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British ColumbiaMinistry of Energy and MinesOctober 18, 2011
BC PETROLEUM AND NATURAL GAS (PNG)
REGULATIONS SEMINAR
Presentation to CAPLOctober 18, 2011
BC PETROLEUM AND NATURAL GAS (PNG)
REGULATIONS SEMINAR
Presentation to CAPLOctober 18, 2011
May Mah-Paulson Terry Branscombe Dave Richardson
Page 1.Page 1.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
SEMINAR OUTLINESEMINAR OUTLINE
PART 1 – MINISTRY UPDATES
Ministry Structure / Organization Update
Acquiring Petroleum and Natural Gas (PNG) Tenure in BC
Resource Development Updates
Tenure Management Updates
Royalty Program Update
Policy and Regulatory Updates
Jobs and the Economy
Page 2.Page 2.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
SEMINAR OUTLINESEMINAR OUTLINE
PART 2 – TENURE
Resources for Tenure Managers
Introduction to BC’s land and zone systems
BC’s Tenure Options
Permits
Drilling Licences• Extensions, Groupings and Conversions
• Evaluation of Zones in Earning Wells
Leases• Land Plats
• Continuation Options
• Zone Specific Retention
Page 3.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
SEMINAR OUTLINESEMINAR OUTLINE
PART 3 – GENERAL ADMINISTRATION
e-Payments
Transfers, Encumbrances and Related Instruments
Page 4.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
MINISTRY STRUCTUREMINISTRY STRUCTURE
Page 5.
Deputy MinisterMinistry of
Energy and Mines
Executive LeadTitles and Corporate Relations Division
Assistant Deputy Minister
Oil and Gas Division
Assistant Deputy Minister
Mines and Mineral Resources Division
Assistant Deputy Minister
Electricity and Alternative Energy
Division
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
TITLES & CORPORATE RELATIONS DIVISIONTITLES & CORPORATE RELATIONS DIVISION
Page 6.
Executive LeadTitles and Corporate Relations Division
Corporate Services Branch
Petroleum & Natural Gas Titles Branch
Corporate Policy, Planning &
Legislation Branch
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
PNG TITLES BRANCHPNG TITLES BRANCH
Page 7.
May Mah-PaulsonExecutive DirectorPetroleum & Natural Gas Titles Branch
Terry BranscombeSenior Tenure Management
Advisor
Debbie FischerDirector
Tenure & Revenue Management
Garth Thoroughgood
DirectorResource
Development
Dave RichardsonManagerGeology
Chris BlaneyManager
Crown Sale & GIS Services
Geoff TurnerDirector
Policy & Planning
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
ACQUIRING PNG TENURE IN BCACQUIRING PNG TENURE IN BC
Page 8.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
PNG TENUREPNG TENURE
Page 9.
Tenure does provide:exclusive rights to the subsurface resourceright to apply to the OGC for activities approval
Tenure does not provide:the authority to conduct any activities on lands (e.g., drilling)
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
DISPOSITION PROCESSDISPOSITION PROCESS
Page 10.
12 sales per year
106 day process
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
ADDITIONAL INFORMATION SOURCESADDITIONAL INFORMATION SOURCES
Posting Requests
http://www.empr.gov.bc.ca/Titles/OGTitles/SalesNotices/Pages/Instructions.aspx
Submitting a Bid
http://www.empr.gov.bc.ca/Titles/OGTitles/InfoLetters/IssueDate/Pages/TACRD-11-03.aspx
Disposition Dates for 2011-2012
http://www.empr.gov.bc.ca/Titles/OGTitles/InfoLetters/IssueDate/Pages/TACRD-11-06.aspx
Page 11.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
RESOURCE DEVELOPMENT UPDATESRESOURCE DEVELOPMENT UPDATES
Page 12.
First Nations Engagement
Community Engagement
Boreal Caribou
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
FIRST NATIONS ENGAGEMENTFIRST NATIONS ENGAGEMENT
“PNG Tenure 101” Presentations to Chief & Council and Lands Staff
Responsive to First Nation comments
Provide more detailed mapping and information for specific sites
Meet to resolve area-specific issues
Page 13.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
TREATY 8 CONSULTATION PROCESS AGREEMENTS (CPAs)TREATY 8 CONSULTATION PROCESS AGREEMENTS (CPAs)
To assist in the First Nations’ capacity to review and respond to oil and gas activity referrals
A number of Treaty 8 CPAs expired March 31, 2011
BC’s Ministry of Aboriginal Relations and Reconciliation is leading the negotiations for new Treaty 8 CPAs
The BC Oil and Gas Commission has developed Interim Consultation Procedures to guide consultation where there is no signed CPA in effect with a Treaty 8 First Nation
http://www.bcogc.ca/firstnations/consult.aspx
Page 14.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
COMMUNITY ENGAGEMENTCOMMUNITY ENGAGEMENT
Landowner Notification Program
Forum for community engagement
Farmers’ Advocacy Office
Page 15.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
BOREAL CARIBOU RRAsBOREAL CARIBOU RRAs
In 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 years
For more information, see Information Letter TACRD-10-10
http://www.empr.gov.bc.ca/Titles/OGTitles/InfoLetters/IssueDate/Pages/TACRD-10-10.aspx
Page 17.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
BOREAL CARIBOU – UPDATESBOREAL CARIBOU – UPDATES
August 2011
Ministry of Environment (MOE) publicly released the “Implementation Plan for the Ongoing Management of Boreal Caribou”
Province initiated engagement with First Nations to discuss implementation activities
Industry supportive of a collaborative approach in implementing the Plan, including an industry funding model
September 2011 – MOE legally established environmental objectives for boreal caribou (Wildlife Habitat Areas and Ungulate Winter Ranges) which must be considered by the BC Oil and Gas Commission when issuing a permit
Page 18.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
BOREAL CARIBOU – NEXT STEPSBOREAL CARIBOU – NEXT STEPS
Consultation with First Nations and stakeholders on the “Implementation Plan for the Ongoing Management of Boreal Caribou”
Establishment of habitat management polygons for the Chinchaga boreal caribou range
Establishment of operating practices to be applied to oil and gas activities within designated caribou habitat management polygons
Page 19.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
TENURE MANAGMENT UPDATESTENURE MANAGMENT UPDATES
Page 20.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
ACTIVE PNG TENUREACTIVE PNG TENURE
Page 21.
2011 (to Sept)
2010 (to Dec) 2009 (to Dec)
Active PNG Tenure (all types)
14,626
14,637
14,710
Drilling Licences:
- Leases converted from Licence 105 288 284 - Average turnaround (days) 64 109 122
Leases:
- New s.58(3)(a) continuations 389 377 283 - New s.58(3)(c) continuations 53 54 41 - New s.61 continuations 11 3 18
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
GEOLOGYGEOLOGY
Land Plats
Zone Specific Retention
New Zone Designations
Page 22.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
eBUSINESSeBUSINESS
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)
May 2012 – Completion of application delivery and integration testing
September 2012 - Production launch, including eBidding
ePayments
New service provider
To enhance performance and response time, all code is being reviewed and rewritten, if necessary
Page 23.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
ROYALTY PROGRAM UPDATEROYALTY PROGRAM UPDATE
Page 24.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
TARGETED ROYALTY PROGRAMSTARGETED ROYALTY PROGRAMS
What was the challenge? What was the solution?
