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Ministry of Energy & Mines Page 1. Oil & Gas Tenure Update 2004.

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Presentation on theme: "Ministry of Energy & Mines Page 1. Oil & Gas Tenure Update 2004."— Presentation transcript:

1 Ministry of Energy & Mines Page 1. Oil & Gas Tenure Update 2004

2 Ministry of Energy & Mines Page 2. Oil & Gas Tenure 2004 Oil & Gas Tenure 2004 TOPICS TOPICS MISCELLANEOUS POLICY CHANGES PERMIT, FEE AND WORK REQUIREMENT REGULATION CHANGES DRILLING LICENCE REGULATION CHANGES ZONE RETENTION (SHALLOW RIGHTS REVERSION) PETROLEUM TITLES ONLINE PROJECT

3 Ministry of Energy & Mines Page 3. Oil & Gas Tenure 2004 MISC. POLICY CHANGES Document Execution Requirement to return executed tenure documents rescinded. Issue date Documents now dated day after sale. DL Term Extensions for CBG Projects 5 one-year extensions available for CBG projects Single Tenure Issuance Fee - June 1/04 fees New $500 tenure issuance fee cover future transfers and miscellaneous fees

4 Ministry of Energy & Mines Page 4. Oil & Gas Tenure 2004 PERMIT, FEE AND WORK REQUIREMENT REGULATION CHANGES Revised rental rates in effect June 1, 04 Revised work requirements rates under review

5 Ministry of Energy & Mines Page 5. Oil & Gas Tenure 2004

6 Ministry of Energy & Mines Page 6. Oil & Gas Tenure 2004 New Permit Fees, Rental and Work Requirements New Rental Schedule PermitYearsYears Class1 – 56+ A,B,C,D$1.05$1.75 (all)

7 Ministry of Energy & Mines Page 7. Oil & Gas Tenure 2004 New Work Schedule PermitYearsYears Class1 – 56+ A, B$5.00$20.00 C, D$3.00$10.00 Proposed Permit Work Requirements

8 Ministry of Energy & Mines Page 8. Oil & Gas Tenure 2004 DRILLING LICENCE REGULATION CHANGES Administration Term Groupings Lease Earnings

9 Ministry of Energy & Mines Page 9. Oil & Gas Tenure 2004 Administration $500 reinstatement fee Rescind requirement for a written posting request A single late rental payment fee of $500 Rescind requirement to publish tenure conditions in the BC Gazette Clarify process for Production from Drilling Licence i

10 Ministry of Energy & Mines Page 10. Oil & Gas Tenure 2004 Term (Applies to new drilling licences only) Clarify extension provisions 3 year term boundary - no change 4 year term boundary – Fort Nelson - Liard 5 year term boundary – balance of Province

11 Ministry of Energy & Mines Page 11. Oil & Gas Tenure 2004

12 Ministry of Energy & Mines Page 12. Oil & Gas Tenure 2004 Grouping Rescind requirement for oil or gas or well Allow licences to be grouped for each qualifying well Re-entered wells to qualify as grouping wells Grouping distance changed from 4K to one gas spacing area

13 Ministry of Energy & Mines Page 13. Oil & Gas Tenure 2004 Lease Earnings Separate earning schedule for each term area scaled to recognize risk Earnings defined as gas spacing areas Earnings based on combined well bore length of all drilling events Selection rules more flexible

14 Ministry of Energy & Mines Page 14. Oil & Gas Tenure 2004

15 Ministry of Energy & Mines Page 15. ZONE RETENTION

16 Ministry of Energy & Mines Page 16. Oil & Gas Tenure 2004 ZONE RETENTION Why is BC Considering Zone Specific Retention ? Acceleration of activity would lead to earlier new pool discoveries with very positive revenue implications for both industry and the province. Larger contiguous blocks of land would become available providing economies of scale for development of marginal plays. Accessible land tenure is a competitiveness issue. Our tenure system must evolve in a maturing basin.. ZSR has been requested by a significant number of industry clients.

17 Ministry of Energy & Mines Page 17. Oil & Gas Tenure 2004 BC implemented Deep Rights Reversion in 1985, following Alberta. Acknowledged benefits to industry and provinces. Shallow Rights Reversion or Zone Specific Retention is the next logical step. February 2003: Titles staff began first consultation with cross section of clients in Calgary. October 2003: Brian Scarfe of BriMar Consultants completed economic analysis showing significant benefits to industry and BC. Economic Considerations

18 Ministry of Energy & Mines Page 18. Oil & Gas Tenure 2004 Cretaceous and Triassic zones are approaching maturity in extensively drilled areas of BC. Significant new pools can still be discovered in these formations. A new fiscal regime for low productivity wells adds to the incentive to find new pools. Geology

