Canada Oil and Gas Land Regulations (C.R.C., c. 1518)

29 A licensee shall upon request by the Oil Conservation Engineer report the location and progress of any field party employed by the licensee.

Exploration Agreements

• 30 (1) The Minister may, subject to this section, enter into an exploration agreement with any person relating to Crown reserve lands.

• (2) An exploration agreement may provide for any matter relating to exploration for or development of oil or gas and, in particular, but without restricting the generality of the foregoing, may provide terms and conditions for

  • (a) payment and disposition of deposits,

  • (b) work programs and drilling requirements,

  • (c) reporting and disclosure of information,

  • (d) grouping of land areas described in exploration agreements, and

  • (e) surrender, cancellation and transfer of rights under the agreement,

  but so long as this section is in force and unless otherwise specified in this section or section 31 or 32 or in the exploration agreement, the provisions of these Regulations relevant to a permit shall apply to an exploration agreement.

• (3) Subject to subsection (7), before entering into any exploration agreement, the Minister shall publish a notice in the Canada Gazette and in any other publication he considers appropriate calling for the submission of proposals in respect of the interests to be conferred by the agreement.

• (4) A notice calling for the submission of proposals under subsection (3) shall be published at least 60 days before the closing date fixed in the notice for the submission of proposals and shall set out any requirement or matter applicable to persons submitting proposals, including

  • (a) the amount of any deposit required and the conditions for its return;

  • (b) any work requirements, the term of the agreement and any rental payable;

  • (c) the royalty payable in respect of any oil or gas produced under a lease granted under section 54 if different from that payable under section 85;

  • (d) any requirements for

    • (i) Canadian equity participation,

    • (ii) participation by the Government of Canada or any department, branch or agency thereof, or

    • (iii) employment of Canadian goods and services; and

  • (e) such other terms and conditions as the Minister may determine.

• (5) In selecting any proposal submitted pursuant to this section for the purpose of negotiating an exploration agreement, the Minister shall take into account any factors he considers appropriate in the public interest but is not bound to select any particular proposal submitted.

• (6) Where no proposal is submitted before the closing date specified in a notice calling for the submission of proposals, the Minister may, within 90 days after that closing date, enter into an exploration agreement with any person on such terms and conditions as the Minister may determine.

• (7) An exploration agreement may be entered into without a notice calling for the submission of proposals where

  • (a) the Minister does not consider it to be in the public interest to give such a notice owing to the limited area or the location of land available or owing to the need to act expeditiously; or

  • (b) the agreement is to be with Petro-Canada in respect of lands selected by Petro-Canada Limited for exploration and development pursuant to section 33.

• 31 (1) An exploration agreement shall be for a term not exceeding 10 years from the date the agreement takes effect and may be renewed for a term or terms not exceeding 10 years in the aggregate.

• (2) An exploration agreement and any renewal thereof shall be subject to such terms and conditions as are determined by the Minister.

• (3) Notwithstanding subsection (1), where the holder of an exploration agreement makes a significant discovery during the term of the agreement and a declaration thereof made under section 124 is in force on the expiration of the term, the exploration agreement continues in force, in respect of any grid area that is specified in the declaration, for so long as the declaration is in force, and the terms and conditions and royalty provisions that applied during the term of the agreement shall continue to apply during the continuation thereof.

• 32 (1) Subject to these Regulations, a person acting under an exploration agreement may, for the purpose of searching for or developing oil or gas, enter on and use any land described in the agreement in order to

  • (a) carry out or cause to be carried out exploratory work and the drilling of wells without limitation as to depth, including delineation and development wells;

  • (b) mine, quarry, extract and produce from the land such quantities of oil or gas or other minerals and substances in association therewith as, in the opinion of the Minister or person designated by the Minister, are necessary for test purposes or for conducting the operations by any person acting under the exploration agreement; and

  • (c) carry out any other work or activity agreed to under the exploration agreement.

• (2) Subject to these Regulations, every exploration agreement confers on the holder thereof the exclusive option to obtain an oil and gas lease for the Canada lands described thereof.

Petro-Canada Limited

• 33 (1) Subject to subsections (2) to (8), Petro-Canada Limited has the right, in priority to any other person,

  • (a) during a period of one year commencing on August 3, 1977, to select lands from among the lands that are Crown reserve lands on such date in the manner and quantities approved by the Minister or a person designated by the Minister; and

  • (b) during a period of seven years commencing on August 3, 1977, to select, in the manner approved by the Minister or a person designated by the Minister, within one year from the date the Minister or a person designated by the Minister gives notice that the lands are available for selection, up to a maximum of 25 per cent of such Crown reserve lands as are specified in the notice.

