British Columbia Ministry of Energy and Mines October 18, 2011

Report
BC PETROLEUM AND
NATURAL GAS (PNG)
REGULATIONS SEMINAR
Presentation to CAPL
October 18, 2011
May Mah-Paulson
British Columbia
Ministry of Energy and Mines
October 18, 2011
Terry Branscombe
Dave Richardson
Page 1.
SEMINAR 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 2.
SEMINAR 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 3.
SEMINAR OUTLINE
PART 3 – GENERAL ADMINISTRATION
e-Payments
Transfers, Encumbrances and Related Instruments
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 4.
MINISTRY STRUCTURE
Deputy Minister
Ministry of
Energy and Mines
Assistant Deputy
Minister
Mines and Mineral
Resources Division
British Columbia
Ministry of Energy and Mines
October 18, 2011
Assistant Deputy
Minister
Oil and Gas Division
Executive Lead
Titles and Corporate
Relations Division
Assistant Deputy
Minister
Electricity and
Alternative Energy
Division
Page 5.
TITLES & CORPORATE
RELATIONS DIVISION
Executive Lead
Titles and Corporate
Relations Division
Petroleum & Natural
Gas Titles Branch
British Columbia
Ministry of Energy and Mines
October 18, 2011
Corporate Services
Branch
Corporate Policy,
Planning &
Legislation Branch
Page 6.
PNG TITLES BRANCH
May Mah-Paulson
Executive Director
Petroleum & Natural
Gas Titles Branch
Garth
Thoroughgood
Director
Resource
Development
Chris Blaney
Manager
Crown Sale & GIS
Services
British Columbia
Ministry of Energy and Mines
October 18, 2011
Debbie Fischer
Director
Tenure & Revenue
Management
Terry Branscombe
Senior Tenure
Management
Advisor
Geoff Turner
Director
Policy & Planning
Dave Richardson
Manager
Geology
Page 7.
ACQUIRING
PNG TENURE IN BC
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 8.
PNG TENURE
Tenure does provide:
exclusive rights to the subsurface resource
right to apply to the OGC for activities approval
Tenure does not provide:
the authority to conduct any activities on lands (e.g.,
drilling)
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 9.
DISPOSITION PROCESS
12 sales per year
106 day process
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 10.
ADDITIONAL INFORMATION
SOURCES
Posting Requests
http://www.empr.gov.bc.ca/Titles/OGTitles/SalesNotices/Page
s/Instructions.aspx
Submitting a Bid
http://www.empr.gov.bc.ca/Titles/OGTitles/InfoLetters/IssueDa
te/Pages/TACRD-11-03.aspx
Disposition Dates for 2011-2012
http://www.empr.gov.bc.ca/Titles/OGTitles/InfoLetters/IssueDa
te/Pages/TACRD-11-06.aspx
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 11.
RESOURCE DEVELOPMENT
UPDATES
First Nations Engagement
Community Engagement
Boreal Caribou
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 12.
FIRST 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 13.
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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 14.
COMMUNITY ENGAGEMENT
Landowner Notification Program
Forum for community engagement
Farmers’ Advocacy Office
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 15.
BOREAL CARIBOU
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 16.
BOREAL 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/OGT
itles/InfoLetters/IssueDate/Pages/TA
CRD-10-10.aspx
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 17.
BOREAL 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 18.
BOREAL 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 19.
TENURE MANAGMENT UPDATES
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 20.
ACTIVE PNG TENURE
2011 (to Sept)
2010 (to Dec)
2009 (to Dec)
14,626
14,637
14,710
Drilling Licences:
- Leases converted from Licence
- Average turnaround (days)
105
64
288
109
284
122
Leases:
- New s.58(3)(a) continuations
- New s.58(3)(c) continuations
- New s.61 continuations
389
53
11
377
54
3
283
41
18
Active PNG Tenure (all types)
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 21.
GEOLOGY
Land Plats
Zone Specific Retention
New Zone Designations
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 22.
eBUSINESS
Integrated Petroleum System (iPS)
iPS will transition 3 legacy applications to current technology
Petroleum 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 23.
