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Notice – Proposed Indian Oil and Gas Regulations



Category: relating to consultations and public input
Organization: Indigenous and Northern Affairs Canada
Date: September 05, 2017

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Notice – Proposed Indian Oil and Gas Regulations

This is an early draft of the proposed regulations (prior to their approval and pre-publication in Canada Gazette, Part I) that would entirely replace the existing Indian Oil and Gas Regulations, 1995.

Background and Context:

The regime that governs the management and administration of oil and gas resources on First Nations reserve lands needed to be modernized to ensure First Nations reserve lands are competitive with surrounding regimes and to ensure oil and gas activities are regulated in an effective manner. Originally passed in the 1970’s, the Indian Oil and Gas Act and Indian Oil and Gas Regulations are administered by Indian Oil and Gas Canada (IOGC), a special operating agency of Indigenous and Northern Affairs Canada (INAC), located on Tsuut’ina Nation lands, just outside Calgary.

Legislation amending the Indian Oil and Gas Act, 1974 received Royal Assent in May 2009 resulting in the new Indian Oil and Gas Act, 2009 (IOGA, 2009). The IOGA, 2009 provided for the development of new regulations to replace the Indian Oil and Gas Regulations, 1995. The IOGA, 2009 and its associated new regulations will both become law once the new regulations are ready. Both the 2009 Act and the proposed new regulations were developed in co-operation with the Indian Resource Council, an Aboriginal organization that advocates on behalf of over 180 First Nations with oil and gas resources or the potential for such resources. During this process, the Indian Resource Council was funded for both their participation and to obtain independent legal and technical advice on both the Act and the regulations.

Proposed New Regulations:
The following is a brief summary of some of the key provisions of the proposed regulations.

Subsurface Tenure: Both Chief and Council and the Minister must approve any contract issued for the exploration or exploitation of oil and gas on First Nations reserve lands. The proposed regulations clearly stipulate the criteria the Minister will, in consultation with the First Nation, use to evaluate a proposed contract. First Nations will be able to negotiate drilling commitments, earning provisions, and the contract depth of earning wells in order to meet specific needs and circumstances.

 

Leases will have an initial term of 3 years and permits will have an initial fixed term between 2 and 5 years depending on the region in which the contract is located. However, to ensure flexibility in an unpredictable industry, First Nations have the ability to grant an initial term up to 5 years or amend the term to a maximum of 5 years.

 

The cumbersome lease selection process is replaced with a provision that allows oil and gas production to occur from permit lands, and earned permit lands to qualify for a 3-year intermediate term. Again, to ensure flexibility, First Nations have the ability to amend the intermediate term to a maximum of 5 years.

Continuance: The proposed regulations contain specific requirements for which contract lands are eligible for continuance. However, to address the unique First Nation needs in this area, a First Nation can authorize a continuance of ineligible lands to a maximum of 5 years.

 

The proposed regulations provide that lands meeting the specific requirements are continued indefinitely as long as they are considered productive. This reduces the burden on industry, First Nations and government of repeatedly reviewing the contract for continuance. In its place, new non-productivity notices will be sent to the company if lands are no longer considered productive. The notice gives the company one year to prove the lands productive or the lands will be returned to the First Nation.

Drainage and Compensatory Royalty: The proposed regulations provide for proximity-based offset notices to be issued whenever a well is producing adjacent to First Nations reserve lands. The default option of the notice will be for the company to pay a compensatory royalty unless a well is put on production in the First Nation spacing unit or the lands are surrendered. If the offset lands are not leased, a notice will be sent to the Chief and Council and work can begin to lease the lands.

Reporting Methods: The proposed regulations give IOGC the ability to request information in a format other than that identified in the regulation. This will allow IOGC, for example, to utilize PETRINEX (PETRoleum INformation Excellence) – the industry and provincially-recognized authoritative source for oil and gas volume and pricing data.


First Nation Audit: The proposed regulations give the First Nation the ability to enter into an agreement to conduct an audit on behalf of the Minister for the purpose of verifying royalties payable.

Updates to 1995 Regulations: The proposed regulations were updated to reflect regulatory authorities set out in the IOGA, 2009, and to incorporate modern federal drafting standards. In addition, the proposed regulations have been updated to reflect some of IOGC’s current practices and policies. For example, the proposed regulations include requirements for environmental reviews to accompany applications for exploration programs, surface agreements (surface leases and rights-of-way), and bitumen projects.

Review and Feedback:
Public input is very important to ensure that IOGC develops the best possible regulatory regime to meet stakeholder needs. This is an early draft of the proposed regulations (prior to their approval and pre-publication in Canada Gazette, Part I) for stakeholders to have an early start on their review.

Consultation Draft Regulations of the Indian Oil and Gas Regulations

You are invited to review the proposed regulations and, if desired, to provide feedback once they have been pre-published in Canada Gazette, Part I (http://www.gazette.gc.ca/gazette/home-accueil-eng.php) projected to occur by November 2018.

 

If you would like more information in advance of the Canada Gazette, Part 1 process, please contact IOGC at:

 

Indian Oil and Gas Canada / Pétrole et gaz des Indiens du Canada

100 – 9911 boul. Chiila Blvd.

Tsuut’ina, AB  T2W 6H6

Phone / Téléphone: (403) 292-5625

Fax / Télécopieur: (403) 292-5618

Email: ContactIOGC@aandc-aadnc.gc.ca

Website: www.iogc.gc.ca



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