• (2) The Minister or a person designated by the Minister shall give prompt notice to Petro-Canada Limited of lands that are or have become Crown reserve lands whereupon Petro-Canada Limited may exercise the rights granted by subsection (1).

• (3) In exercising its right to select lands pursuant to subsection (1), Petro-Canada Limited shall not select more than 25 per cent of the land in respect of which it has the right unless the Minister authorizes the selection of a greater percentage in any case where he considers it appropriate due to the limited area of land available.

• (4) Any land selected by Petro-Canada Limited pursuant to subsection (1) shall be held by it under an exploration agreement subject to such terms and conditions consistent with these Regulations as are agreed on between it and the Minister or a person designated by the Minister.

• (5) Where the Minister intends to give notice pursuant to section 30 calling for the submission of proposals in respect of any Crown reserve lands for which Petro-Canada Limited has the rights granted by subsection (1), he shall send notice in writing of his intention to Petro-Canada Limited specifying the lands in respect of which he intends to call for the submission of proposals and Petro-Canada Limited shall have 60 days from the day such notice is sent to make its selection of not more than 25 per cent of such lands, in the manner approved by the Minister or a person designated by the Minister.

• (6) The Minister may, after the expiration of the 60-day period referred to in subsection (5), give public notice pursuant to section 30 calling for the submission of proposals in respect of any lands not selected by Petro-Canada Limited pursuant to subsection (1) and Petro-Canada Limited and all other persons are equally entitled to submit such proposals.

• (7) Any lands not disposed of pursuant to a proposal submitted under subsection (6) or an exploration agreement entered into under subsection 30(6) shall remain subject to the rights granted to Petro-Canada Limited but nothing done under this section extends or suspends the period available to Petro-Canada Limited to exercise its rights under subsection (5).

• (8) Petro-Canada Limited shall not, without the prior approval in writing of the Minister, which may be given on application by any interested party, transfer, assign or in any other manner dispose of any interest or right in lands it has selected pursuant to subsection (1), or any interest or right in an exploration agreement affecting such lands, otherwise than by way of charge or mortgage.

Permittees

• 34 (1) A permittee must be the holder of a licence before he may carry out exploratory work on Canada lands.

• (2) Where a permittee is authorized to carry out exploratory work under these Regulations, that work may be performed by any person employed or hired by the permittee.

• (3) A permittee may, for the purpose of carrying out exploratory work for oil and gas,

  • (a) enter upon the Canada lands described in his permit; and

  • (b) use such part of the surface of the Canada lands described in his permit as may be necessary.

• (4) A permittee may produce, mine, quarry or extract from the Canada lands described in his permit such quantity of oil, gas and other minerals and substances that are produced, mined, quarried or extracted in association with any oil or gas as, in the opinion of the Oil Conservation Engineer, is necessary for test purposes or for conducting operations of the permittee on that permit area.

• 35 (1) Subject to these Regulations, a permittee has the exclusive option to obtain an oil and gas lease for the Canada lands described in his exploratory permit.

• (2) Every permit shall state the term of the oil and gas lease for which an option is given and the royalty payable under the lease.

Term of Permit

• 36 (1) Except as provided in subsection (4), where the whole or greater part of a permit area is located south of latitude 65°, the permit is valid for three years from the date of issue.

• (2) Except as provided in subsection (4), where the whole or greater part of a permit area is located between latitude 65° and latitude 68°, the permit is valid for four years from the date of issue.

• (3) Where the whole or greater part of a permit area is located between latitude 68° and latitude 70°, the permit is valid for six years from date of issue.

• (4) Where a permit area is located

  • (a) south of latitude 70° and within Canada lands other than those lands located in that part of Canada described in Schedule VI, or

  • (b) south of latitude 70° and east of longitude 90° and within Canada lands located in that part Of Canada described in Schedule VI,

  and the whole or greater part thereof is, in the opinion of the Chief, covered by seacoast waters, the permit for that permit area is valid for six years from the date of issue.

