Presentation on theme: "Geoff Turner Terry Branscombe"— Presentation transcript:
1 Geoff Turner Terry Branscombe BC Petroleum and Natural Gas Regulations Seminar Presentation to CAPL October 22, 2013Geoff TurnerTerry BranscombePage 1.
2 PART 1 – MINISTRY UPDATES SEMINAR OUTLINEPART 1 – MINISTRY UPDATESMinistry Structure / Organization UpdateAcquiring Petroleum and Natural Gas (PNG) Tenure in BCResource Development UpdatesTenure Management UpdatesRoyalty Program UpdatePolicy and Regulatory UpdatesJobs and the EconomyPage 2.
3 PART 2 – TENURE MANAGEMENT SEMINAR OUTLINEPART 2 – TENURE MANAGEMENTResources for administratorsGeneral framework for tenureLand systemsSpacingRentalsGeological zones in BCTenuresPermits (Features)Drilling Licences (Features, Extensions, Earnings, Groupings)Leases (Features, Continuation Options, Land Plats)
4 PART 3 – GENERAL ADMINISTRATION SEMINAR OUTLINEPART 3 – GENERAL ADMINISTRATIONe-PaymentsTraining ResourcesPayment Types and when to use themTenure CancellationLetters of AuthorityInstruments Affecting TitleTransfers (assignments)EncumbrancesPooling AgreementsName Changes/Amalgamation
6 Assistant Deputy Minister MINISTRY STRUCTUREDeputy MinisterMinistry ofNatural Gas DevelopmentAssistant Deputy MinisterLiquefied Natural Gas InitiativesUpstream Development DivisionAssistant Deputy MinisterOil and Strategic Initiatives Division
7 UPSTREAM DEVELOPMENT DIVISION Assistant Deputy MinisterUpstream Development DivisionPolicy and Royalty BranchTenure and Geoscience Branch
10 PNG TENURE Tenure does provide: exclusive rights to the subsurface resourceright to apply to the OGC for activities approvalTenure does not provide:the authority to conduct any activities on lands (e.g., drilling)
11 DISPOSITION PROCESS12 sales per year106 day process
12 ADDITIONAL INFORMATION SOURCES Posting RequestsSubmitting a BidLink to Bidding and Disposition GuideDisposition Dates for
13 RESOURCE DEVELOPMENT UPDATES First Nations EngagementCommunity EngagementCaribou
14 FIRST NATIONS ENGAGEMENT Role of the CrownThe Crown has a fiduciary duty to consult First Nations about decisions which may impact their rights and, where possible, accommodate their interests.Role of the proponentBuild and maintain good relationships with First Nations in the areas you operate.
15 FIRST NATIONS ENGAGEMENT Monthly Referral ProcessInitial Impact AssessmentsResponsive to First Nation commentsDeferred ParcelsMeet to resolve area-specific issues – FSJ staffExample: Old Man Lily ParcelsShapefile and PDF map of currently deferred parcels:Strategic First Nations NegotiationsConsultation AgreementsStrategic Engagement AgreementsCurrent number of deferred parcels: 222 (as of Oct 1, 2013)
16 FIRST NATIONS ENGAGEMENT Emerging IssuesOpportunities to build landscape level impacts/Cumulative Effects into decisionsOutcome of the Dene Tha’ Judicial Review
17 COMMUNITY ENGAGEMENTReferral packages and discussions on deferred parcels with local governmentLandowner Notification ProgramFarmers’ Advocacy Office renewed
19 BOREAL CARIBOU RRAsIn June 2010, 500,000 hectares of boreal caribou habitat were set aside as “resource review areas” (RRAs) where no PNG tenure requests would be accepted for a minimum of five yearsFor more information, see Information Letter TACRD-10-10
20 BOREAL CARIBOU – UPDATES Radio collaring underway funded in part by industryNew ungulate winter ranges and wildlife habitat areas designated in May 2013 (Chinchaga herd)Establishment of operating practices to be applied to oil and gas activities within designated caribou habitat management polygonsConsultation completed with First Nations and stakeholders on the “Implementation Plan for the Ongoing Management of Boreal Caribou”
21 PEACE NORTHERN CARIBOU Provincial implementation plan has been completed for Peace Northern CaribouEstablished RRAs for high elevation winter ranges for Peace Northern Caribou HerdsPlanning requirements have been established for activities taking place in high elevation winter rangesWork underway to establish operating practices for low elevation habitat for the Peace Northern Caribou
23 eBUSINESS Integrated Petroleum System (iPS) iPS will transition 3 legacy applications to current technologyPetroleum Titles System (PTS)Petroleum Accounts Receivable System (PARS)Sales Parcel System (SPS)Launch has been postponed to make minor changes and fixeseBidding will be offered once industry consultation has taken place (expected in the new calendar year)
25 TARGETED ROYALTY PROGRAMS ChallengeSolutionWestern Canada sedimentary basin deepens towards the WestDeep Royalty Credit ProgramNew, conventional wells with lower productivityMarginal Royalty ProgramTight gas developmentUltra-marginal (tight gas) Royalty ProgramCoalbed gas potential development challengesCoalbed Methane Royalty Program“White spaces” and areas with limited infrastructure (roads/pipes) availableInfrastructure Royalty Credit ProgramHuge potential in new, remote, high-risk unconventional resourcesNet Profit Royalty Program
