Permit, Lease and Survey System Regulations

c t OIL AND NATURAL GAS ACT PERMIT, LEASE AND SURVEY SYSTEM REGULATIONS PLEASE NOTE This document, prepared by the Legislative Counsel Office, is an office consolidation of this regulation, current to April 4, 2009. It is intended for information and reference purposes only. This document is not the official version of these regulations. The regulations and the amendments printed in the Royal Gazette should be consulted on the Prince Edward Island Government web site to determine the authoritative text of these regulations. For more information concerning the history of these regulations, please see the Table of Regulations on the Prince Edward Island Government web site (www.princeedwardisland.ca). If you find any errors or omissions in this consolidation, please contact: Legislative Counsel Office Tel: (902) 368-4292 Email: legislation@gov.pe.ca Oil and Natural Gas Act Permit, Lease and Survey System Regulations Section 1 c OIL AND NATURAL GAS ACT Chapter O-5 PERMIT, LEASE AND SURVEY SYSTEM REGULATIONS Pursuant to section 11 of the Oil and Natural Gas Act R.S.P.E.I. 1988, Cap. O-5, Council made the following regulations: 1. Definitions (1) In these regulations (a) “Act” means the Oil and Natural Gas Act R.S.P.E.I. 1988, Cap. O-5; (b) “anniversary date” means the annual return of the date on which a permit or lease was issued; (c) “bid” means a proposal for exploration or development of provincial lands for oil or natural gas, that was submitted in response to a call for bids; (d) “call for bids” means a request by the Minister for bids on a permit to conduct exploration or development of provincial lands for oil or natural gas; (e) “offshore” means the seabed and the subsoil off the shore of the land mass of the province to the limits of the sovereignty of the government of Prince Edward Island and to such limits as may be determined by federal provincial agreement; (f) “onshore” means the land mass of the province; (g) “vacant”, in relation to lands, means provincial lands that are not subject to a permit, lease or geophysical license under the Act. Compliance with applicable laws (2) Lessees, permitees and bidders shall comply with the Act, the regulations and all other applicable federal or provincial laws and regulations. (EC689/00) 2. Call for bids (1) Where the Minister receives a written request that provincial lands be submitted in a call for bids, the Minister shall consider the request and reply to it not later than 3 weeks from receipt of the request. Idem (2) The Minister may issue a call for bids for an oil and natural gas permit (a) for any provincial lands; or c t Updated April 4, 2009 Page 3 Section 3 Oil and Natural Gas Act Permit, Lease and Survey System Regulations (b) for all or part of provincial lands described in a request submitted pursuant to subsection (1). Publication (3) A call for bids shall be published in the Gazette and such other publications as the Minister considers appropriate. Information required (4) A call for bids shall include the following information: (a) the location and description of the provincial lands for which bids are invited; (b) the total area for which bids are invited; (c) the location where the information package for bidders will be available; (d) the address where the Minister will receive bids; (e) the closing date and time for submission of bids; (f) the terms and conditions required to be met by a bidder; (g) the manner in which a bid is to be submitted; (h) the criteria to be applied for acceptance of bids; and (i) other information as the Minister considers appropriate. (EC689/00) 3. Information on bid A bid for an oil and natural gas permit shall be on the prescribed form and include the following information: (a) the type of work proposed by the bidder, including geological work, geophysical exploration, exploratory drilling and other activities specified in the call for bids or proposed by the bidder; (b) a description of the work plan and the time period in which it is to be carried out; (c) the monetary value of the work plan; and (d) any other information specified by the Minister in the call for bids. (EC689/00) 4. Bid criteria (1) A bid shall not be accepted by the Minister unless the bid (a) satisfies the terms and conditions and acceptance criteria of the call for bids; and (b) is submitted in the prescribed form and in manner specified in the call for bids. Late bids not considered (2) No bid received after the stated closing time for submissions of bids shall be considered by the Minister in issuing a permit. Late bids returned (3) All bids received after the stated closing date and time for submission of bids shall remain sealed and shall be returned to the bidder. (EC689/00) 5. Minister may decline bids (1) Notwithstanding any other provision of these regulations, the Minister may decline to accept any bids. Page 4 Updated April 4, 2009 t c Oil and Natural Gas Act Permit, Lease and Survey System Regulations Section 6 Subsequent call for bids (2) The Minister may, at any time after the closing date of a call for bids for which no bids were received or for which all bids were rejected, request a call for bids for the same provincial lands on the basis of the same or different terms and conditions as set out in the original call for bids. (EC689/00) 6. Security (1) Within 15 days of being notified that a