resource in section 2 and sections 48.01 to 48.095 accordingly.

Transboundary Pools or Fields

Delineation

Marginal note:Appropriate regulator

48.1 For the purposes of sections 48.11 to 48.14, the appropriate regulator is any regulator that has jurisdiction in an area

• (a) adjoining the portion of the perimeter where the drilling took place or where an accumulation of oil or gas exists; or

• (b) into which there is reason to believe that, based on the data obtained from any drilling, an accumulation of oil or gas extends.

Marginal note:Information

• 48.11 (1) If an exploratory well, as defined in subsection 101(1) of the Canada Petroleum Resources Act, is drilled in the perimeter, the Commission of the Canadian Energy Regulator shall provide each appropriate regulator, within the prescribed time and in the prescribed manner, with any information in its possession, including any prescribed information, that is relevant to the determination of whether a pool is transboundary and its delineation.

• Marginal note:Additional information

  (2) The Commission of the Canadian Energy Regulator shall, on request, provide the regulator with any additional information in its possession, that is relevant to the determination of whether a pool is transboundary and its delineation.

Marginal note:Notice — as soon as feasible

• 48.12 (1) If the data obtained from any drilling in the perimeter provides sufficient information for the Commission of the Canadian Energy Regulator to determine whether a pool exists, the Commission shall notify each appropriate regulator as soon as feasible of its determination.

• Marginal note:Notice — after three drillings

  (2) If no notice is given under subsection (1), the Commission of the Canadian Energy Regulator shall, no later than one year after the day on which it receives data from the last of three drillings of the same geological feature in the perimeter, notify each appropriate regulator of its determination or that there is insufficient information to make a determination based on the data from those drillings.

• Marginal note:Notice — transboundary pool

  (3) If the Commission of the Canadian Energy Regulator determines that a pool exists, the Commission shall also specify in the notice whether or not there is, in its opinion, reason to believe that the pool is transboundary.

• Marginal note:Reasons

  (4) The Commission of the Canadian Energy Regulator shall provide each appropriate regulator and the Minister with the reasons for its determination and opinion.

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.