BC drilling activity very concentrated during winter months, when ground frozen
Summer Royalty Credit Program
Western Canada sedimentary basin deepens towards the West
Deep Royalty Credit Program
New, conventional wells with lower productivity
Marginal Royalty Program
Tight gas development Ultra-marginal (tight gas) Royalty Program
Coalbed gas potential development challenges
Coalbed Methane Royalty Program
“White spaces” and areas with limited infrastructure (roads/pipes) available
Infrastructure Royalty Credit Program
Huge potential in new, remote, high-risk unconventional resources
Net Profit Royalty Program
Page 25.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
TARGETED ROYALTY PROGRAMS (CONT’D)TARGETED ROYALTY PROGRAMS (CONT’D)
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 drilled in the “summer”, is deep, and is marginal…
…can receive all the associated benefits for those programsFor more information:
http://www.empr.gov.bc.ca/OG/oilandgas/royalties/Pages/default.aspx
Page 26.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
POLICY & REGULATORY UPDATESPOLICY & REGULATORY UPDATES
Page 27.
Industry Engagement
New Policies & Information Letters
Hydraulic Fracturing & Disclosure
Review of the PNG Act & Regulations
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
INDUSTRY ENGAGEMENTINDUSTRY ENGAGEMENT
In May 2008, the BC Tenure Working Group was established with participants from both industry and government. The Working Group continues to meet regularly to discuss:
Improved communication
Legislation and Regulations
Opportunities to work more efficiently and effectively
Educational opportunities
eBusiness
Shared Principles have been developed to help guide discussions around policy, legislation and regulation changes
Page 28.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
NEW - POSTING LARGERPNG LEASESNEW - POSTING LARGERPNG LEASES
As of February 2011, the Ministry no longer limits lease posting size to an area of one gas spacing area
All posting requests will continue to be evaluated on a case-by-case basis and the Ministry may request written justification to support the request
For more information, see Information Letter TACRD-11-01
http://www.empr.gov.bc.ca/Titles/OGTitles/InfoLetters/IssueDate/Pages/TACRD-11-01.aspx
Page 29.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
NEW - SECTION 3(5.1) DRILLING LICENCE EXTENSION POLICYNEW - SECTION 3(5.1) DRILLING LICENCE EXTENSION POLICY
Policy developed in February 2011 which includes a set of factors the Ministry will consider in evaluating extension requests under s3(5.1)
For more information, see Information Letter TACRD-11-02
http://www.empr.gov.bc.ca/Titles/OGTitles/InfoLetters/IssueDate/Pages/TACRD-11-02.aspx
Page 30.
DL Regulation, Section 3(5.1), “The minister may grant one or more extensions of a drilling licence each for a period of one year or less if
(a) an application is made to the director before the end of the current term of the licence and is accompanied by rental of $3.50 per ha a year, (b) an application to drill an earning well has been made to the commissioner at least 30 days before the end of the current term of the licence, and (c) drilling of an earning well has been delayed pending completion of
(i) an environmental or socioeconomic study, (ii) a public hearing, or (iii) a planning or consultation process.”
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
REVISED - BIDDING PROCEDURESREVISED - BIDDING PROCEDURES
The “Bidding Procedures for Dispositions of Crown Petroleum and Natural Gas Rights” were revised in April 2011
Bid letters must include the total amount tendered (including fee, rent and bonus)
For more information, see Information Letter TACRD-11-03
http://www.empr.gov.bc.ca/Titles/OGTitles/InfoLetters/IssueDate/Pages/TACRD-11-03.aspx
Page 31.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
NEW - HYDRAULIC FRACTURING AND DISCLOSURENEW - HYDRAULIC FRACTURING AND DISCLOSURE
The online registry, announced in September 2011, supports the Ministry’s goal of creating a more open and transparent government
It will be accessible to everyone, allowing anyone interested to search for the locations of where hydraulic fracturing activities are taking place, and for detailed information about the practices and additives used during these activities
The site will closely mirror the U.S. version known as FracFocus.org
Public disclosure will be mandatory and enforced
Page 32.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
REVIEW OF THE PNG ACT & REGULATIONSREVIEW OF THE PNG ACT & REGULATIONS
The Petroleum and Natural Gas Act (PNG Act) has not had an overall review since the late 1980s
Due to significant technological advances allowing the development of unconventional PNG resources, the implementation of the Oil and Gas Activities Act and emergent environmental issues, the Ministry has decided that a full review of the PNG tenure system within the PNG Act and regulations is warranted at this time
Page 33.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
DISCUSSION PAPERDISCUSSION PAPER
To seek input from interested parties regarding what changes to the tenure provisions of the PNG Act and regulations are required to improve the PNG tenure system
Comments received in response to the discussion paper will be used to help inform the proposal for future amendments to the PNG Act and regulations
The discussion paper was made publicly available on September 15, 2011
http://www.empr.gov.bc.ca/Titles/OGTitles/OtherPublications/Documents/PNG%20Tenure%20Discussion%20Paper.pdf
Submission deadline for comments - October 17, 2011
Page 34.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
NEXT STEPSNEXT STEPS
The Ministry will be compiling a list of suggested changes to the PNG tenure system
Analyses will be conducted on the suggested changes to assess whether they will help meet the provincial government’s direction and the Ministry’s objectives for the BC energy sector
Suggested changes to the PNG tenure system may be accommodated by a change to the PNG Act, one of its regulations or a change in Ministry policy that does not require any change to the Act or its regulations
Page 35.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
JOBS & THE ECONOMYJOBS & THE ECONOMY
Page 36.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
CROWN SALESCROWN SALES
Page 37.
2011 (to Sept)
2010 (to Sept) 2010 (to Dec)
# parcels offered 243 549 615 # parcels disposed 201 481 543 # hectares offered 150,212 367,269 414,375 # hectares disposed 121,165 335,094 381,132 Total tender bonus $ 123,189,109 $ 780,550,974 $ 844,414,026 Average price/hectare $ 1,017 $ 2,329 $ 2,216
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
LIQUEFIED NATURAL GAS (LNG)LIQUEFIED NATURAL GAS (LNG)
In September 2011, the Premier confirmed Provincial commitment to the development of LNG export capacity in BC
The announcement included commitments in four areas:
Greater emphasis on the permitting and decision making processes
Skills training and development
Investment and attraction
International marketing
Page 38.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
PNG OPPORTUNITIESPNG OPPORTUNITIES
Continue to develop and implement strategies to make PNG tenure available
Continue to create and implement progressive and innovative strategies and approaches for effective policy, legislation and regulations that support a modernized tenure issuance and management system
Continue to provide an attractive investment environment through royalty and infrastructure programs
Page 39.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Tenure ManagementTenure Management
Resources AvailablePublished Information• Legislation and Regulations – QP• Land Plats (GIS shapefiles) – DataBC• DLS Spacing Areas and Hectares maps – QP• Branch website
Online Tools• Petroleum Titles Online (PTO)
– Postings– Map creation and viewing– PTS Web – title searches – FREE
• e-Payments
Page 42.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
PTS Web – Title SearchesPTS Web – Title Searches
www.ptonline.gov.bc.ca
Title number and type
Term and Area
Key Dates: Issuance, Effective, Expiry
Tracts – Lands and Rights held
Ownership
Continuation History
Transfer History
Encumbrance History
Special Projects, Wells, Units, Groupings
Page 43.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Online Tools – PNG Titles HomeOnline Tools – PNG Titles Home
Page 44.