ROYALTY PROGRAM UPDATE
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 24.
TARGETED 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 25.
TARGETED ROYALTY PROGRAMS
(CONT’D)
These programs can be combined in many cases, thus
providing enough margin to move certain projects to
economic territory
Example - 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
programs
For more information:
http://www.empr.gov.bc.ca/OG/oilandgas/royalties/Pages/
default.aspx
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 26.
POLICY & REGULATORY UPDATES
Industry Engagement
New Policies & Information Letters
Hydraulic Fracturing & Disclosure
Review of the PNG Act & Regulations
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 27.
INDUSTRY 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 28.
NEW - POSTING LARGER
PNG 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 TACRD11-01
http://www.empr.gov.bc.ca/Titles/OGTitles/InfoLetters/IssueDa
te/Pages/TACRD-11-01.aspx
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 29.
NEW - 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/Titl
es/OGTitles/InfoLetters/Issue
Date/Pages/TACRD-1102.aspx
British Columbia
Ministry of Energy and Mines
October 18, 2011
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.”
Page 30.
REVISED - 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 TACRD11-03
http://www.empr.gov.bc.ca/Titles/OGTitles/InfoLetters/IssueDa
te/Pages/TACRD-11-03.aspx
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 31.
NEW - 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 32.
REVIEW 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 33.
DISCUSSION 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/Doc
uments/PNG%20Tenure%20Discussion%20Paper.pdf
Submission deadline for comments - October 17, 2011
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 34.
NEXT 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 35.
JOBS & THE ECONOMY
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 36.
CROWN SALES
# parcels offered
# parcels disposed
# hectares offered
# hectares disposed
Total tender bonus
Average price/hectare
British Columbia
Ministry of Energy and Mines
October 18, 2011
2011 (to Sept)
2010 (to Sept)
2010 (to Dec)
243
201
549
481
615
543
150,212
121,165
367,269
335,094
414,375
381,132
$ 123,189,109
$ 1,017
$ 780,550,974
$ 2,329
$ 844,414,026
$ 2,216
Page 37.
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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 38.
PNG 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 39.
QUESTIONS?
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 40.
PART 2
Tenure
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 41.
Tenure Management
Resources Available
Published 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 42.
PTS 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 43.
Online Tools – PNG Titles Home
Subscription
Services (e-mail)
Posting Maps
Sale Notices
Sale Results
Info Letters
Acts & Regs
Publications
PTO & PTS Web
ePayments
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 44.
Acts and Regulations
Petroleum and Natural Gas Act
Grid Regulation
Drilling Licence Regulation
Fee, Rental and Work Requirement
Regulation
Storage Reservoir Regulation
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 45.
Online Resources
Petroleum Titles Online (PTO)
http://www.ptonline.gov.bc.ca
[email protected]
PTS Web (Petroleum Titles System)
From PTO, click “Title Searches (PTS Web)” link
[email protected]
ePayments
https://epayments.gov.bc.ca
[email protected]
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 46.
BC’s Land & Rights Systems
Dominion Land
Survey (DLS)
Petroleum Grid (NTS)
Spacing Areas
Well Locations
Zones, Pools, & Plats
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 47.
DLS
PNG Grid Regulation Schedule 1
Limited to Peace River Block
TWPs 76 - 88
RGEs 13 – 26 W6M
Legal hectarages are as surveyed
Refer to published map entitled “Peace River Block Gas
Spacing Units and Hectarage Map” available from Queen’s
Printer (Crown Publications division)
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 48.
DLS – Peace River Block
Expect other-thannormal spacing areas
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 49.
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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 50.
Petroleum Grid (NTS)
8° long.
Well location example:
4° lat.
d-010-A/094-H-16
Title description example:
094-H-16 Blk A Unit 10
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 51.
Petroleum Grid (NTS)
Well location example:
d-010-A/094-H-16
Title description example:
094-H-16 Blk A Unit 10
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 52.
Normal Spacing – NTS
1
10
1
10
1
10
1
10
1
10
91
100
91
100
91
100
91
100
91
100
1
10
91
100
D
C
B
A
X
1
10
1
10
1
10
1
10
91
100
91
100
91
100
91
100
K
L
X
J
1
10
1
10
1
10
1
10
1
10
91
100
91
100
91
100
91
100
91
100
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 53.