26 TARGETED ROYALTY PROGRAMS These programs can be combined in many cases, thus providing enough margin to move certain projects to economic territoryExample - a well that:is a road project (an infrastructure credit),is deep, andis marginalcan receive all the associated benefits for those programsMore information:
27 ROYALTY PROGRAMS Update Changes Announced as Part of Budget 2013Deep Well Credit – minimum 3% royalty payableSummer Drilling Credit Program cancelledMore information:2013 Infrastructure Royalty Credit Program$115.8 million in royalty credits supporting 12 new infrastructure projects in northeast BC, which will help the advancement of an LNG industryThe 2013 credits are expected to generate about $445 million in revenues for the province and over $320 million in new capital spending by industry
28 POLICY & REGULATORY UPDATES BC Tenure Working GroupReview of the PNG Act & RegulationsNew Policy Guides
29 BC TENURE WORKING GROUP The BC Tenure Working Group continues to meet regularly to discuss:Improved communicationLegislation and RegulationsOpportunities to work more efficiently and effectivelyEducational opportunitieseBusinessRecent meetings included discussions about:Posting and bidding processesFoundational concepts for tenure reformTenure terms and continuation
30 REVIEW OF THE PNG ACT & REGULATIONS Comments received in response to the Discussion Paper on the tenure provisions helped inform analysis and recommendationsProposed changes are intended to modernize the Act, streamline tenure administration and improve management of unconventional resource development within the tenure systemIn March 2012 the Ministry issued a report on progress for tenure holders regarding potential changesConsultations with industry, First Nations and other government agencies continued in 2012
31 REVIEW OF THE PNG ACT & REGULATIONS Feedback on the proposed changes from the Tenure Reform Task Group informed further analysis and consultation with the BC Tenure Working GroupIn addition to reviewing the tenure provisions, the Ministry is working on a framework for the management of carbon capture and storageThe Ministry is awaiting a decision on if and when changes will be madeOngoing consultation and analysis regarding some details that would be introduced through the regulations
32 NEW POLICY GUIDESPolicy guides will replace info letters as the main source of detailed information on BC tenure policy and legislationGuides are updated each time there is a change eliminating the need to refer to multiple info lettersGuides available online:Info letters will still be used for announcementsSubscribers will receive notifications when a guide is issued or updated (to subscribe, send a request to
33 NEW POLICY GUIDES Recently issued guides: Guidelines for Registering a Transfer of Subsurface Interest in TitleGuide to BC Petroleum and Natural Gas Act Lease ContinuationsUpcoming guides include:Guide to Bidding and Disposition of Crown Petroleum and Natural Gas RightsGuide to the Petroleum and Natural Gas Drilling Licence RegulationNatural Gas and Oil Tenure Rents, Fees and Penalties
36 NATURAL GAS STRATEGY Ensure an effective royalty regime Ensure Infrastructure is available to encourage investmentAmend the Petroleum and Natural Gas Act and regulationsNew Jobs for BCEngaging with First Nations and CommunitiesEnsuring environmental responsible development
37 LIQUEFIED NATURAL GAS (LNG) In September 2011, the Premier confirmed Provincial commitment to the development of LNG export capacity in BCThe announcement included commitments in four areas:Greater emphasis on the permitting and decision making processesSkills training and developmentInvestment and attractionInternational marketing
38 LNG UPDATEThe Premier made two trade missions to Asia to promote trade and cultivate business relationshipsBC hosted Canada’s first international LNG conference in February 2013The NEB has issued export licences to three LNG proponents and additional applications are before the NEB for reviewSeveral proponents have come forward with proposals for LNG facilities and transportation systemsMost recently, in response to the Province’s request for expressions of interest, four proponents submitted proposals for an LNG plant and marine export terminal at Grassy Point near Prince Rupert
39 PNG OPPORTUNITIESContinue to develop and implement strategies to make PNG tenure availableContinue to create and implement progressive and innovative strategies and approaches for effective policy, legislation and regulations that support a modernized tenure issuance and management systemContinue to provide an attractive investment environment through royalty and infrastructure programs
42 Tenure Management Resource List Tenure and Geoscience Branch homepage LegislationInformation LettersOther Publications (Guides and reference material)Links to:Petroleum Titles Online (PTO)Submit posting requestes for Crown dispositionOnline title searchese-PaymentsDataBC/GeoBCMap Viewer (iMap 2.0)Complete data warehouse of provincial GIS dataTenure in context of other geographic and land use information