Subscription Services (e-mail)
Posting MapsSale NoticesSale ResultsInfo Letters
Acts & RegsPublicationsPTO & PTS WebePayments
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Acts and RegulationsActs and Regulations
Petroleum and Natural Gas ActGrid Regulation
Drilling Licence Regulation
Fee, Rental and Work Requirement Regulation
Storage Reservoir Regulation
Page 45.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Online ResourcesOnline Resources
Petroleum Titles Online (PTO)http://www.ptonline.gov.bc.ca
PTS Web (Petroleum Titles System)From PTO, click “Title Searches (PTS Web)” link
ePaymentshttps://epayments.gov.bc.ca
Page 46.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
BC’s Land & Rights SystemsBC’s Land & Rights Systems
Dominion Land Survey (DLS)
Petroleum Grid (NTS)
Spacing Areas
Well Locations
Zones, Pools, & Plats
Page 47.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
DLSDLS
PNG Grid Regulation Schedule 1Limited to Peace River Block
TWPs 76 - 88RGEs 13 – 26 W6M
Legal hectarages are as surveyedRefer to published map entitled “Peace River Block Gas Spacing Units and Hectarage Map” available from Queen’s Printer (Crown Publications division)
Page 48.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
DLS – Peace River BlockDLS – Peace River Block
Page 49.
Expect other-than-normal spacing areas
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Petroleum Grid (NTS)Petroleum Grid (NTS)
PNG Grid Regulation Schedule 3
Applies everywhere the DLS does not
Based on longitude and latitude
Sub-divisions achieve oil and gas spacing areas similar in size to DLS
Areas taken from lookup tables
Download from “Other Publications”
Also for geothermal and coal tenures
Page 50.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Petroleum Grid (NTS)Petroleum Grid (NTS)
Page 51.
8° long.
4° lat.
Well location example:d-010-A/094-H-16
Title description example:094-H-16 Blk A Unit 10
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Petroleum Grid (NTS)Petroleum Grid (NTS)
Page 52.
Well location example:d-010-A/094-H-16
Title description example:094-H-16 Blk A Unit 10
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Page 53.
1 10 1 10 1 10 1 10 1 10
91 100 91 100 91 100 91 100 91 100
X
1 10 1 10 1 10 1 10 1 10
91 100 91 100 91 100 91 100 X 91 100
1 10 1 10 1 10 1 10 1 10
91 100 91 100 91 100 91 100 91 100
D C B A
L K J
Normal Spacing – NTSNormal Spacing – NTS
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Other-than-Normal SpacingOther-than-Normal Spacing
OGAA: Drilling and Production RegulationOTN’s are an OGC approval
PNG Act – section 65.1
Generally larger than normal spacing areasSome are already declared
Peace River Block – Petroleum GridBC – YT, NWT, AB boundariesBC – USAProtected Areas
1 OTN gas spacing = 1 gas spacing for calculating earnings from Drilling Licences
Page 54.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Page 55.
OTN – Peace River BlockOTN – Peace River Block
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Page 56.
41
50
31
40
21
30
11
20
1
10
1
91
100
9 1
81
90
71
80
61
70
51
60
OTN – Alberta boundaryOTN – Alberta boundary
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Page 57.
91 100
91 100
1 10
1 10
91 100
91 100
J I L
G H E
YT / NWT
X X X X X X
X X X X X X
X X X X X X
X X X X X X
X X X
X X X
X X X
X X X
X X X
X X X
X X X
X X X X X X X X X
X X X X X X X X X
X X X X X X X X X
X X X
X X X
X X X
X X X
OTN – NWT / Yukon boundariesOTN – NWT / Yukon boundaries
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Tenure Size (hectares)Tenure Size (hectares)All tenure rentals are based on area, measured in whole hectaresPetroleum Grid (NTS) Unit
“NTS Unit Areas” (download)Crown Publications map GM15For NWT/YT and other boundary areas, call us
Peace River Block (DLS)Crown Publications map GM14 (2 sheets)• Includes size of fractional spacing's on NTS/DLS
boundary• Depicts lands in other-than-normal spacing areas
Regardless of source, calculate area the sameSum individual unit areas in title, keep intermediate fractionsRound sum to nearest whole hectare
Page 58.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Tenure Size – NTSTenure Size – NTS
Exercise; find the combined area of NTS Units 42-47 of Block E in 094-H-06
Map
94 EFGH
Group
5 to 8
Block
E F G H
Unit
41-50Page 59.
Total6 X 69.8 or 418.8
Rental Size: 419 ha.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Tenure Size – DLSTenure Size – DLS
Page 60.
Exercise; find the total area of the two gas spacing areas outlined at right
OTN: 19.0 + 21.4 + 39.7 + 38.0 + 66.0 + 66.0 = 250.1 ha.
Sec 8-88-25: infer 263.9
Total250.1 + 263.9 = 514.0Rental Size: 514 ha.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Well IDs and LocationsWell IDs and LocationsWell Authorization (WA)
Simple 5-digit number assigned to each OGC well permitPlease use wherever possible in correspondence
Unique Well Identifier (UWI)16-digit code issued at spudExamples• DLS: 102041308617W603• NTS: 200D024H094H1604
Digit 1: DLS (1) or NTS (2)Digit 2: Always zeroDigit 3: Sequence of the well at that bottom-hole location
• Value of 1 never used
Digits 4-14: Approved (then actual) bottom-hole locationDigits 15-16: drilling or completion event sequence
• First CE gets same code as its DE
Well NameOperator(s), HZ, and surface location
Page 61.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
BC’s PNG Zone SystemBC’s PNG Zone System
Page 62.
Zones are packages of one or more formations (marked in white on diagram)
Defined by specific intervals on specific logs of a reference well
Zone boundaries carefully selected to avoid disputes; primarily widespread markers in non-productive strata
5-digit codeDigits 1-3: Zone seriesDigits 4-5: Geographic IDCode value increases as age decreases
Available for download as a PDF wall chart
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Zones, Pools, & PlatsZones, Pools, & Plats
Page 63.
Rights usually described in relation to a zone base, e.g.:
PNG Down to Base 36002 (from surface)NG In 36002PET From Base 38001 To Base 36002PNG Below Base 36002
A land plat depicts the spacing areas recognized to include a specific productive stratum or pool in a specific tenure area
LeaseProve a spacing area covers a productive pool; continue the zone
Drilling Licence
Evaluate a formation (first); earn the zone
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Permits
Drilling Licences
Leases
Page 64.
BC’s Oil and Gas TenuresBC’s Oil and Gas Tenures
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Other Tenure We ManageOther Tenure We Manage
Underground Storage Lease
PNG Act sections 126 – 132
Special Agreement
PNG Act section 72
Geothermal Resources Act
Permits
Leases
Page 65.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Main FeaturesMain Features
A right to explore for oil and gas
Available only by Crown salePostings up to one NTS block accepted, with cause
One year primary term
Term renewal requires annual exploration spending
Actual exploration spending or cash-in-lieu paymentRates defined in Fee, Rental and Work Req. Reg.Renewal options and work requirements vary by class
Page 67.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Page 68.