bid has been accepted, a bidder shall post with the Minister, (a) performance security payable to the Minister in accordance with subsection (2) with a value of 25% of the total monetary value of the bid; and (b) the required permit and rental fees. Form of security (2) Performance security shall be in the form of a performance bond from a company acceptable to the Minister, or such other substitute security as may be acceptable to the Minister, to ensure the proper performance of the permit by the permitee. (EC689/00) 7. Permit (1) Where the successful bidder complies with section 6, the Minister shall issue an oil and gas permit (a) on the terms and conditions of the call for bids and the bid, including the work plan described in the bid; and (b) on such other terms and conditions as the Minister considers necessary. If no security (2) Where the successful bidder fails to comply with section 6, the Minister (a) shall declare that bid null and void; and (b) may consider other bids submitted in response to the call for bids or disregard all bids and declare the lands vacant. Contiguous areas (3) A permit shall only be issued in respect of contiguous areas. (EC689/00) 8. Term of permit (1) The term of an onshore permit shall be 6 years and the term of an offshore permit shall be 9 years. One-time extension (2) Notwithstanding subsection (1), the Minister may grant a one-time extension to the term of an onshore permit prescribed by subsection (1), for a term not to exceed two years from the date of expiry of the permit, with such conditions as the Minister may impose. (EC689/00; 162/09) c t Updated April 4, 2009 Page 5 Section 9 Oil and Natural Gas Act Permit, Lease and Survey System Regulations 9. Permitee to complete work, comply with permit (1) A permitee shall complete the work described in the work plan which is described in the permit and shall comply with and fulfil all of the terms and conditions of the permit. Work to be done in year scheduled (2) All work shall be completed in the year in which it is scheduled in the work plan set out in the permit. Carry forward excess work (3) Notwithstanding subsection (2), where a permitee has, in any preceding year, completed and recorded an excess of any scheduled work required by the permit, the excess work may be carried forward to fulfil future work obligations of the permit. Minister may vary work schedule (4) Notwithstanding subsections (1) and (2), the Minister may vary the schedule for the implementation of a work plan as the Minister considers necessary. (EC689/00) 10. Annual report A permitee shall submit to the Minister, on or before 10 days from the anniversary date, (a) evidence of expenditures made for work done and completion dates; (b) reports and maps showing the geological or geophysical examinations, aerial photographs, detailed logs, well history reports and all information obtained respecting the presence of water, coal, salt, gravel, sand and other potentially useful substances; and (c) such other information as the Minister may require, on the prescribed form. (EC689/00) 11. Revocation of permit (1) In the event that a permitee fails to comply with subsection 1(2), section 9 or section 10, the Minister may revoke the permit, declare the permit area to be vacant, and declare as forfeit all or part of the performance security submitted pursuant to section 6. Amount determined by Minister (2) The amount forfeit in accordance with this section shall be determined by the Minister. (EC689/00) 12. Security returned after expiry Except where all or part of a performance security is forfeit, a performance security shall be returned to a permitee after expiry of the period in which coverage is bound by the security. (EC689/00) Page 6 Updated April 4, 2009 t c Oil and Natural Gas Act Permit, Lease and Survey System Regulations Section 13 EXPLORATORY WELLS 13. No well within 500m, onshore (1) No person shall drill an exploratory well within 500 metres of the boundary of an onshore permit. Lease for additional well (2) Where, in the Minister’s opinion, an existing well in an onshore permit area may be capable of commercial production of oil or natural gas, the permitee shall not drill another well unless the permitee has applied for a lease and been issued a lease of the area for which the new well is proposed. (EC689/00) 14. No well within 1 km, offshore (1) No person shall drill an exploratory well within 1 kilometre of the boundary of an offshore permit. Lease for additional well (2) Where, in the opinion of the Minister, an existing well in an offshore permit area may be capable of commercial production of oil or natural gas, the permitee shall not drill another well unless the permitee has applied for a lease and been issued a lease with respect to the area proposed for a well. (EC689/00) OIL AND NATURAL GAS PRODUCTION LEASE 15. No gas, oil production without lease (1) Except as provided in section 94 of the Act, no person shall produce any oil or natural gas from an onshore well, without a lease of the oil and natural gas rights issued for the area in which the well is located, issued in accordance with the Act or these regulations. 20 year term, onshore (2) A lease of oil and natural gas rights derived from an onshore permit area shall be for a term not exceeding 20 years, and subject to such terms and conditions as the Minister may consider necessary. 