Other-than-Normal Spacing
OGAA: Drilling and Production Regulation
OTN’s are an OGC approval
PNG Act – section 65.1
Generally larger than normal spacing areas
Some are already declared
Peace River Block – Petroleum Grid
BC – YT, NWT, AB boundaries
BC – USA
Protected Areas
1 OTN gas spacing = 1 gas spacing for
calculating earnings from Drilling Licences
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 54.
OTN – Peace River Block
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 55.
OTN – Alberta boundary
41
50
31
40
21
30
11
20
1
10
1
91
100
91
81
90
71
80
61
70
51
60
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 56.
OTN – NWT / Yukon boundaries
YT / NWT
91
X
X
X
J
100
91
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
1
X
X
X
G
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
10
X
91
X
1
100
H
L
X
X
X
X
X
X
X
X
X
X
X
X
X
10
X
91
100
E
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
British Columbia
Ministry of Energy and Mines
October 18, 2011
I
100
Page 57.
Tenure Size (hectares)
All tenure rentals are based on area, measured in whole
hectares
Petroleum Grid (NTS) Unit
“NTS Unit Areas” (download)
Crown Publications map GM15
For 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 same
Sum individual unit areas in title, keep intermediate
fractions
Round sum to nearest whole hectare
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 58.
Tenure 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
EFGH
Unit
41-50
Total
6 X 69.8 or 418.8
Rental Size: 419 ha.
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 59.
Tenure Size – DLS
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
Total
250.1 + 263.9 = 514.0
Rental Size: 514 ha.
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 60.
Well IDs and Locations
Well Authorization (WA)
Simple 5-digit number assigned to each OGC well permit
Please use wherever possible in correspondence
Unique Well Identifier (UWI)
16-digit code issued at spud
Examples
• DLS: 102041308617W603
• NTS: 200D024H094H1604
Digit 1: DLS (1) or NTS (2)
Digit 2: Always zero
Digit 3: Sequence of the well at that bottom-hole location
•
Value of 1 never used
Digits 4-14: Approved (then actual) bottom-hole location
Digits 15-16: drilling or completion event sequence
•
First CE gets same code as its DE
Well Name
Operator(s), HZ, and surface location
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 61.
BC’s PNG Zone System
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 code
Digits 1-3: Zone series
Digits 4-5: Geographic ID
Code value increases as age decreases
Available for download as a PDF wall chart
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 62.
Zones, Pools, & Plats
Rights usually described in
relation to a zone base, e.g.:
PNG Down to Base 36002
(from surface)
NG In 36002
PET From Base 38001 To
Base 36002
PNG Below Base 36002
A land plat depicts the spacing
areas recognized to include a
specific productive stratum or
pool in a specific tenure area
Lease
Prove a spacing area
covers a productive pool;
continue the zone
Drilling Licence
Evaluate a formation
(first); earn the zone
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 63.
BC’s Oil and Gas Tenures
Permits
Drilling Licences
Leases
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 64.
Other Tenure We Manage
Underground Storage Lease
PNG Act sections 126 – 132
Special Agreement
PNG Act section 72
Geothermal Resources Act
Permits
Leases
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 65.
Permits
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 66.
Main Features
A right to explore for oil and gas
Available only by Crown sale
Postings 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 payment
Rates defined in Fee, Rental and Work Req. Reg.
Renewal options and work requirements vary by class
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 67.
Permits – Classes, Rents, and Work
by Year and Permit Class
(Dollars per Hectare)
YEAR
1
2
3
4
5
6
7
8
Class A
Rent Work
1.05 1.00
1.05 2.00
1.05 4.00
1.05 5.00
1.05 5.00
Class B
Rent Work
1.05 1.00
1.05 1.50
1.05 3.00
1.05 4.00
1.05 4.00
1.75 7.50
1.75 15.00
1.75 20.00
1.75 6.00
1.75 10.00
1.75 15.00
Class C
Rent Work
1.05 1.00
1.05 1.00
1.05 2.00
1.05 2.50
1.05 3.00
1.75
1.75
1.75
5.00
7.50
7.50
Class D
Rent Work
1.05 0.50
1.05 0.50
1.05 1.00
1.05 2.50
1.05 3.00
1.75
1.75
1.75
5.00
7.50
7.50
Source: PNG Fee, Rent and Work Requirement Regulation
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 68.