Permits – Classes, Rents, and WorkPermits – Classes, Rents, and Work
by Year and Permit Class(Dollars per Hectare)
Class A Class B Class C Class DYEAR Rent Work Rent Work Rent Work Rent Work
1 1.05 1.00 1.05 1.00 1.05 1.00 1.05 0.502 1.05 2.00 1.05 1.50 1.05 1.00 1.05 0.503 1.05 4.00 1.05 3.00 1.05 2.00 1.05 1.004 1.05 5.00 1.05 4.00 1.05 2.50 1.05 2.505 1.05 5.00 1.05 4.00 1.05 3.00 1.05 3.00 6 1.75 7.50 1.75 6.00 1.75 5.00 1.75 5.007 1.75 15.00 1.75 10.00 1.75 7.50 1.75 7.508 1.75 20.00 1.75 15.00 1.75 7.50 1.75 7.50
Source: PNG Fee, Rent and Work Requirement Regulation
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Permit RenewalsPermit Renewals
Renewal optionsAffidavit of expenditures for work done
Cash-in-lieu payment for work not done
Refundable deposit in amount equal to past year plus upcoming year work requirement, along with a written work commitment
May surrender all or part of a Permit at renewal
Payment of applicable rent, fees, deposits, and penalties within 60 days after expiry
Page 69.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Permits – Lease SelectionPermits – Lease Selection
Must meet 5th-year work requirement (Class B)
May convert up to 50% of the Permit area
Leases must be configured, where possible, with 4 sides in 1 of 6 shapes defined by NTS units, and
Shapes must coincide with gas spacing areas
Leases must corner other leases, or be separated by at least 2 NTS units
No splitting of gas spacing areas
Exceptions made to reach 50% of Permit area
No one Lease may exceed 9 GSUs
Page 70.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Page 71.
Possible Configurations - PNG Act s.55
1 10 1 10 1 10
91 100 91 100 91 100
1 10
1 10
1 10
91 100 91 100 91 100
1 10
1 10
1 10
91 100 91 100 91 100
K J
F G
6 x 6
4 x 8
4 x 6
2 x 2
2 x 4
4 x 4
LEGEND
Permit Boundary
Selected Leases
Permits – Lease SelectionPermits – Lease SelectionAllowable Lease configurationsExceptions may be considered if 50% rule cannot be met with these configurations
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
DL - Main FeaturesDL - Main Features
A right to explore for oil and gas by drilling wells
Not a right to take production (for sale); testing OK
Acquired only from Crown SalePostings: 1 – 36 gas spacing areas
Term is 3, 4, or 5 years; “Prescribed Area”
Term may be extended, at least once, more depending on circumstances
Splits not allowed; but partial surrenders OK
Convertible to Lease by drilling or grouping
May convert some GSAs to Lease for production and defer any unused entitlement to later in DL term
Page 73.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
DL - Term ExtensionsDL - Term Extensions
Section 3(5) - “Standard Extension”One year period
Available once only at any time after primary term
Pre-requisite for some other extension types
$500 fee; double rent ($7/ha)
Written application not required• Apply from e-Payments Statement; do not use Submission
• Available only up to expiry date (NO GRACE PERIOD)
Page 74.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
DL - Term ExtensionsDL - Term Extensions
Section 3(5.1) - “Special Extension”Available after term expiry or another extension
Renewable for one year or less, by application
Requires:• Application submitted to MEM before expiry
• WA application filed with OGC at least 30 days before expiry
• Start of drilling is delayed past term expiry or extension by one of:– Environmental or socio-economic study
– Public hearing
– Planning or consultation process
Application• No extra fee, normal DL rent ($3.50/ha)
Approval is discretionary• Decisions will be based on policies in Information Letter TACRD-11-02
Page 75.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
DL - Term ExtensionsDL - Term Extensions
Section 3(5.3) - “Coal Bed Gas Extension”Applications must be sent before expiry
Applies only to land and rights within a coalbed gas project approved by the OGC under s.75 of OGAA
Lands and zones outside the project revert to Crown reserve
May be used up to 5 times after the primary term and the “standard" extension have expired
Page 76.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
DL - Term ExtensionsDL - Term ExtensionsSections 3(7) – “Drilling past expiry”
Available only after the “standard” extension
Extends DL term to the date a rig is released from drilling operations
Drilling must be:• Past 150m (from surface) at midnight on expiry date
• Conducted “diligently”– Rig may be withdrawn during drilling interruptions due to road bans or
unsafe working conditions, e.g., avalanche hazard
Section 3(9): No other well may be started during extension, except in the event of mechanical failures in the first well
Section 3(10): Other DLs expiring after standard extension may be extended to the same date if they are grouped with the DL being drilled
Page 77.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
DL - GroupingDL - Grouping
One Group per Earning Well
Earning well may be used only once to group DLs
Criteria for inclusion:In the opinion of the Director, an "earning" well was drilled on one of the DLs to be grouped
All DLs to be grouped lie within 4 km. of the DL deemed to contain the earning well• Verify using scaled map, GIS, PTO Viewer• If in doubt, call to receive written verification
Written application sent before earliest expiring DL
Written authority of one titleholder of each DL if applicant is not the Payor or a titleholder of all DLs
Page 78.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
DL - GroupingDL - Grouping
Number of DLs per GroupIf any one DL had more than four gas spacing areas, normal or OTN), when it was issued, that DL may be grouped with only one other DL for each earning well drilled on it
If all DLs to be grouped contained four or fewer gas spacing areas when they were issued, the number of DLs in the group is limited only by the 4 km. distance rule
Page 79.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Why Small DL Grouping?Why Small DL Grouping?
Page 80.
3,500m 3,500m
DL 1
DL 2
DL 1
DL 16
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Page 81.
Grouping – Distance GuideGrouping – Distance GuideFour NTS Units or DLS quarter-sections are always less than 4 kilometres when measured directly north-south or east-west
For all other cases, use a scaled map, GIS-capable software, or PTO Viewer
1 10 1 10 1 10
91 100 91 100 91 100
1 10
1 10
1 10
91 100 91 100 91 100
1 10
1 10
1 10
91 100 91 100 91 100
K J
F G
ok
?
? ok
Earning well
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Page 82.
Relies on precise point selection, so zoom in as close as possible, keeping both endpoints visible
1. Click the ‘Measure Distance’ icon on the PTO toolbar (hover)
2. Click on first endpoint
3. Click on second endpoint
4. Read measured distance from right sidebar
PTO – Distance Tool HowToPTO – Distance Tool HowTo
1
2
3
4
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Awarded in terms of gas spacing areas and zonesGSAs awarded depends on:
Prescribed Area 1, 2, or 3• When DL spans two or more Areas, earnings are based on the
Area with the greatest earnings• Information Letter TITLES-05-03
Combined lengths of drilling events• Less any length drilled through rights held by lease that are
not necessary for the purpose of evaluating the DL
Zones awarded are to base of deepest zone "evaluated”One well may penetrate 2 or more DLs
Licensee must nominate one to be the ‘drilled’ DLEarnings attach to ‘drilled’ DL onlyNominated DL may be grouped with any qualified DL
Page 84.
Lease EarningsLease Earnings
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Page 85.
