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

Marginal note:Financial resources — certain activities

• 26.1 (1) An applicant for an authorization under paragraph 5(1)(b) for the drilling for or development or production of oil or gas shall provide proof, in the prescribed form and manner, that it has the financial resources necessary to pay the greatest of the amounts of the limits of liability referred to in subsection 26(2.2) that apply to it. If the Commission of the Canadian Energy Regulator considers it necessary, it may determine a greater amount and require proof that the applicant has the financial resources to pay that greater amount.

• Marginal note:Financial resources — other activities

  (2) An applicant for an authorization under paragraph 5(1)(b) for any other work or activity shall provide proof, in the prescribed form and manner, that it has the financial resources necessary to pay an amount that is determined by the Commission of the Canadian Energy Regulator.

• Marginal note:Loss of non-use value

  (3) When the Commission of the Canadian Energy Regulator determines an amount under subsection (1) or (2), the Commission is not required to consider any potential loss of non-use value relating to a public resource that is affected by a spill or the authorized discharge, emission or escape of oil or gas or as a result of debris.

• Marginal note:Continuing obligation

  (4) The holder of an authorization under paragraph 5(1)(b) shall ensure that the proof referred to in subsections (1) and (2) remains in force for the duration of the work or activity in respect of which the authorization is issued.

• Marginal note:Extended obligation

  (5) The holder of an authorization under paragraph 5(1)(b) shall also ensure that the proof referred to in subsection (1) remains in force for a period of one year beginning on the day on which the Commission of the Canadian Energy Regulator notifies the holder that it has accepted a report submitted by the holder indicating that the last well in respect of which the authorization is issued is abandoned. The Commission may reduce that period and may decide that the proof that is to remain in force during that period is proof that the holder has the financial resources necessary to pay an amount that is less than the amount referred to in subsection (1) and that is determined by the Commission.

Marginal note:Financial responsibility

• 27 (1) An applicant for an authorization under paragraph 5(1)(b) shall provide proof of financial responsibility in the form of a letter of credit, guarantee or indemnity bond or in any other form satisfactory to the Commission of the Canadian Energy Regulator,

  • (a) in the case of the drilling for or development or production of oil or gas in any area referred to in paragraphs 3(d) and (e), in the amount of $100 million or, if the Commission considers it necessary, in a greater amount that it determines; or

  • (b) in any other case, in an amount that is satisfactory to, and determined by, the Commission.

• Marginal note:Pooled fund

  (1.01) An applicant to which paragraph (1)(a) applies may, rather than provide proof of financial responsibility in the amount referred to in that paragraph, provide proof that it participates in a pooled fund that is established by the oil and gas industry, that is maintained at a minimum of $250 million and that meets any other requirements that are established by regulation.

• Marginal note:Increase in amount by regulation

  (1.02) The Governor in Council may, by regulation, on the recommendation of the Minister, increase the amount referred to in subsection (1.01).

• Marginal note:Continuing obligation

  (1.1) The holder of an authorization under paragraph 5(1)(b) shall ensure that the proof of financial responsibility referred to in subsection (1) or (1.01) remains in force for the duration of the work or activity in respect of which the authorization is issued.

• Marginal note:Extended obligation

  (1.2) The holder of an authorization under paragraph 5(1)(b) shall also ensure that the proof referred to in paragraph (1)(a) or subsection (1.01) remains in force for a period of one year beginning on the day on which the Commission of the Canadian Energy Regulator notifies the holder that it has accepted a report submitted by the holder indicating that the last well in respect of which the authorization is issued is abandoned. The Commission may reduce that period and may decide — other than in the case of a holder that participates in a pooled fund — that the proof that is to remain in force during that period is for an amount that is less than the amount referred to in paragraph (1)(a) and that is determined by the Commission.