Permit Renewals
Renewal options
Affidavit 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 69.
Permits – 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 70.
Permits – Lease Selection
Possible Configurations - PNG Act s.55
1
10
1
10
1
10
91
100
91
100
2x2
91
100
4x6
Allowable Lease
configurations
Exceptions may be considered
if 50% rule cannot be met with
these configurations
6x6
K
J
4x8
2x4
1
10
1
10
1
10
91
100
91
100
91
100
4x4
F
G
LEGEND
Permit Boundary
Selected Leases
1
10
1
10
1
10
91
100
91
100
91
100
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 71.
Drilling Licences
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 72.
DL - 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 Sale
Postings: 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 73.
DL - 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)
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 74.
DL - 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 75.
DL - 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 76.
DL - Term Extensions
Sections 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 77.
DL - 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 78.
DL - Grouping
Number of DLs per Group
If 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 79.
Why Small DL Grouping?
DL 1
3,500m
DL 2
British Columbia
Ministry of Energy and Mines
October 18, 2011
DL 1
3,500m
DL 16
Page 80.
Grouping – Distance Guide
1
10
1
10
91
100
91
100
?
1
10
91
100
ok
K
1
10
91
100
ok
J
Earning well
1
10
1
10
91
100
91
100
F
Four NTS Units or DLS
quarter-sections are
always less than 4
kilometres when
measured directly northsouth or east-west
For all other cases, use a
scaled map, GIS-capable
software, or PTO Viewer
G
?
1
10
1
10
1
10
91
100
91
100
91
100
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 81.
PTO – Distance Tool HowTo
Relies on precise point selection,
so zoom in as close as possible,
keeping both endpoints visible
1
2
4
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
3
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 82.
Lease Earnings
Awarded in terms of gas spacing areas and zones
GSAs 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’ DL
Earnings attach to ‘drilled’ DL only
Nominated DL may be grouped with any qualified DL
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 84.
DL Term – Prescribed Areas
Download from link in “Info Letters”
Info Letter TITLES-05-03
Link: “NEBC DL Boundary .pdf Map”
British Columbia
Ministry of Energy and Mines
October 18, 2011
Measured Wellbore
Length (meters)
Column 2
3 years
Primary Term
Column 3
4 years
Column 4
5 years
less than 1001
1 001 to 1 300
1 301 to 1 500
1 501 to 1 800
1 801 to 2 100
2 101 to 2 400
2 401 to 2 600
2 601 to 2 800
2 801 to 3 000
3 001 to 3 200
3 201 to 3 400
3 401 to 3 600
3 601 to 3 800
3 801 to 4 000
4 001 to 4 200
4 201 to 4 400
over 4 400
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
2
3
5
6
7
8
9
10
12
13
14
15
16
18
20
22
24
3
4
6
8
9
10
11
12
14
16
18
20
22
24
26
28
30
Page 85.
Earning 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 information
For 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 86.
Earning Well – Off DL
Drilling Licence
British Columbia
Ministry of Energy and Mines
October 18, 2011
Lease
Page 87.
Earning Wells
Amendments of August 20, 2009
Wellbore 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 88.
Earning Well Scenario A
1
2
3
4
Spacing Area 1
British Columbia
Ministry of Energy and Mines
October 18, 2011
Spacing Area 2
Page 89.
Earning Well Scenario A
1
3
4
2
<or>
Spacing Area 1
British Columbia
Ministry of Energy and Mines
October 18, 2011
Spacing Area 2
Page 90.
Earning Well Scenario B-1
2
1
Spacing Area 1
British Columbia
Ministry of Energy and Mines
October 18, 2011
Spacing Area 2
Page 91.
Earning Well Scenario B-2
1
2
Spacing Area 1
British Columbia
Ministry of Energy and Mines
October 18, 2011
Spacing Area 2
Page 92.