DL Term – Prescribed AreasDL Term – Prescribed Areas Primary Term
Measured Wellbore Length (meters)
Column 2 3 years
Column 3 4 years
Column 4 5 years
less than 1001 2 2 3
1 001 to 1 300 3 3 4
1 301 to 1 500 4 5 6
1 501 to 1 800 5 6 8
1 801 to 2 100 6 7 9
2 101 to 2 400 7 8 10
2 401 to 2 600 8 9 11
2 601 to 2 800 9 10 12
2 801 to 3 000 10 12 14
3 001 to 3 200 11 13 16
3 201 to 3 400 12 14 18
3 401 to 3 600 13 15 20
3 601 to 3 800 14 16 22
3 801 to 4 000 15 18 24
4 001 to 4 200 16 20 26
4 201 to 4 400 17 22 28
over 4 400 18 24 30
Download from link in “Info Letters”
Info Letter TITLES-05-03
Link: “NEBC DL Boundary .pdf Map”
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Earning WellsEarning Wells
Definition before August 20, 2009 remains in force:"A well drilled in a spacing area all or part of which is in a location described in a drilling licence, and includes a well redrilled in a spacing area formerly described in a permit, drilling licence, or lease”
A "redrilled" well refers to a “re-entered” well, so the work carried out may consist of one or more of:• deepening the existing well sufficiently far to log and evaluate one or more
underlying zones (where ‘zone’ refers to zone as defined in the PNG Act)• completing a formation not previously completed in the well• re-completing one or more formations in the well
Re-entry must yield significant new geological informationFor lease entitlements, 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
Page 86.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Earning Well – Off DLEarning Well – Off DL
Page 87.
Drilling Licence Lease
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Earning WellsEarning Wells
Amendments of August 20, 2009Wellbore must be the first to evaluate any one zone on at least one spacing area• Rig release date determines drilling order
• Need not be spacing area where bottom-hole is located
• Wells drilled on previous tenures not counted
Evaluation is deemed to have occurred when either:• 150m of wellbore has been drilled in a spacing area, or
• the Director believes the well evaluates the zone first
Page 88.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Page 89.
Earning Well Scenario AEarning Well Scenario A
1
Spacing Area 1 Spacing Area 2
2 3
4
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Earning Well Scenario AEarning Well Scenario A
Page 90.
3
Spacing Area 1 Spacing Area 2
2
4
<or>
1
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Page 91.
Earning Well Scenario B-1Earning Well Scenario B-1
12
Spacing Area 1 Spacing Area 2
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Page 92.
Earning Well Scenario B-2Earning Well Scenario B-2
1
2
Spacing Area 1 Spacing Area 2
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Earning Well Scenario BEarning Well Scenario B
Page 93.
1
Spacing Area 1 Spacing Area 2
2
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Earning Well Scenario CEarning Well Scenario C
Page 94.
DL 1 DL 2
2
1
Spacing Area 1 Spacing Area 2
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Earning Well Scenario CEarning Well Scenario C
Page 95.
DL 1 DL 2
1 or 2
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Pad Well ExamplePad Well Example
Page 96.
Your geologist proposes to drill five pad wells as depicted on the left. Each will be drilled to the same depth and drill more than 150m into each spacing area they penetrate
How does the order of drilling affect lease entitlements?
e.g., compare:A-B-C-D-EB-A-C-D-E
B
A
E D
C
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Lease Selection ApplicationsLease Selection Applications
e-Payments Submission THEN Application Letteradd Letter of Authority if neither Payor nor Titleholder
Include e-Payments Submission number in subject line
Letter must include, for each earning well:Name and OGC Well Authorization (WA)
Estimated total eligible wellbore length• Enclose the directional survey where applicable
Estimated earnings (gas spacing areas)
Statement of deepest evaluated formation or zone
Desired configuration of Leases• Earnings from two or more WAs may be combined
• Use legal descriptions that match formats used in the Drilling Licence
Page 97.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Lease ConfigurationLease Configuration
The number and location of selected Leases are up to the applicant, except Leases must:
include all spacing areas to be placed on production
be located entirely within one DL
contain only contiguous tracts
not result in split gas spacing areas (oil wells excepted)
Page 98.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Evaluation of Zonesin Earning WellsEvaluation of Zonesin Earning Wells
Page 99.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
EVALUATION OF ZONES IN EARNING WELLSEVALUATION OF ZONES IN EARNING WELLS
Conversion of petroleum and natural gas title in Drilling Licence form into Lease form requires the drilling of “earning well(s)”.
The sum of all metres drilled in a well determines Lease geographical size, and the Lease will contain rights down to the base of the deepest geological zone contained in the Drilling Licence that is “evaluated” by the drilling of the earning well.
The Drilling Licence is a form of tenure designed for hydrocarbon exploration by drilling. Therefore, the requirement to evaluate zones is applied in a broad, exploratory sense.
If an earning well drills into and finds significant or substantial new geological information about a zone, then that well is credited with evaluating that zone.
It is not necessary to completely penetrate a zone in order to evaluate it. For example, if a zone is drilled into and, through the recording of well logs, mud logs, chip samples and other well data, significant new information is obtained regarding the zone, then the zone is considered to be evaluated.
Page 100.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
EVALUATION OF ZONES IN EARNING WELLSEVALUATION OF ZONES IN EARNING WELLS
Examples of such evaluation include the determination of the existence of a hydrocarbon-bearing reservoir, a wet reservoir, a tight reservoir or the definitive absence of a reservoir, or the geological characterization of a zone in a new area.
The existing state of exploration of a zone in an area is an important factor: 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 zone.
Similarly, 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.
Conversely, a thick but geologically uniform zone in an area of existing wells will require a substantial penetration in order to be evaluated.
Page 101.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Geology Section Petroleum and Natural Gas Titles Branch
Geology Section Petroleum and Natural Gas Titles Branch
• Manages the geological Zone Designation System, the framework upon which Crown Petroleum and Natural Gas rights are described and issued
• Creates and maintains the system of GIS Land Plats that illustrate where and in what geological zones the Crown recognizes oil and gas pools developed by industry: this determines where industry may continue title to leased Crown rights versus where rights return to the Crown for re-issue at Crown Land Sales
• Assesses industry technical applications for Licence conversion to Lease and Lease continuation
• Reviews land value of oil and gas potential in parcels offered at Crown Land Sales for fair value
• Provides information on oil, gas and geothermal potential in Land Use
• Contributes to development of policy, regulation and legislation
Page 102.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
LeasesLeases
A right to explore for and produce oil and gas
Available from
Crown Sale• *** NEW*** Large Lease Postings Greater Than
1 Gas Spacing Area are Now Possible, to Facilitate Greater Gas and Oil Recovery and Early Production in Resource Play Areas
Converting Permits and Drilling Licences
Split from another Lease (transfer)
May be continued beyond initial primary term
Page 104.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Leases – TermLeases – Term
Page 105.