• Marginal note:Payment of claims

  (2) The Commission of the Canadian Energy Regulator may require that moneys in an amount not exceeding the amount prescribed for any case or class of cases, or determined by the Commission in the absence of regulations, be paid out of the funds available under the letter of credit, guarantee or indemnity bond or other form of financial responsibility provided under subsection (1), or be paid out of the pooled fund referred to in subsection (1.01), in respect of any claim for which proceedings may be instituted under section 26, whether or not those proceedings have been instituted.

• Marginal note:Manner of payment

  (3) Where payment is required under subsection (2), it shall be made in such manner, subject to such conditions and procedures and to or for the benefit of such persons or classes of persons as may be prescribed for any case or class of cases, or as may be required by the Commission of the Canadian Energy Regulator in the absence of regulations.

• Marginal note:Deduction

  (4) Where a claim is sued for under section 26, there shall be deducted from any award made pursuant to the action on that claim any amount received by the claimant under this section in respect of the loss, damage, costs or expenses claimed.

• Marginal note:Reimbursement of pooled fund

  (5) The holder of an authorization under paragraph 5(1)(b) that is liable for a discharge, emission or escape of oil or gas that is authorized by regulation or for any spill or debris in respect of which a payment has been made under subsection (2) out of the pooled fund, shall reimburse the amount of the payment to the fund in the prescribed manner.

Marginal note:Lesser amount

• 27.1 (1) The Minister may, by order, on the recommendation of the Commission of the Canadian Energy Regulator, approve an amount that is less than the amount referred to in paragraph 26(2.2)(a) or (d) or 27(1)(a) in respect of an applicant for, or a holder of, an authorization under paragraph 5(1)(b).

• Marginal note:Financial resources — exception

  (2) If the Minister approves an amount that is less than the amount referred to in paragraph 26(2.2)(a) or (d) in respect of an applicant for an authorization under paragraph 5(1)(b), that applicant, for the purposes of subsection 26.1(1), shall only provide proof that it has the financial resources necessary to pay the adjusted amount approved by the Minister.

• Marginal note:No contravention

  (3) No applicant for an authorization under paragraph 5(1)(b) contravenes paragraph 27(1)(a) if that applicant provides proof of financial responsibility in the amount that is approved by the Minister under this section.

Inquiries

Marginal note:Inquiries

• 28 (1) Where a spill or debris or an accident or incident related to any activity to which this Act applies occurs or is found in any area to which this Act applies and results in death or injury or danger to public safety or the environment, the Minister may direct an inquiry to be made, subject to the Canadian Transportation Accident Investigation and Safety Board Act, and may authorize any person that the Minister deems qualified to conduct the inquiry.

• Marginal note:Mandatory inquiry

  (1.1) Where a spill or debris or an accident or incident related to any activity to which this Act applies occurs or is found in any area to which this Act applies and is serious, as defined by regulation, the Minister shall direct that an inquiry referred to in subsection (1) be made, subject to the Canadian Transportation Accident Investigation and Safety Board Act, and shall ensure that the person who conducts the inquiry is not employed in a part of the federal public administration for which the Minister is responsible.

• Marginal note:Power of persons conducting inquiry

  (2) For the purposes of an inquiry under subsection (1), a person authorized by the Minister under that subsection has all the powers of a commissioner under Part I of the Inquiries Act.

• Marginal note:Compatible procedures and practices

  (3) The person or persons authorized to conduct an inquiry under subsection (1) shall ensure that, as far as practicable, the procedures and practices for the inquiry are compatible with investigation procedures and practices followed by any appropriate provincial authorities, and for those purposes may consult with any of those authorities concerning compatible procedures and practices.

• Marginal note:Report

  (4) As soon as possible after the conclusion of an inquiry under subsection (1), the person or persons authorized to conduct the inquiry shall submit a report to the Minister, together with the evidence and other material that was before the inquiry.

• Marginal note:Publication

  (5) A report made pursuant to subsection (4) shall be published by the Minister within thirty days after he has received it.

• Marginal note:Copies of report

  (6) The Minister may supply copies of a report published pursuant to subsection (5) in such manner and on such terms as he considers proper.