25 year term, offshore (3) A lease of oil and natural gas rights derived from an offshore permit area shall be for a term not exceeding 25 years, and subject to such terms and conditions as the Minister may consider necessary. Compliance with lease (4) A lessee shall comply with the terms and conditions of a lease. Allocation on hectare basis (5) The allocation of a lessee’s share of the oil and gas from the spacing area pursuant to clause 61(5)(c) of the Act shall be on a hectare basis. (EC689/00) c t Updated April 4, 2009 Page 7 Section 16 Oil and Natural Gas Act Permit, Lease and Survey System Regulations 16. Surrender of lease (1) A lessee may, at any time, surrender a lease upon giving 90 days written notice to the Minister. Liability continues (2) Notwithstanding any surrender or cancellation or expiration of any lease, the lessee remains liable for any act, matter or thing for which at the date of surrender or cancellation or expiration the lessee was liable under this Act, the regulations or under the terms of the surrendered or cancelled or expired document. (EC689/00) 17. Cancellation of lease (1) In the event that a lessee fails to comply with subsections 1(2) or 15(4), or fails to pay the royalty as required by the Act and regulations, the Minister may cancel the lease upon first giving 90 days notice to the lessee stating the reasons for the intended cancellation. Cancellation may be revoked (2) If, within 90 days of the receipt of a notice under subsection (1), the lessee remedies the reason for the intended cancellation, the Minister may revoke the intended cancellation. (EC689/00) 18. Transfer production and transportation facilities Where a lease is cancelled or surrendered or has expired, the Minister may require the lessee to transfer to the province, or the province’s nominee, all production and transportation facilities that may be required for continued production from the lease area, at fair market value, as agreed by the parties, or failing such agreement, by arbitration pursuant to section 19. (EC689/00) 19. Arbitration (1) Where a permitee or lessee disputes a decision made pursuant to section 11 or 17, or there is a failure to reach an agreement on market value pursuant to section 18, the dispute shall be referred to arbitration by three arbitrators, one to be appointed by the Minister, one to be appointed by the permitee or lessee, and a chairperson to be appointed by the other two arbitrators. Arbitration Act applies (2) The Arbitration Act R.S.P.E.I. 1988, Cap A-16, applies to any arbitration held under this section. (EC689/00) SURVEY SYSTEM 20. Grid areas (1) All areas shall be divided into grid areas. Grid measurements (2) Grid areas shall be bounded on the east and west sides by successive meridians of longitude of the series 61 degrees 00’00”, 61 degrees 15’00”, 61 degrees 30’00”, 61 degrees 45’00”, 62 degrees 00’00”, which series may be extended by the Minister, as required. Page 8 Updated April 4, 2009 t c Oil and Natural Gas Act Permit, Lease and Survey System Regulations Section 21 Idem (3) Grid areas shall be bounded on the north and south sides by straight lines joining the points of intersection of the east and west boundaries with successive parallels of latitude of the series 46 degrees 00’00”, 46 degrees 10’00”, 46 degrees 20’00”, 46 degrees 30’00”, 46 degrees 40’00”, 46 degrees 50’00”, 47 degrees 00’00”, which series may be extended by the Minister, as required. Northeast corner as reference (4) A grid area shall be referred to by the latitude and longitude of its northeast corner. Area of grid areas (5) The area for each grid area set out in Schedule C is calculated on the basis of the Universal Transverse Mercator plane from the Clarke 1866 Ellipsoid. Conversion, hectares to acres (6) The relationship between hectares and acres shall be established by multiplying the area in hectares by 1/2.4710387. Schedule C (7) The area for each grid area at a latitude as set out in Schedule C shall be the same at any longitude. (EC689/00) 21. 100 sections per grid area (1) Every grid area shall be divided into 100 sections. East/west boundaries (2) Sections shall be bounded on the east and west sides by meridians spaced at intervals of one-tenth of the interval between the east and west boundaries of the grid area. North/south boundaries (3) Sections shall be bounded on the north and south sides by straight line drawn parallel to the north and south boundaries of the grid areas and spaced at intervals of one-tenth of the interval between the north and south boundaries of the grid area and sections shall be numbered as illustrated in Diagram A of Schedule B. Section areas (4) The area for each section in a row across a grid area shall correspond to the area of the section in the first column of the grid areas as set out in Schedule C. (EC689/00) 22. 