Inside Area 1: 5 years
Outside Area 1: 10 years
A Lease overlapping both areas has a 5-year term
Posting requests and Lease selections intersecting the boundary should be done carefully:
Term is the shorter of 5 or 10 years if Lease straddles boundary
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
LAND PLATSLAND PLATS• The Land Plat illustrates where the Director of Petroleum
Lands has recognized that a pool of natural gas or petroleum has been delimited through the exploration and development work of industry
• The Land Plat has a surface geographical component and a subsurface geological component
• The Land Plat illustrates in map view the gas or oil Spacing Areas delimited in a pool, and names the geological formation in which the pool is recognized
• Land Plats are indexed by naming a Tenure Area (oil or gas field name), Geological Formation, Sequence Letter and Hydrocarbon Type (oil or gas)
Page 107.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
LAND PLAT: ALTARES, Gething ‘A’ Gas PoolLAND PLAT: ALTARES, Gething ‘A’ Gas Pool
Page 108.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
LAND PLATSLAND PLATSLand Plats are the fundamental record documenting the Director’s recognition of delimited oil and gas pools, both internally to government and, when published, externally to industry
In a Lease, those Spacing Areas falling within a Land Plat can be continued beyond the primary term of the Lease
Lease continuation application process is much simplified: Investment of geological staff expertise in technical submissions can be saved where lands are recognized within Land Plats, and refocused on those Spacing Areas not yet recognized, where recent drilling, evaluation or geophysical work may demonstrate to the Director that lands merit being included in a Land Plat
GeoBC.gov.bc.ca is now developing Land Plat and Tenure Area coverage for its web site service
Page 109.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
LAND PLATS LAND PLATS
The Act requires “delimiting” of a pool for Lease continuation under section 58
The Land Plat illustrates the delimited pool
Pools are delimited by Control Points of hard and soft data:
Wells posting hard results at specific locations
2D Seismic line locations; 3D seismic survey grids
Known geological formation characteristics
Mid to long term production and pressure histories
Page 110.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
LAND PLATSLAND PLATS
Sources of Evidence Delimiting Land Plats:Industry applications for continuation interpreting the results of drilling, seismic and well evaluation work
Ministry 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 control
Analogous wells, old and new, with similar properties
Evaluations and approvals received from the OGC
Thousands of geophysical and geological interpretations on file from all Crown title holders, representing decades of information and analysis
All Analysed Spacing Area by Spacing Area
Page 111.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
LEASE CONTINUATION OPTIONSLEASE CONTINUATION OPTIONS
Page 112.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Leases – ContinuationsLeases – Continuations
Several forms
Section 62 - Penalty Payment
Section 61 - Firm Well Commitment Made Prior to Expiry
Section 61,1 (Disposal wells: rights revert – zone specific)
Section 58 (rights revert – deep or zone specific)
One year, in all cases
Download Guides from Web Site “Other Publications”:
“Lease Continuation Options”
"Recommended Technical Package Contents"
Page 113.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
s. 62 Continuations. 62 Continuation
Continuation by Penalty PaymentYear 1 $15.00 / Ha
Years 2 or 3 $25.00 / Ha
Available three times for any 10-year Lease
No rights reversion
Need not be used in consecutive years
Application made through ePaymentsUse the statement when no other continuation types are anticipated for the Lease, or
Use submission and written application when other continuation types (splits) are anticipated or desired for the Lease
Page 114.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
s. 61 Continuations. 61 ContinuationContinuation by Drilling Commitment made Before Expiry
Drill one or more wells on Lease during continuation year, evaluating at least one zone held by that Lease
Application Must be in Writing and Must be made Prior to Expiry
Available for any Lease that is expiring
No rights reversion
May be used more than once, but spacing area(s) of successful commitment wells will be split out under s.58
Applies only to Lease(s) being drilled
Director may cancel Lease for non-performance
Applications made through e-Payments
The Act requires sending written application
Page 115.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
s. 61.1 Continuations. 61.1 ContinuationContinuation for Disposal Well and Planning Purposes
Continues 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 land
Water, CO2, frac fluids, waste fluids
Shallow and deep rights revert
Spacing areas included in projects approved under s.75 of the Oil and Gas Activities Act are not eligible
Written application with supporting technical material to accompany e-Payments for first approval
Once approved, application is by annual rental until further notice by Director
Page 116.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
s. 58 Continuations. 58 Continuation
Four types of continuation:58(3)(a): Eligible Spacing Areas
58(3)(b): Unit and Royalty Agreements
58(3)(c): Work Programs
58(3)(d): Establishment of a Well
All s.58 continuations subject to rights reversion: deep rights or zone specific (s.59)
Leases approved under two or more s.58 sub-sections may have to be split
Page 117.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
s. 58 Continuations. 58 Continuation
s. 58(3)(a) – An Eligible Spacing Area is a spacing area that:
Contains a “petroleum well” or “gas well”
Is located in a project area approved by the OGC under s.75 of the Oil and Gas Activities Act
Director believes >50% covered by a designated MEM pool: The Spacing Area is in a Land Plat
Director believes contains a pool that is able to be drained by a well in an adjacent spacing area: The Spacing Area is in a Land Plat
Once approved, continuation is by rental payment until further notice; subject to annual review under the Act
Page 118.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
s. 58 Continuations. 58 ContinuationSection 58(3)(b) - “unit or royalty agreements”
Portions of Lease subject to Unit or Royalty Agreements
Once approved, continuation is by rental payment until further notice; subject to annual review under the Act
Section 58(3)(c) - “work programs”
Must be designed to delimit a pool or field of oil or natural gas
May include multiple Leases
Not 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 date
The Director is satisfied that the drilling or work will continue
Page 119.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
s. 58(3)(c)s. 58(3)(c)
General FeaturesMay include multiple Leases, even multiple target zones, and different expiry dates
Requires written commitment to specific work: drilling, seismic, completions, re-entries - to delimit a pool
Do not suggest future drilling locations in an application under the previously discussed sec. 58(3)(a): these belong in a commitment to a Program of Work under sec. 58(3)(c)
Majority are one year only; exceptions to this on a case-by-case basis, typically due to very limited access and unusually large project scope
Non-performance of commitments jeopardizes future work program approvals
Page 120.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
s. 58(3)(c)s. 58(3)(c)Application must include:
The portions of Leases to be included
The formation(s) and spacing areas that will be “delimited”
A firm commitment, e.g. “XYZ Corp. commits to carry out the following program of work: . . .”
A clear depiction (map) of where the work will take place in relation to the locations to be included
A clear explanation of how each spacing area will be evaluated by the work
Technical package contents
must demonstrate how the work will “delimit” a field or pool
Simple – drill a new well
Complex – interpreted seismic, X-sections, well results; some work may be contingent on the results of preceding work
Page 121.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
s. 58(3)(c)s. 58(3)(c)
Programs with seismic components require a geophysical report at year end
Must include interpreted results of the work program, with illustrating maps and sections
Held confidential for 10 years, then is deposited with thousands of similar studies, as a future resource for your geological staff
“Requirements for Affidavits and Reports”See Titles Web Site for Report Requirements:
www.empr.gov.bc.ca/Titles/OGTitles/OtherPublications/Pages/Requirements.aspx
Page 122.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
s. 58(3)(d)s. 58(3)(d)
Designed to allow leaseholders to finish drilling or “establishing” a well clearly in progress
Applies only to a single Lease
At minimum, must have Well Authorization before expiry
Estimated rig release date well past expiry
60 days to make any s. 58 application, but
We encourage s. 58(3)(a) within 60 days where possible
More scrutiny if well not spud by expiry
All rights below the base of the deepest objective zone named in the Well Authorization (WA) are subject to rights reversion, deep or Zone Specific
Page 123.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
ZONE-SPECIFIC RETENTIONZONE-SPECIFIC RETENTION
Page 124.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
ZONE SPECIFIC RETENTIONZONE SPECIFIC RETENTION
What does Zone Specific Retention mean?
The effect of the March 29, 2007 Act amendment implementing Zone Specific Retention is to return to the Province, at the end of the primary five-year or ten-year term of a new Lease, all the zones of a Lease that do not contain identified oil or natural gas deposits.
New petroleum and natural gas Leases will retain those zones found to contain oil or gas. The existing Zone Designation System will be used.
All 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 penalty for ten-year leases.
Page 125.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
ZONE SPECIFIC RETENTIONZONE SPECIFIC RETENTION
What are the implications of Zone Specific Retention?
Applying Zone Specific Retention to new Leases, with all pre-existing title exempt, will create greater development opportunities for industry, while protecting the rights of holders of title acquired before the change in legislation, March 29, 2007.