19 Ministry of Energy & Mines Page 19. Oil & Gas Tenure 2004 Substantial benefits to industry and BC if activity is brought forward by as much as five years. Example: Expected Net Present Values to industry for the Gething play trend would increase by 62% over the case with no ZSR (full cycle netback value to producers at 10% real discount rate). Public NPVs for royalties, other provincial revenues and federal tax would increase by about 28% (5% public discount rate). Analysis Results

20 Ministry of Energy & Mines Page 20. Oil & Gas Tenure 2004 Previous consultation showed ZSR may be acceptable to industry if implemented: On a “go forward” basis (original proposal included current tenure); Clear technical criteria in place to retain secondary undeveloped productive zones Earliest implementation in 6 years Manageable administrative burden Consultation

21 Ministry of Energy & Mines Page 21. Oil & Gas Tenure 2004 Leases only, on a “go forward” basis. (new leases) Implementation no sooner than six years from now. No major changes to posting requests: New tenures would continue to convey rights to pre- specified zones, including “all available rights”. Notification one year before end of primary term specifying zones that can be retained. Proposed Approach

22 Ministry of Energy & Mines Page 22. Oil & Gas Tenure 2004 Consultation with industry on technical retention criteria before implementation. Any reasonable indication of productive potential should be acceptable to retain a specific zone – for example, log analysis, DST, mud log. Goal is to accelerate development, not retrieve land. Proposed Approach

23 Ministry of Energy & Mines Page 23. Oil & Gas Tenure 2004 Meet with CAPP BC Committee May/04 Review options Final Decision on whether to proceed by June 30/04 Next Steps

24 Ministry of Energy & Mines Page 24. PETROLEUM TITLES ONLINE

25 Ministry of Energy & Mines Page 25. Oil & Gas Tenure 2004 PETROLEUM TITLES ONLINE WEB based petroleum titles transactions Joint Development Project MEM/MSRM Links to New Integrated Land Registry under development

26 Ministry of Energy & Mines Page 26. Oil & Gas Tenure 2004 PETROLEUM TITLES ONLINE Phase 1 - Phase 1 - Web Enabled Map Viewer Phase 2 - Phase 2 - Sale Notice Maps Phase 3 - Phase 3 - Posting Requests Online

27 Ministry of Energy & Mines Page 27. Oil & Gas Tenure 2004 Phase 1 Development of map query tool Petroleum Titles NE BC Title Search Function Title Owner Number Term Issue date Legal Description

28 Ministry of Energy & Mines Page 28. The Petroleum Titles On-Line Project is a joint initiative being developed by the Ministry of Energy and Mines (MEM) and the Ministry of Sustainable Resource Management (MSRM) to facilitate petroleum tenure-related transactions through the internet. Click on the links below to search for existing titles or parcels requested for sale. Petroleum Oil & Gas Tenure 2004 Find Parcels Offered for Sale Find Petroleum Active Titles Find Parcels Requested for Sale Petroleum Title Online

29 Ministry of Energy & Mines Page 29.

30 Ministry of Energy & Mines Page 30. Oil & Gas Tenure 2004 Phase 2 Web based maps for sale notice and results reports Will display surface lots for improved land owner notification and consultation

31 Ministry of Energy & Mines Page 31. Oil & Gas Tenure 2004

32 Ministry of Energy & Mines Page 32. Oil & Gas Tenure 2004

33 Ministry of Energy & Mines Page 33. Oil & Gas Tenure 2004

34 Ministry of Energy & Mines Page 34. Posting Online Oil & Gas Tenure 2004 Phase 3

35 Ministry of Energy & Mines Page 35. Oil & Gas Tenure 2004

36 Ministry of Energy & Mines Page 36. Oil & Gas Tenure 2004 Registration and Security Only able to view own requests up to closing data of sale Access provided through electronic registration with BCeID

37 Ministry of Energy & Mines Page 37. Oil & Gas Tenure 2004

38 Ministry of Energy & Mines Page 38. Oil & Gas Tenure 2004

39 Ministry of Energy & Mines Page 39. Oil & Gas Tenure 2004

40 Ministry of Energy & Mines Page 40. Oil & Gas Tenure 2004

41 Ministry of Energy & Mines Page 41. Oil & Gas Tenure 2004

42 Ministry of Energy & Mines Page 42. Oil & Gas Tenure 2004

43 Ministry of Energy & Mines Page 43. Oil & Gas Tenure 2004

44 Ministry of Energy & Mines Page 44. Oil & Gas Tenure 2004

45 Ministry of Energy & Mines Page 45. Oil & Gas Tenure 2004

46 Ministry of Energy & Mines Page 46. Oil & Gas Tenure 2004 Vision A spatially enabled, efficient and accessible electronic register of all legal interests in Crown and private land and resources, which serves the business needs of a diversity of users and clients. Being Piloted in the Northeast for implementation by March 2005.

47 Ministry of Energy & Mines Page 47. Oil & Gas Development Strategy Cameron Lewis Director Oil and Gas Policy


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