PART IIProduction Arrangements

Interpretation

Marginal note:Definitions

29 In this Part,

expert

expert means a person who is appointed under subsection 48.27(2) or an expert panel appointed under subsection 48.27(3); (expert)

perimeter

perimeter means

• (a) the area in the offshore, as defined in section 48.01, that is within 20 km of the onshore;

• (b) the area in Nunavut that is within 20 km of the limit of that territory; and

• (c) the portion of the submarine area — consisting of the areas referred to in paragraphs 3(d) and (e) — that is within 10 nautical miles of the seaward limit of that area; (bande limitrophe)

pooled spacing unit

pooled spacing unit means the area that is subject to a pooling agreement or a pooling order; (unité d’espacement mise en commun)

pooled tract

pooled tract means the portion of a pooled spacing unit defined as a tract in a pooling agreement or a pooling order; (parcelle mise en commun)

pooling agreement

pooling agreement means an agreement to pool the interests of owners in a spacing unit and to provide for the operation or the drilling and operation of a well thereon; (accord de mise en commun)

pooling order

pooling order means an order made under section 31 or as altered pursuant to section 35; (arrêté de mise en commun)

regulator

regulator means a provincial government, a provincial regulatory agency or a federal-provincial regulatory agency that has administrative responsibility for the exploration for and exploitation of oil and gas in an area adjoining the perimeter; (organisme de réglementation)

royalty interest

royalty interest means any interest in, or the right to receive a portion of, any oil or gas produced and saved from a field or pool or part of a field or pool or the proceeds from the sale thereof, but does not include a working interest or the interest of any person whose sole interest is as a purchaser of oil or gas from the pool or part thereof; (droit à redevance)

royalty owner

royalty owner means a person, including Her Majesty in right of Canada, who owns a royalty interest; (titulaire de redevance)

spacing unit

spacing unit means the area allocated to a well for the purpose of drilling for or producing oil or gas; (unité d’espacement)

tract participation

tract participation means the share of production from a unitized zone that is allocated to a unit tract under a unit agreement or unitization order or the share of production from a pooled spacing unit that is allocated to a pooled tract under a pooling agreement or pooling order; (fraction parcellaire)

transboundary

transboundary means, in relation to a pool, extending beyond the Commission of the Canadian Energy Regulator’s jurisdiction under this Act or, in relation to a field, underlain only by one or more such pools; (transfrontalier)

unit agreement

unit agreement means an agreement to unitize the interests of owners in a pool or a part of a pool exceeding in area a spacing unit, or such an agreement as varied by a unitization order; (accord d’union)

unit area

unit area means the area that is subject to a unit agreement; (secteur unitaire)

unitization order

unitization order means an order made under section 41, 48.092 or 48.23; (arrêté d’union)

unitized zone

unitized zone means a geological formation that is within a unit area and subject to a unit agreement; (terrain)

unit operating agreement

unit operating agreement means an agreement, providing for the management and operation of a unit area and a unitized zone, that is entered into by working interest owners who are parties to a unit agreement with respect to that unit area and unitized zone, and includes a unit operating agreement as varied by a unitization order; (accord d’exploitation unitaire)

unit operation

unit operation means those operations conducted pursuant to a unit agreement or a unitization order; (exploitation unitaire)

unit operator

unit operator means a person designated as a unit operator under a unit operating agreement; (exploitant unitaire)

unit tract

unit tract means the portion of a unit area that is defined as a tract in a unit agreement; (parcelle unitaire)

working interest

working interest means a right, in whole or in part, to produce and dispose of oil or gas from a pool or part of a pool, whether that right is held as an incident of ownership of an estate in fee simple in the oil or gas or under a lease, agreement or other instrument, if the right is chargeable with and the holder thereof is obligated to pay or bear, either in cash or out of production, all or a portion of the costs in connection with the drilling for, recovery and disposal of oil or gas from the pool or part thereof; (intérêt économique direct)

working interest owner

working interest owner means a person who owns a working interest. (détenteur)