44 Online Title Searches Getting there: Content: Navigate to PTO main page from the Branch homepage, or dial in: https://www.ptonline.gov.bc.caOn PTO main page, click “PTS Web” in left sidebarSupport:Content:Up-to-the minute title status and descriptions for active titlePrimary Term (years), Area (hectares), Key Dates: Issuance, Effective, ExpiryTracts – Lands and Rights heldGroupings (Drilling Licences)Ownership profileRental & Continuation HistoryTransfers and EncumbrancesSpecial Projects (OGC), Wells (UWIs), Unit Agreements
45 Online Tools and Support Petroleum Titles Online (PTO)File posting requestsSupport:e-Paymentshttps://epayments.gov.bc.caSupport:
46 Key Acts and Regulations Petroleum and Natural Gas ActGrid RegulationDrilling Licence RegulationFee, Rental and Work Requirement RegulationStorage Reservoir Regulation
47 Geography and Geology Dominion Land Survey (DLS) Petroleum Grid (NTS) Spacing AreasWell LocationsStratigraphy & Zones
48 DLS PNG Grid Regulation Schedule 1 Limited to Peace River Block TWPsRGEs 13 – 26 W6MSection size is as surveyed, not standard like AlbertaRefer to downloadable map entitled “Peace River Block Gas Spacing Units and Hectarage Map”Location: PNG Titles Branch > Other Publications
49 Petroleum Grid (NTS) PNG Grid Regulation Schedule 3 Applies everywhere the DLS does notBased on longitude and latitude, but customized for oil and gas managementSub-divisions achieve oil and gas spacing areas similar in size to DLSUnit areas defined in downloadable lookup tablesLocation: PNG Titles Branch > Other PublicationsGeothermal and coal tenures are also managed with Petroleum Grid system
50 Petroleum Grid (NTS) d-010-A/094-H-16 094-H-16 Blk A Unit 10 8° long.4° lat.Well location example:d-010-A/094-H-16Title description example:094-H-16 Blk A Unit 10
51 Petroleum Grid (NTS) d-010-A/094-H-16 094-H-16 Blk A Unit 10 Well location example:d-010-A/094-H-16Title description example:094-H-16 Blk A Unit 10
53 Other-than-Normal Spacing OGAA: Drilling and Production RegulationOTN’s are an OGC approvalPNG Act – section 65.1Generally larger than normal spacing areasSome are already declaredPeace River Block – Petroleum GridBC – YT, NWT, AB boundariesBC – USAProtected Areas1 OTN gas spacing = 1 gas spacing for calculating earnings from Drilling LicencesOGAA defines the target areas for gas spacing. When creating a special project the entire area may end up creating OTN. The OGC will decide the spacing area for projects.
57 Tenure Size (hectares) All tenure rentals are based on area, measured in whole hectaresPetroleum Grid (NTS) Unit“NTS Unit Areas” (Excel workbook; download)For NWT/YT and other boundary areas, call usPeace River Block (DLS)“Gas Spacing and Hectarage Map for the PRB” (PDF; download)Includes size of fractional spacing's on NTS/DLS boundaryDepicts lands in other-than-normal spacing areasRegardless of source, calculate area the sameSum individual source valuesKeep intermediate fractionsRound sum for entire title to nearest whole hectare
58 Tenure Size – NTSExercise; find the combined area of NTS Units of Block E in 094-H-06Map 94 EFGHGroup 5 to 8Block E F G HUnit 41-50Total6 X 69.8 or 418.8Rental Size: 419 ha.
59 Tenure Size – DLSExercise; find the total area of the two gas spacing areas outlined at rightOTN: = ha.Sec : infer 263.9Sliver is part of 94-A-5 Blk D. If in the next map sheet, NTS 94-A-8, you would use the NTS Unit Areas workbook for calculating NTS.Total= 514.0Rental Size: 514 ha.
60 Well IDs and Locations Well Authorization (WA) Simple 5-digit number assigned to each OGC well permitPlease use wherever possible in correspondenceUnique Well Identifier (UWI)16-digit code issued at spudExamplesDLS: W603NTS: 200D024H094H1604Digit 1: DLS (1) or NTS (2)Digit 2: Always zeroDigit 3: Sequence of the well at that bottom-hole locationValue of 1 never usedDigits 4-14: Approved (then actual) bottom-hole locationDigits 15-16: drilling or completion event sequenceFirst CE gets same code as its DEWell NameOperator(s), HZ, and surface location
61 Zone Designation System Zones are packages of one or more formations (marked in white on diagram)Defined by specific intervals on specific logs of a reference wellZone boundaries carefully selected to avoid disputes; primarily widespread markers in non- productive strata5-digit codeDigits 1-3: Zone seriesDigits 4-5: Geographic IDCode value increases as age decreasesAvailable for download as a PDF wall chart
63 Zone Designation System The Stratigraphic Chart illustrates standard geological formation names used in British ColumbiaOverlaid on the Stratigraphic Chart are major horizontal intervals, lying between white lines, each containing from one to several major geological formations. These horizontal bands represent slices of rock that are used in the standard Zone Designation System. Some intermediate or alternate bands are left out for readabilityStandard reference descriptions of geological intervals (“Zone Designations”) with well-chosen type wells are used to ensure consistency in the administration of rights