• (5) Where a permit area is located

  • (a) south of latitude 70° and west of longitude 90°, and

  • (b) within Canada lands located in that part of Canada described in Schedule VI,

  and the whole or greater part thereof is, in the opinion of the Chief, covered by seacoast waters, the permit for that permit area is valid for six years from the date of issue.

• (6) Where a permit area is located north of latitude 70°, the permit is valid

  • (a) in the case of a permit issued before 1968, for eight years from the date of issue, and

  • (b) in the case of a permit issued on or after January 1, 1968, for six years from the date of issue.

• (7) In the case of a permit that was issued prior to July 1, 1967, in respect of a permit area, the whole or greater part of which is located north of latitude 70°,

  • (a) the period of the original term of the permit is extended by 12 months, as set out in Schedule V;

  • (b) each period of the permit that follows the extended period shall be computed as if it commences 12 months after the date on which it would otherwise commence;

  • (c) all references in these Regulations to the period that is extended shall be deemed to be references to that period as so extended; and

  • (d) each anniversary, referred to in section 53, of a permit a period of which is extended shall be computed as if that anniversary occurs 12 months after the date on which it actually occurs.

37 A permittee may at any time surrender the grid area or one-half of the grid area for which he holds a permit but, except as provided in section 41, no deposit shall be refunded to the permittee.

Permit Renewal

• 38 (1) An application for renewal of a permit shall be made to the Chief before the expiry date of the permit and shall be accompanied by the deposit required by section 40.

• (2) Upon receipt of an application for renewal of a permit made pursuant to subsection (1) and of the deposit referred to in that subsection, the Chief shall renew the permit for a term of one year.

• (3) Where a permittee does not make application for renewal of a permit in accordance with subsection (1), the Chief shall give written notice to the permittee informing him that if within 90 days of the date of the notice the permittee makes an application for renewal of his permit, accompanied by the deposit required by section 40, his permit may be renewed.

• (4) Upon receipt of an application for renewal of a permit accompanied by the deposit required by section 40 in accordance with a notice given pursuant to subsection (3), the Chief shall renew the permit for a term of one year from the expiry date of the permit and the permit shall, for the purposes of these Regulations, be deemed not to have expired.

• (5) A permit shall not be renewed pursuant to subsection (2) or (4) more than six times.

• 39 (1) Where

  • (a) a permit has been renewed six times,

  • (b) a well is being drilled in a manner satisfactory to the Chief, and

  • (c) in the opinion of the Chief, the well will not be completed or abandoned before the expiration of the permit,

  the Chief may, upon application, extend the term of the permit for one or more periods of 90 days.

• (2) The application for extension shall be made to the Chief and shall be accompanied by the deposit required by section 40.

Deposits

• 40 (1) Every permittee shall deposit with the Chief, before the commencement of a period set out in Column I of Schedule II, money, bonds or an approved note of a value equal to the amount set out opposite that period in Column II of that Schedule.

• (2) Notwithstanding subsection (1) and subsection 108(1), where a permit for an area located north of latitude 70° was issued earlier than January 1, 1965, the permittee may make the deposit required by subsection (1) for the second 36-month period of the original term or for the 24-month period following the second 36-month period of the original term of a permit described in subsection 36(4) on a date later than the date referred to in subsection (1), but in such case he shall make the deposit before January 1, 1968.

• (3) In this section, approved note means a promissory note payable on demand that a chartered bank has agreed, in terms acceptable to the Chief, to honour on presentment for payment.

• 41 (1) The portion of a deposit equal to the allowable expenditure made during the period, shall be returned to the permittee.

• (2) Subject to subsection (3), the portion of the deposit not returned to the permittee is forfeited to Her Majesty.

• (3) Where, in the opinion of the Chief, a permittee has not been able to make allowable expenditure equal to the deposit required for any period, and the permittee has given notice to the Chief, and during the renewal period next following the permittee makes allowable expenditure equal to the aggregate of

  • (a) the deposit required for the renewal period next following, and

  • (b) the portion of the deposit for the period, heretofore not returned to the permittee,

  the portion of the deposit heretofore not returned shall be returned to the permittee.

• (4) The notice required under subsection (3) shall be given before the end of the period and shall state the reasons that the permittee has not been able to make allowable expenditures equal to the deposit required for that period and that the permittee intends to make allowable expenditure, during the renewal period next following, equal to the aggregate of

  • (a) the deposit required for the renewal period; and

  • (b) the portion of the deposit for the period heretofore not returned to the permittee.