16 units per section (1) Every section shall be divided into 16 units. East/west boundaries (2) Units shall be bounded on the east and west sides by meridians spaced at intervals of one quarter of the interval between the east and west boundaries of the section. North/south boundaries (3) Units shall be bounded on the north and south by straight lines drawn parallel to the north and south boundaries of the section and spaced at intervals of one-quarter of the interval between c t Updated April 4, 2009 Page 9 Section 23 Oil and Natural Gas Act Permit, Lease and Survey System Regulations the north and south boundaries of the section and units shall be lettered as illustrated in Diagram B of Schedule B. (EC689/00) 23. North American Datum as standard All latitudes and longitudes used in these regulations shall be determined according to the North American Datum of 1927. (EC689/00) 24. Land Survey Act applies The survey, division and subdivision of any onshore area and the definition and description of those areas, permits and leases shall be done in conformity with the Land Survey Act R.S.P.E.I. 1988, Cap. L-2.1. (EC689/00) 25. Land Surveys Act (Canada) applies The survey, division and subdivision of any offshore area and the definition and description of those areas shall be consistent with the Lands Surveys Act (Canada). (EC689/00) 26. Schedules Schedules A, B and C are prescribed. (EC689/00) 27. Fees Every application under the Act or these regulations, or request for a service for which a fee is payable, shall be accompanied by the prescribed fee. (EC689/00) Page 10 Updated April 4, 2009 t c Oil and Natural Gas Act Permit, Lease and Survey System Regulations SCHEDULE A SCHEDULE A FORM 1 Bid Documents Lands specified in Call for Bid No. ................Total Area:..................Ha Bidder: ................................................................................................................................... Address for Service: ............................................................................................................... ................................................................................................................................................ ................................................................................................................................................ Amount of Bid: $............................. Amount of Deposit: $............................. c t Updated April 4, 2009 Page 11 SCHEDULE A Oil and Natural Gas Act Permit, Lease and Survey System Regulations FORM 2 Bid Documents Work Plan Year Description of Work Value Cumulative ($) Value ($) 1 2 3 4 5 6 7 (offshore only) 8 (offshore only) 9 (offshore only) signature: ................................................................................................................................ name: ...................................................................................................................................... title: ......................................................................................................................................... company: ................................................................................................................................ date: ........................................................................................................................................ phone: .................................................................................................................................... fax: .......................................................................................................................................... Page 12 Updated April 4, 2009 t c Oil and Natural Gas Act Permit, Lease and Survey System Regulations SCHEDULE B SCHEDULE B SURVEYS Diagram A - Sections within a Grid Area 100 90 80 70 60 50 40 30 20 10 49 48 47 46 45 44 43 42 91 81 71 61 51 41 31 21 11 1 Diagram B - Units within a Section M N O P L K J I E F G H D C B A c t Updated April 4, 2009 Page 13 SCHEDULE C Oil and Natural Gas Act Permit, Lease and Survey System Regulations SCHEDULE C GRID AREAS IN HECTARES Latitude of Northeast Corner of Grid Area 45 10’ 45 20’ 45 30’ 45 40’ 45 50’ 46 00’ Entire Grid Area 36,459 36,354 36,248 36,142 36,036 35,930 East or West Half 18,230 18,177 18,124 18,071 18,018 17,965 South Half 18,242 18,190 18,138 18,084 18,031 17,980 North Half 18,217 18,164 18,110 18,058 18,005 17,950 Section: 1 365 364 363 362 361 360 2 365 364 363 362 361 360 3 365 364 363 362 361 360 4 365 364 363 361 361 360 5 365 363 363 361 361 359 6 365 363 363 361 360 359 7 365 363 362 361 360 359 8 364 363 362 361 360 359 9 364 363 362 361 360 359 10 364 363 362 361 360 359 Latitude of Northeast Corner of Grid Area 46 10’ 46 20’ 46 30’ 46 40’ 46 50’ 47 00’ Entire Grid Area 35,823 35,717 35,609 35,501 35,393 35,285 East or West Half 17,912 17,858 17,805 17,751 17,697 17,643 South Half 17,925 17,872 17,819 17,764 17,710 17,656 North Half 17,898 17,845 17,790 17,737 17,683 17,629 Section: 1 359 358 357 356 354 353 2 359 358 357 355 354 353 3 359 357 356 355 354 353 4 358 357 356 355 354 353 5 358 357 356 355 354 353 6 358 357 356 355 354 353 7 358 357 356 355 354 353 8 358 357 356 355 354 353 9 358 357 356 355 354 353 10 358 357 356 355 353 352 (cid:13)Latitude of Northeast Corner of 47 10’ 47 20’ 47 30’ 47 40’ 47 50’ 48 00’ Grid Area Entire Grid Area 35,177 35,068 34,959 34,849 34,740 34,630 East or West Half 17,589 17,534 17,480 17,425 17,370 17,315 South Half 17,602 17,548 17,494 17,439 17,385 17,329 North Half 17,575 17,520 17,465 17,410 17,355 17,301 Section: 1 352 351 350 349 348 347 2 352 351 350 349 348 347 3 352 351 350 349 348 346 4 352 351 350 349 348 346 5 352 351 350 349 348 346 6 352 351 350 348 347 346 7 352 351 349 348 347 346 8 352 350 349 348 347 346 9 351 350 349 348 347 346 10 351 350 349 348 347 346 (EC689/00) Page 14 Updated April 4, 2009 t c