64 Zone Designation System In a petroleum and natural gas Lease, when hydrocarbons are found in any part of a standard Zone Designation layer, then the entire layer is eligible for lease continuationThe boundaries between layers are chosen at points where geological correlations are clear. Conflicts between companies over geological correlations, rights held, and vertical pooling are eliminated
69 Permits - Main Features A right to explore for oil and gasAvailable only by Crown salePostings up to one NTS block accepted, with causeOne year primary termTerm renewal requires annual exploration spendingActual exploration spending or cash-in-lieu paymentRates defined in Fee, Rental and Work Req. Reg.Renewal options and work requirements vary by class
71 DL - Main FeaturesA right to explore for oil and gas by drilling wellsNot a right to take production (for sale); testing OKAcquired only from Crown SalePostings: 1 – 36 gas spacing areasTerm is 3, 4, or 5 years; “Prescribed Area” (Schedule 2 of the DL Regs)Term may be extended, at least once, more depending on circumstancesSplits not allowed; but partial surrenders OKConvertible to Lease by drilling or groupingMay convert some GSAs to Lease for production and defer any unused entitlement to later in DL term
72 DL - Term Extensions Section 3(5) - “Standard Extension” One year periodAvailable once - only at end of primary termPre-requisite for some other extension types$500 fee; double rent ($7/ha)Written application not requiredApply from e-Payments Statement; do not use SubmissionAvailable only up to expiry date (NO GRACE PERIOD)
73 DL - Term Extensions Section 3(5.1) - “Special Extension” Available after term expiry or another extensionRenewable for one year or less, by applicationApproval is discretionaryDecisions will be based on policies in Information Letter TACRD-11-02Requires:Application submitted to the Director before expiryWA application filed with OGC at least 30 days before expiryStart of drilling is delayed by one of:Environmental or socio-economic studyPublic hearingPlanning or consultation processApplicationStandard DL rental ($3.50/ha) by ePayments Submission (not Statement)
74 DL - Term Extensions Section 3(5.3) - “Coal Bed Gas Extension” Applies only to land and rights within a coalbed gas project approved by the OGC under s.75 of OGAAAvailable only after standard extensionMay be used up to 5 timesRequires:Application submitted to the Director before expiryLands and zones remain subject to OGC special projectApplicationStandard DL rental ($3.50/ha) by ePayments Submission (not Statement)
75 DL - Term Extensions Sections 3(7) – “Drilling past expiry” Available only after the “standard” extensionTerm extended to the rig release date (for drilling operations)Requires:Drilling has reached 150m (from surface) at midnight on expiry dateDrilling is being conducted “diligently”Drilling interruptions may be allowed depending on circumstancesSection 3(10): Other DLs expiring after standard extension may be extended to the same rig release date by grouping with the DL extended under 3(7).Section 3(9): No other well may be started during extension, except in the event of mechanical failures in the first well.
76 DL - Grouping Section 4.1 Application: One DL must have, in the Director’s opinion, an earning well not previously used as an earning well for grouping or selectionAny number of qualified DLs may now be groupedTo qualify, a DL must lie within 4 km. of the DL to which the grouping well is associated.Verify using GIS measurement tools: DataBC, PTO Viewer, or contact us for written confirmation.Application:Submitted to Director before earliest expiry date of the DLs to be grouped.Written authority of one titleholder of each DL to be grouped when the applicant is neither the Payor nor a titleholder of all DLs in the proposed group.
77 Drilling Past Expiry Exercise: DL 1 is extended under 3(7); all DLs here reach the end of their s. 3(5) extension on the dates indicatedWhen does DL 1 expire?Dec 12Which of the five DLs qualify to be extended under section 3(10)?DL 4Why not DL 2?Expires after DL 1 extension endsWhy not DL 3?> 4 km from DL 1Why not DL 5?Expires before DL 1 is extendedExpires: Oct 19Expires: Oct 29Expires: Oct 29Spudded: Sep 5Rig Release: Dec 12Expires: Dec 15Expires: Oct 9
79 Lease Earnings Awarded in terms of gas spacing areas (GSA) and “zones” GSAs awarded depends on:Prescribed Area 1, 2, or 3When DL spans two or more Areas, earnings are based on the Area with the greatest earningsInformation Letter TITLES-05-03Combined lengths of drilling eventsLess any length drilled through rights held by lease that are not necessary for the purpose of evaluating the DLLicensee must designate one of the GSAs the earning well evaluatesA GSA may only be designated once during the life of the DL.