The Province may re-post returned rights, giving the industry additional opportunities to explore for oil and gas in a more timely fashion. This amendment will result in:
o Increased opportunities for industry wanting to invest o Earlier discovery and development of new oil and gas poolso Earlier industry production revenue and Crown royalty revenueo The Crown’s recognizing on title the rights to behind-pipe hydrocarbon
zones encountered by a well
Page 126.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
ZONE SPECIFIC RETENTIONZONE SPECIFIC RETENTION
How will Zone Specific Retention be implemented?
The zone description framework has been developed and is in place in the standard Zone Designation System.
As is current practice, industry can receive Lease continuation by submitting written applications that assert the presence of hydrocarbon in zones in expiring title, in order to ensure those zones are reviewed for continuation of tenure.
Methods of continuing title to Leases will continue to include Programs of Work, drilling commitments and the submission of geological, geophysical and engineering information on the existence of a pool of oil or gas.
Page 127.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
STRATIGRAPHIC CHARTSTRATIGRAPHIC CHART
Page 128.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
STRATIGRAPHIC CHART with ZONE DESIGNATION INTERVALS STRATIGRAPHIC CHART with ZONE DESIGNATION INTERVALS
The Stratigraphic Chart illustrates standard geological formation names used in British Columbia
Overlaid 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
The Zone Designation System was developed in 1988 for the purpose of administering the requirements of stratigraphic rights reversion, also referred to as “deep rights reversion”. Standard reference descriptions of geological intervals (“Zone Designations”) with well-chosen type wells are used to ensure consistency in the administration of rights . . .
Page 130.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
STRATIGRAPHIC CHART with ZONE DESIGNATION INTERVALS STRATIGRAPHIC CHART with ZONE DESIGNATION INTERVALS
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 continuation.
The 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.
This system has functioned extremely well since its introduction, and easily facilitates the introduction of Zone Specific Retention
Page 131.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
ZONE SPECIFIC RETENTIONZONE SPECIFIC RETENTION
FREQUENTLY ASKED QUESTIONS
Q: Does Zone Specific Retention affect all my title?
A: This change does not affect any Lease that existed before March 29, 2007, nor any Lease issued from Permits or Drilling Licences that themselves existed before that date.
It affects only new title originating on or after March 29, 2007.
Page 132.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
ZONE SPECIFIC RETENTIONZONE SPECIFIC RETENTION
Q: What is the earliest date that my Leases may be affected?
A: New five-year Leases will be affected starting in late March, 2012.
Ten-year Leases granted in 2007 will begin to be affected in 2017.
Leases issued from Permits or Drilling Licences that existed before March 29, 2007 will not be affected.
Page 133.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
ZONE SPECIFIC RETENTIONZONE SPECIFIC RETENTION
Q: Do I have to complete and flow each zone to continue it?
A: No. If 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 well.
The zone may be behind pipe, and in some cases the well may be abandoned, but well information proves a pool exists.
Section 58 of the Act states common eligibility requirements.
Page 134.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
ZONE SPECIFIC RETENTIONZONE SPECIFIC RETENTION
Q: How do I apply for continuation, when the time comes?
A: The current Lease continuation application process continues:
Provide a written submission under section 58 of the Act containing information that shows the existence of a pool of oil or gas in each zone in which hydrocarbons have been found.
As now, the Act requires each spacing area in a Lease to be assessed individually as eligible for continuation or not. Each spacing area in a zone should be addressed in an application .
Page 135.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
ZONE SPECIFIC RETENTIONZONE SPECIFIC RETENTION
Q: Do I have other options?
A: You may be eligible for continuation under several parts of the Act:
• Commit before expiry to drill a well under section 61 and all Lease zones will be continued.
• If existing well information does not delimit an oil or gas pool over all parts of a Lease, a Sec. 58(3)(c) Program of Work may use well completions, well tests, well drilling or geophysics to confirm or expand a pool.
• If current work on the completion, testing or drilling of a well is ongoing and directed at the establishment of evidence showing a pool exists, then continuation under section 58(3)(d) applies.
Page 136.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
ZONE SPECIFIC RETENTIONZONE SPECIFIC RETENTION
Q: How stringent are the requirements of proof?
A: Well information obtained by an operator, combined with existing geological knowledge, provide sufficient information to determine whether a zone does or does not contain hydrocarbons, whether completed, tested or behind pipe. Modern well evaluation technology applied correctly makes clear which zones contain hydrocarbons and which do not. Any remaining uncertainty may be resolved by testing if the zone is of interest to an operator.
If geological, well evaluation and geophysical information show clearly that a zone contains hydrocarbons, then completion of the zone is not required.
Page 137.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
ZONE SPECIFIC RETENTIONZONE SPECIFIC RETENTION
Q: If the analysis I submit does not convince the Ministry that a pool exists in a Lease or a spacing area in a zone of interest to my company, what are my alternatives?
A: A negotiated Program of Work, such as a simple completion or testing of a zone where existing well data does not demonstrate a pool, or the acquisition of geophysical data or additional well drilling that shows the extension of a known pool onto the lands, is acceptable under section 58(3)(c) of the Act, work designed to prove a pool exists or to expand a known pool’s limits.
Page 138.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Page 139.
PART 3
General
Administration
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
ePayments
Support: [email protected]
Page 140.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
ePayments – OverviewePayments – OverviewAccepts rents, fees, and penalty payments
Requires self-managed BCeID, electronic passport to BC Gov
Mandatory
Client must initiate payment; not an auto debit system
Key components to remember: Payors, Statements, Submissions, Receipts, Refunds, Surrenders
Issues refunds electronically, also mandatory
e-Payments will not accept payments related to:Split Transfers of PNG LeasesPNG PermitsSection 72 AgreementsUnderground Storage or Geothermal tenure
Page 141.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
ePayments – User RolesePayments – User Roles
BCeID Profile Manager
Appointments Company Administrator for each application accessed with BCeID
Company Administrator (e-Payments)
Assigns roles to other users; can perform function of any role
Users may be assigned multiple roles
Land Adminstrator
Creates and ‘opens’ submissions
Payment Administrator
Initiates payments from Statements or Open Submissions
Viewer
Read-only access
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British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Continuing your TenureContinuing your TenureStatements
• When written applications are not required
• Use one of the “Statements” screens• Primary Term• Continuation/Extension
• Leases• Section 62, or• Section 58(3)(a), 58(3)(b), or 61.1
when this would repeat the previous continuation
• Drilling Licences• Section 3(5)
Submissions
• When written applications are required or to reduce title area by partial surrender
• Use “Manage Expiring Titles” screen• Leases
• 58(3)(a),(b) – first time• 58(3)(c),(d) – each time• 61 – each time• 61.1 – first time
• Drilling Licences• Conversions to Lease• 3(5.1) – each time• 3(5.3) – each time
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British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Submission paymentsSubmission paymentsDistinct from payments made from a Statement
Used when written applications are required Certain DL extension and Lease continuation types
All conversions from DL to Lease
An electronic “bucket” to hold a group of tenures related by their inclusion in a common application for extension, continuation, or conversion
Designed to facilitate application tracking by industry and reduce need to contact Branch staff for updates
Submissions are not applications
e-Payments generates a Submission ID number; please reference it in all application correspondence
Tracking with Milestones and Communication Log
Page 144.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Managing Rental DeadlinesManaging Rental Deadlines
Default Notices eliminated July 1, 2010
Manage titles from the All Titles screene-Payments sends a monthly e-mail reminder to view your statementsOverdue titles are shown in purple and fall off ePayments on day 60 past expiry
Page 145.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Late PenaltiesLate Penalties
Late penalties are automatically calculated once the anniversary date has passedPermits (Manual Payment)
Day 1-10 $100.00Day 11-60 $500.00
LeasesDay 1-30 - 1.5 %Day 31-60 – 3.0 %
Drilling LicenceDay 1-60 $500.00
Page 146.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
CancellationsCancellationsRequest from All Titles screen
Ministry will cancel 60 days after anniversary date and send confirmation
Check title to be cancelled
Can be reversed by selecting title and hitting Cancel Request
Email ministry to confirm reversal
Please use signed letters for tenure types not managed through e-Payments
Page 147.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Letters of AuthorityLetters of Authority
Letter of Authorization’s are needed when you are neither a owner or payorRequired for Titles not covered by e-PaymentsThe registered Owner’s intent is implied by authorizing the Designated Payor to make decisions on the title
Page 148.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Online HelpFollow link in Resources slideGetting StartedSelf-TutoringFAQsQuick Reference Tool
Formal courses in CalgaryPossibly CAPLA, based on demand
Training InformationTraining Information
Page 149.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Power-of-AttorneyPower-of-Attorney
No fees required
Cover letter is required
Power of Attorney documents should have original signatures or be a Certified True Copy
The document must clearly state the types of document that the person/position is authorized to sign on behalf of the company
A registration number will be assigned to the company upon the initial registration, this number will be used for all future registrations
Page 150.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
PartnershipsPartnerships
Permitted to hold title in BC
Partnership needs to provide documentation showing the partnership structure
Documentation must be signed by all parties of the partnership
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British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Page 152.