80 Lease EarningsZones awarded are to the base of the deepest zone "evaluated”If the well penetrates 2 or more DLsLicensee must nominate one to be the ‘drilled’ DLEarnings and grouping rights attach to ‘drilled’ DL only
81 DL Term – Prescribed Areas Primary TermMeasured WellboreLength (meters)Column 23 yearsColumn 34 yearsColumn 45 yearsless than 1001231 001 to 1 30041 301 to 1 500561 501 to 1 80081 801 to 2 100792 101 to 2 400102 401 to 2 600112 601 to 2 800122 801 to 3 000143 001 to 3 20013163 201 to 3 400183 401 to 3 60015203 601 to 3 800223 801 to 4 000244 001 to 4 200264 201 to 4 40017284 401 to 4 800304 801 to 5 2002531Over 5 20032Download from link in “Info Letters”Info Letter TITLES-05-03Link: “NEBC DL Boundary .pdf Map”
82 Earning Wells Definition: 3.1(1) A licensee may apply to the director to have a well designated as an earning well for a gas spacing area if another well has not been designated as an earning well for that gas spacing area.3.1(2) On application under subsection (1), the director may designate a well as an earning well for a gas spacing area if the wellis drilled in a spacing area all or part of which is in a location described in a drilling licence that is either in effect on the date of designation or ceased to be in effect not more than 60 days before the date of the designation, or is a well re-drilled in a spacing area formerly described in a permit, drilling licence or lease no longer in effect.Has generated well reports and well data, as defined in section 14 of the Oil and Gas Activities Act General Regulation, B.C. Reg. 274/2010, that, in the opinion of the director, sufficiently evaluate a zone in the gas spacing area.
83 Earning WellsA "redrilled" well refers to a “re-entered” well, so the work carried out may consist of one or more of:deepening the existing well to evaluate one or more underlying zonescompleting a previously uncompleted interval in the wellre-completing one or more intervals in the well in a manner that provides significant new information about the formationThe total wellbore length for re-entered wells is measured from surface to the base of the new bottom-hole location or from surface to the base of the deepest new completion interval, whichever is applicable
84 Earning Well Scenario A Drilling order does not matterEach well evaluates the same zonesOne well not an earning well; choice is applicant’sApplicant designates GSA1/ZoneA1st12nd2Zone AZone BGSA 1
85 Earning Well Scenario B Drilling order does not matterEach well drills a distinct ‘formation’, but in same zoneApplicant designates which well is the earning wellApplicant designates GSA1/ZoneA1st12nd2Upper legLower legZone AZone BGSA 1
86 Earning Well Scenario C Drilling order does not matter; both wells qualify as earning wellsWell #1 designates GSA/ZoneBWell #2 designates GSA/ZoneA1st12nd2Zone AZone BGSA 1
87 Earning Well Scenario D Drilling order does not matter; both wells qualify as earning wellsWell #1 designates GSA1/ZoneAWell #2 designates GSA2/ZoneA1t12nd2Zone AZone BGSA 1GSA 2
89 Earning Wells – “Evaluation” A selected Lease may include rights down to the base of the deepest geological zone “evaluated” by the earning wellThis standard is applied in a broad, exploratory sense The well must at least drill into and find significant or substantial new geological information about a zone. Typically, the information could establish that the well encountered a:wet reservoir; ortight reservoir; or,hydrocarbon-bearing reservoir
90 Earning Wells – “Evaluation” Alternately, evaluation may also mean determiningThe definitive absence of a reservoir; or,The geological character of a zone in a new areaThe existing state of exploration of a zone in a particular geographic area is an important factor, for example:If drilling takes place in a remote or wildcat exploratory area, or if little is known about the zone of interest, then smaller amounts of new information will be considered significant in the evaluation of the zoneSimilarly, a zone known to have a great degree of local geological variability will require only a small amount of new significant drilling information in order to be considered evaluated
91 Lease Selection Applications First, e-Payments Submission; then Application LetterCreate a Conversion type of SubmissionIf a grouping is needed, add each DL to be grouped to the SubFor each DL, create a row for each new Lease to be issued from that DL, with its expected area, in hectaresApplication Letter must include:The e-Payments Submission number in subject line
92 Lease Selection Applications Application Letter (continued)Include a table with rows for each earning well, containing:OGC Well Permit (WA)Rig release date (from drilling operations)Estimated total length of all eligible wellbore segmentsDo not include lengths drilled after leaving the Drilling Licence rightsExpected number of GSAs earnedName of the deepest formation “evaluated” by the wellDesignated GSA – location and zoneDesired configuration of LeasesUse legal descriptions that match formats used in the Drilling LicenceUse separate tracts for lands of different rights
93 Lease Configuration Basic restrictions on selected Leases: Must include all spacing areas to be placed on productionEach Lease must be located entirely within one DLMust not result in new split gas spacing areas, unless you have an oil well and want to split the gas spacing areaOptions for selected Leases:So long as leases share a common issuance date, and are selected simultaneously, earnings from two or more WAs may be combined, regardless of zones earned, or the originating DL
96 Leases A right to explore for and produce oil and gas Available from Crown SaleConverting Permits and Drilling LicencesSplit from another Lease (transfer)May be continued beyond initial primary term
97 Leases – Term Inside Area 1: 5 years Outside Area 1: 10 years A Lease overlapping both areas has a 5-year termPosting requests and Lease selections intersecting the boundary should be done carefully: Term is the shorter of 5 or 10 years if Lease straddles boundary
98 Leases – Continuations Several formsSection 62Section 61Section 61.1Section 58One year, in all casesGuides available online (“Other Publications” page)“Guide to BC Petroleum and Natural Gas Act Lease Continuations”"Recommended Technical Package Contents for Section 58 Applications"
99 s. 62 Continuation Continuation by Penalty Payment Year 1 $15.00 / HaYears 2 or 3 $25.00 / HaAvailable three times for any 10-year LeaseNo rights reversionNeed not be used in consecutive yearsApplication made through ePaymentsUse the statement when no other continuation types are anticipated for the Lease, orUse submission and written application when other continuation types (splits) are anticipated or desired for the Lease
100 s. 61 ContinuationContinuation by Drilling Commitment made Before ExpiryDrill one or more wells on Lease during continuation year, evaluating at least one zone held by that LeaseApplication Must be in Writing and Must be made Prior to ExpiryAvailable for any Lease that is expiringNo rights reversionMay be used more than once, but spacing area(s) of successful commitment wells will be split out under s.58Applies only to Lease(s) being drilledDirector may cancel Lease for non-performanceApplications made through e-PaymentsThe Act requires sending written application
101 s ContinuationContinuation for Disposal Well and Planning PurposesContinues spacing areas for existing disposal operations and spacing areas the Director believes will be required for effective future disposal, for example Coalbed Methane projects that advance across the landWater, CO2, frac fluids, waste fluidsShallow and deep rights revertSpacing areas included in projects approved under s.75 of the Oil and Gas Activities Act are not eligibleWritten application with supporting technical material to accompany e-Payments for first approvalOnce approved, application is by annual rental until further notice by Director
102 s. 58 Continuation Four types of continuation: 58(3)(a): Eligible Spacing Areas58(3)(b): Unit and Royalty Agreements58(3)(c): Work Programs58(3)(d): Establishment of a WellAll s.58 continuations subject to rights reversion: deep rights or zone specific (s.59)Leases approved under two or more s.58 sub- sections will be split accordingly
103 s. 58 Continuation Section 58(3)(b) - “unit or royalty agreements” Portions of Lease subject to Unit or Royalty AgreementsOnce approved, continuation is by rental payment until further notice; subject to annual review under the ActSection 58(3)(c) - “work programs”Must be designed to delimit a pool or field of oil or natural gasMay include multiple LeasesNot intended for multi-year exploration programs, depends on circumstances (e.g., access, scope)Section 58(3)(d) – “drilling incomplete”The drilling or work on the establishment of a well is incomplete on the expiry dateThe Director is satisfied that the drilling or work will continue
104 s. 58(3)(a) - Eligibilitys. 58(3)(a) – An Eligible Spacing Area is a spacing area that:Contains a “petroleum well” or “gas well”Is subject to an approved issued under s.75 of the Oil and Gas Activities Act by the Oil and Gas CommisssionThe Director believes is at least 50% covered by a designated land platThe Director believes contains a pool that may be adequately drained by a well in an adjacent spacing areaOnce approved, continuation is made by annual rental payment until further notice; subject to annual review under the Act
105 s. 58(3)(a) – Land PlatsDepicts where the Director of Petroleum Lands recognizes that a pool of natural gas or petroleum has been delimited through the exploration and development work of industryIllustrates, in map view, the gas or oil Spacing Areas delimited in a pool, and names the geological formation in which the pool is recognizedReferred to by combining the Tenure Area (oil or gas field name), Geological Formation, Sequence Letter, and Fluid Type (oil or gas), for example:TA DG (Inga Doig Phosphate ‘D’ Gas)
107 s. 58(3)(a) – Land PlatsLease continuation application process is simplified for Crown and industryExpertise of geological staff can be focused on Spacing Areas not yet recognizedFreely availableData download; or,View online (iMap tool at DataBC website)Pools are delimited by Control Points of hard and soft data:Wells posting hard results at specific locations2D Seismic line locations; 3D seismic survey gridsKnown geological formation characteristicsMid to long term production and pressure histories
108 s. 58(3)(a) – Land Plats Sources of Evidence Delimiting Land Plats: Industry applications for continuation interpreting the results of drilling, seismic and well evaluation workMinistry evaluations of drilling, log, sample, drillstem test, completion and production results, posted at the specific well locations, combined with geophysical evidence extending pools beyond well controlAnalogous wells, old and new, with similar propertiesEvaluations and approvals received from the OGCThousands of geophysical and geological interpretations on file from all Crown title holders, representing decades of information and analysisAll Analysed Spacing Area by Spacing Area
109 s. 58(3)(a) – Land PlatsClients that only submit a land plat and no technical package with their 58(3)(a) original application, or a contingent section 58(3)(c) application, will be notified of the land plat reduction by telephone and and given one opportunity to make their case (58A or 58C) within 10 working days of that contact, regardless of how much time has elapsed after expiry.