Title TransfersTitle TransfersNo fees required
Cover letter must accompany documents
Transfers are considered effective from the date received, not the execution date
Stale-dated transfers are acceptable
Changes are recorded against title specified in the document
Only transfers of undivided interest are permissible
Signatures in counterpart are acceptable
Any color ink acceptable for signatures
Electronic Signatures and signature stamps are not acceptable
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Title TransfersTitle Transfers
Transfer documents must:Be originals
List all title numbers to be transferred
Be executed by all transferors and all transferees• Subsequent edits must be initialled by all parties
A properly “executed” document is:Dated, and
Signed by a signing officer of the firm or by a person with a Power of Attorney registered with Titles, Aboriginal and Corporate Relations Division, and
Witnessed or affixed with a corporate seal
Page 153.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Title TransfersTitle Transfers
Schedules are permitted and should include only the title number and the company reference number
Transfer documents must specify interest as a percentage of the undivided interest
8 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
Page 154.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Title TransfersTitle Transfers
Sample forms available from the Division website, no prescribed form necessary
Information Letter EMD-008
Must not contain implied or explicit encumbrances, eg: “subject to” clause
Do not send title documents with your transfer request
Use full legal name of companies
If legal descriptions must be included for corporate reasons, they:
Must be identical to registered legal description
Must include complete tract rights
Page 155.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Split TransfersSplit Transfers
A procedure to divide one lease into two or more leases
Leases only
$500.00 fee for each new lease to be issued
Leases may be divided by:Surface hectares
Stratigraphic
A combination of both
Page 156.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Split TransfersSplit Transfers
All 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 specified
Must not divide gas spacing areas containing gas wells
May divide gas spacing areas if:
Contains an oil well; or
Spacing area already split
Page 157.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Pooling AgreementsPooling Agreements
Purpose – joint development of a spacing area
Recorded in the Oil and Gas Titles Branch
Letter contents:Name all title holders
Title numbers
Well authorization No.
UWI of well
Date of Pooling Agreement
Signature of all title holders
Page 158.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
EncumbrancesEncumbrances
Information Letter EMD02-01
A claim or lien placed on a title by a third-party
NOT a legal registry; information purposes only
Encumbrances do not restrict the application of any provision of the Petroleum and Natural Gas Act
Examples of types of documents:
Bank Act assignment
Deed of Trust
Debenture
Mortgage
Builder’s Lien
Page 159.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Recording EncumbrancesRecording Encumbrances
Requests must include:
Letter of instruction and fee• State the type of encumbrance
• State the full legal names of the companies involved
Encumbrance document• Original or certified true copy• Document must be dated and signed by a signing officer of the
company holding the encumbrance
Fee:
$50.00 per title per encumbrance, includes discharge
Page 160.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Discharging EncumbrancesDischarging EncumbrancesRequests must:
Be dated and signed by a signing officer of the company holding the encumbrance
Include original encumbrance registration numbers
State the type of encumbrance
State full legal names of the companies named in the encumbrance
Include the date of the original encumbrance registration
Include the date of the encumbrance
Indicate if the discharge is full or partial
List only active title numbers to be discharged
Original signatures or certified true copy
Each encumbrance must be discharged with a separate document
Page 161.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Copies of EncumbrancesCopies of Encumbrances
Requests for copies of encumbrances can be sent by fax
Fax: (250) 952-0331
Fees – minimum charge of $10.00, or .75 cents per page whichever is greater, an invoice will be sent with the documents
We copy the first 10 pages of the documents and the signature page only, due to the size of some encumbrance documents
Return by fax or email up to 50 pages, by collect courier or mail – include your courier name and account number with your request
Page 162.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Name Changes & AmalgamationsName Changes & Amalgamations
Requests must include:
May be sent by mail, fax or email
Copy of certificate and articles of amendment
Photocopies acceptable
Changes are only recorded against “active” title
All federal and provincial certificates are accepted where:
Jurisdiction and registration numbers are included
Full legal names of the parties are used
Page 163.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
Signed Title SearchesSigned Title Searches
Available if required
Send request via fax or mail to Diane Jensen
Results can be delivered by:
Fax or email – up to 50 pages
Courier (sent collect)
Fees $7.50 per title number
Invoice will be returned with request
Page 164.
British ColumbiaMinistry of Energy and MinesOctober 18, 2011
May Mah-Paulson, Executive Director, Petroleum and Natural Gas Titles Branch 250-952-0335
POSTINGS, PETROLEUM TITLES ONLINE, WEBMASTER, MAPPINGChris Blaney, Manager, Crown Sale and GIS Services 250-952-0344
PRE-TENURE REFERRALS, TENURE CAVEATSGarth Thoroughgood, Director, Resource Development 250-952-6382
GEOLOGY, ZONE DESIGNATIONDave Richardson, Manager, Geology 250-952-0359
TENURE POLICYGeoff Turner, Director, Policy & Planning 250-952-0709DRILLING LICENCES, WORK PROGRAMS, PERMITSTerry Branscombe, Senior Tenure Management Advisor 250-952-0340
DRILLING LICENCES, LEASE CONTINUATIONSCindy Kocol, Tenure Management Advisor 250-952-0342
DRILLING LICENCES, TRANSFERS, ENCUMBRANCESChristine McCarthy, Tenure Management Advisor 250-952-0341
E-PAYMENTS, BCeID, PRE-AUTHORIZED DEBITSCarolyn Desjardins, Manager, Revenue Collection, Reconciliation and Reporting 250-356-1059
GENERAL INQUIRIES 250-952-0333www.empr.gov.bc.ca/Titles/OGTitles [email protected]
KEY CONTACTSKEY CONTACTS
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