110 s. 58(3)(a) – ReversionLeases are now subject to one of two types of rights reversion: zone-specific or deep rights reversion. In either case, the existing Zone Designation System will be used to administer themWhat is Zone-Specific Retention (ZSR)?A ZSR-subject Lease is a PNG Lease that is a member of a chain of title originating with the purchase of a PNG title through a Crown sale held on or after March 29, 2007ZSR is designed to return to the Province, at the end of the primary term of a subject Lease, all the zones that do not contain identified oil or natural gas depositsAll other zones will revert to the Crown unless they can be continued under other applicable sections of the Act, including sections 58(3)(c) and (d) and sections 61 and 62. These sections allow continuation based on drilling, completions, work programs, delimiting pools, and the simple payment of a penalty
111 s. 58(3)(a) – Reversion Benefits of Zone-Specific Retention Increased investment opportunities for industryEarlier discovery and development of new oil and gas pools, leading to earlier revenues for both industry and the ProvinceIf well, geophysical, geological or engineering data shows that a pool of oil or gas exists in a zone in any spacing area, then it qualifies for continuation. This consideration is independent of the status of a wellThe zone may be behind pipe, and in some cases the well may be abandoned, but well information proves a pool exists.
112 s. 58(3)(a) – Zone Reversion Standards for Zone-Specific RetentionWell information, combined with existing geological knowledge, are usually sufficient to determine whether a zone contains hydrocarbonsModern well evaluation technologies, properly applied, are capable, in the vast majority of cases, of demonstrating the presence of hydrocarbonsAny remaining doubts should be resolved by completing the zone
114 s. 58(3)(c) General Features May include multiple Leases, even multiple target zones, and with different but relatively close expiry datesProposed work must, in the opinion of the division head, be designed to delimit one or more poolsApproved non-optional work must be fully completed during the term of the continuation.Contingent work must be started during the term of the continuation, e.g., contingent wells must be spuddedMajority of programs are one year only; exceptions may be considered due to very limited access or an unusually complex work programNon-performance jeopardizes future work programs
115 s. 58(3)(c)Application must include a cover letter on company letterhead, and include:A firm work commitment, e.g. “XYZ Corp. commits to carry out the following program of work: . . .”A clear description of where the work will take place in relation to the Leases included in the applicationThe locations and formation names of the pools that will be delimited by the work programTechnical package contentsMust demonstrate the current state of geologic knowledge of the pools to be delimited, and how the work is likely to further delimit those poolsMay include any technical material, such as public and proprietary well data, geological x-sections, isopachs, interpreted seismic, remote sensing results, and field studies
116 s. 58(3)(c)Where approved programs include seismic components (new or re-evaluated), an acceptable report of the geophysical results is required at the end of the continuation yearRefer to downloadable document entitled “Requirements for Affidavits and Reports”Location: “Other Publications” pageReports held confidential for 10 years, then deposited with thousands of similar studiesA cumulative index is published annually and available online from the same page
117 s. 58(3)(d)Designed to allow leaseholders to finish drilling or “establishing” a well that is clearly in progressMore scrutiny will be applied if the well has not been spudded by expiryIf the well drilled into or will drill into multiple Leases, all Leases may be approvedAll rights below the base of the deepest objective zone corresponding with the OGC well permit’s (WA) deepest “objective” formation are not included
120 ePayments – Overview Accepts rents, fees, and penalty payments Requires self-managed BCeID, electronic passport to BC GovMandatoryClient must initiate payment; not an auto debit systemKey components to remember: Payors, Statements, Submissions, Receipts, Refunds, SurrendersIssues refunds electronically, also mandatorye-Payments will not accept payments related to:Split Transfers of PNG LeasesPNG PermitsSection 72 AgreementsUnderground Storage or Geothermal tenure
121 ePayments – User Roles BCeID Profile Manager Appointments Company Administrator for each application accessed with BCeIDCompany Administrator (e-Payments)Assigns roles to other users; can perform function of any roleUsers may be assigned multiple rolesLand AdminstratorCreates and ‘opens’ submissionsPayment AdministratorInitiates payments from Statements or Open SubmissionsViewerRead-only access
122 Continuing your Tenure StatementsWhen written applications are not requiredUse one of the “Statements” screensPrimary TermContinuation/ExtensionLeasesSection 62, orSection 58(3)(a), 58(3)(b), or 61.1 when this would repeat the previous continuationDrilling LicencesSection 3(5)SubmissionsWhen written applications are required or to reduce title area by partial surrenderUse “Manage Expiring Titles” screen58(3)(a),(b) – first time58(3)(c),(d) – each time61 – each time61.1 – first timeConversions to Lease3(5.1) – each time3(5.3) – each time
123 Submission payments Distinct from payments made from a Statement Used when written applications are requiredCertain DL extension and Lease continuation typesAll DL groupings and lease conversionsWhen requested by the CrownAn electronic “bucket” to hold a group of tenures related by their inclusion in a common application for extension, continuation, or conversionDesigned to facilitate application tracking by industry and reduce need to contact Branch staff for updatese-Payments generates a Submission ID number; please reference it in all application correspondenceTracking with Milestones and Communication Log
124 Managing Rental Deadlines Rental “Default Notices” were eliminated July 1, 2010Manage expiries from the All Titles screene-Payments sends a monthly reminder to view your statementsOverdue titles are shown in purple and fall off ePayments 61 days past expiry
125 Late PenaltiesLate penalties are automatically calculated once the anniversary date has passedLeasesDay %Day – 3.0 %Drilling LicenceDay 1-60 $500.00
126 Cancellations Request from All Titles screen in ePayments Ministry will cancel 60 days after anniversary date and send confirmationCheck title to be cancelledWhile the title remains visible, the cancellation request can be reversed with the Cancel Request function buttonPlease use signed letters for tenure types not managed through e-Payments (may require letter of authorization from a titleholder)Page 126.
127 Letters of AuthorityLetter of Authorization’s are needed when you are neither an owner or payorRequired for Titles not covered by e-PaymentsFor e-Payments, the registered Owner’s intent is implied by authorizing the Designated Payor to make decisions on the title
128 Training Information Online Help Follow link in Resources slide Getting StartedSelf-TutoringFAQsQuick Reference Tool
130 Power-of-Attorney No fees required Cover letter is required Power of Attorney documents should have original signatures or be a Certified True CopyThe document must clearly state the types of document that the person/position is authorized to sign on behalf of the companyA registration number will be assigned to the company upon the initial registration, this number will be used for all future registrations
131 Partnerships Permitted to hold title in BC Partnership needs to provide documentation showing the partnership structureDocumentation must be signed by all parties of the partnership
132 Title Transfers New Guide available from “Other Publications” page Guidelines for Registering a Transfer of Subsurface Interest in Title (see Information Letter OGD-13-01)No fees requiredCover letter must accompany documentsTransfers are considered effective from the date received, not the execution dateStale-dated transfers are acceptableChanges are recorded against title specified in the documentOnly transfers of undivided interest are permissibleSignatures in counterpart are acceptableAny color ink acceptable for signaturesElectronic Signatures and signature stamps are not acceptable
133 Title Transfers Transfer documents must: Be originalsList all title numbers to be transferredBe executed by all transferors and all transfereesSubsequent edits must be initialled by all partiesA properly “executed” document is:Dated, andSigned by a signing officer of the firm or by a person with a Power of Attorney registered with Titles, Aboriginal and Corporate Relations Division, andWitnessed or affixed with a corporate seal
134 Title TransfersSchedules are permitted and should include only the title number and the company reference numberTransfer documents must specify interest as a percentage of the undivided interest8 decimal places (max)Interests displayed as percentages of percentages are not acceptable:Interest amounts are not required on transfer of all a companies interest in a title
135 Title TransfersSample forms available from the Division website, no prescribed form necessaryInformation Letter EMD-008Must not contain implied or explicit encumbrances, eg: “subject to” clauseDo not send title documents with your transfer requestUse full legal name of companiesIf legal descriptions must be included for corporate reasons, they:Must be identical to registered legal descriptionMust include complete tract rightsPage 135.
136 Split TransfersA procedure to divide one lease into two or more leasesLeases only$ fee for each new lease to be issuedLeases may be divided by:Surface hectaresStratigraphicA combination of both
137 Split TransfersAll criteria applicable to simple transfers are applicable to split transfers, plus:“in and to a portion of….” must be used on the transfer documents”Legal descriptions of the transferred portion, including the rights held by that portion, must be specifiedMust not divide gas spacing areas containing gas wellsMay divide gas spacing areas if:Contains an oil well; orSpacing area already splitPage 137.
138 Pooling Agreements Purpose – joint development of a spacing area Recorded as an ‘encumbrance’ in the titles registry (will appear online in title searches)Letter contents:Name all title holdersTitle numbersWell authorization No.UWI of wellDate of Pooling AgreementSignature of all title holders
139 Encumbrances Information Letter EMD02-01 A claim or lien placed on a title by a third-partyNOT a legal registry; information purposes onlyEncumbrances do not restrict the application of any provision of the Petroleum and Natural Gas ActExamples of types of documents:Bank Act assignmentDeed of TrustDebentureMortgageBuilder’s Lien
140 Recording Encumbrances Single one-time fee:$50.00 per title per encumbranceIncludes any partial or full discharge feesRequests must include:Letter of instruction and feeState the type of encumbranceState the full legal names of the companies involvedEncumbrance documentOriginal or certified true copyDocument must be dated and signed by a signing officer of the company holding the encumbrance
141 Discharging Encumbrances Requests must:Be dated and signed by a signing officer of the company holding the encumbranceInclude original encumbrance registration numbersState the type of encumbranceState full legal names of the companies named in the encumbranceInclude the date of the original encumbrance registrationInclude the date of the encumbranceIndicate if the discharge is full or partialList only active title numbers to be dischargedOriginal signatures or certified true copyEach encumbrance must be discharged with a separate document
142 Copies of Encumbrances Requests for copies of encumbrances can be sent by faxFax: (250)Fees – minimum charge of $10.00, or .75 cents per page whichever is greater, an invoice will be sent with the documentsWe will copy only the first 6 pages of the document plus the signature page; additional pages may be accessed and copied on-site by an authorized agent.Return by fax or up to 50 pages, by collect courier or mail – include your courier name and account number with your request
143 Name Changes & Amalgamations Requests must include:May be sent by mail, fax orCopy of certificate and articles of amendmentPhotocopies acceptableChanges are only recorded against “active” titleAll federal and provincial certificates are accepted where:Jurisdiction and registration numbers are includedFull legal names of the parties are used
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