Earning Well Scenario B
1
2
Spacing Area 1
British Columbia
Ministry of Energy and Mines
October 18, 2011
Spacing Area 2
Page 93.
Earning Well Scenario C
DL 1
DL 2
1
2
Spacing Area 1
British Columbia
Ministry of Energy and Mines
October 18, 2011
Spacing Area 2
Page 94.
Earning Well Scenario C
1 or 2
DL 1
British Columbia
Ministry of Energy and Mines
October 18, 2011
DL 2
Page 95.
Pad Well Example
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
A
C
B
E
British Columbia
Ministry of Energy and Mines
October 18, 2011
D
How does the order
of drilling affect
lease entitlements?
e.g., compare:
A-B-C-D-E
B-A-C-D-E
Page 96.
Lease Selection Applications
e-Payments Submission THEN Application Letter
add 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 97.
Lease 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)
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 98.
Evaluation of Zones
in Earning Wells
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 99.
EVALUATION 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.
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 100.
EVALUATION 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.
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 101.
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 reissue 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 102.
Leases
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 103.
Leases
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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 104.
Leases – Term
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 Columbia
Ministry of Energy and Mines
October 18, 2011
Page 105.
LAND PLATS
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 106.
LAND 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)
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 107.
LAND PLAT:
British Columbia
Ministry of Energy and Mines
October 18, 2011
ALTARES, Gething ‘A’ Gas Pool
Page 108.
LAND PLATS
Land 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 109.
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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 110.
LAND 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 111.
LEASE CONTINUATION OPTIONS
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 112.
Leases – 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"
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 113.
s. 62 Continuation
Continuation by Penalty Payment
Year 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 ePayments
Use 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 114.
s. 61 Continuation
Continuation 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 115.
s. 61.1 Continuation
Continuation 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 116.
s. 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 subsections may have to be split
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 117.
s. 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 118.
s. 58 Continuation
Section 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 119.
s. 58(3)(c)
General Features
May 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 caseby-case basis, typically due to very limited access and
unusually large project scope
Non-performance of commitments jeopardizes future work
program approvals
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 120.
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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 121.
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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 122.
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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 123.
ZONE-SPECIFIC RETENTION
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 124.
ZONE 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.
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 125.
ZONE 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
o
o
o
Increased opportunities for industry wanting to invest
Earlier discovery and development of new oil and gas pools
Earlier industry production revenue and Crown royalty revenue
The Crown’s recognizing on title the rights to behind-pipe hydrocarbon
zones encountered by a well
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 126.
ZONE 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.
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 127.
STRATIGRAPHIC CHART
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 128.
STRATIGRAPHIC CHART
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 129.
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 wellchosen type wells are used to ensure consistency in the
administration of rights . . .
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 130.
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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 131.
ZONE 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.
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 132.
ZONE 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.
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 133.
ZONE 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.
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 134.
ZONE 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 .
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 135.
ZONE 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.
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 136.
ZONE 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.
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 137.
ZONE 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.
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 138.
PART 3
General
Administration
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 139.
ePayments
Support: [email protected]
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 140.
ePayments – Overview
Accepts 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 Leases
PNG Permits
Section 72 Agreements
Underground Storage or Geothermal tenure
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 141.
ePayments – 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 142.
Continuing your Tenure
Statements
Submissions
• 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)
• 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 143.
Submission payments
Distinct 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 144.
Managing Rental Deadlines
Default Notices eliminated July 1, 2010
Manage titles from the All Titles screen
e-Payments sends a monthly e-mail
reminder to view your statements
Overdue titles are shown in purple and
fall off ePayments on day 60 past expiry
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 145.
Late Penalties
Late penalties are automatically calculated
once the anniversary date has passed
Permits (Manual Payment)
Day 1-10 $100.00
Day 11-60 $500.00
Leases
Day 1-30 - 1.5 %
Day 31-60 – 3.0 %
Drilling Licence
Day 1-60 $500.00
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 146.
Cancellations
Request 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 147.
Letters of Authority
Letter of Authorization’s are needed
when you are neither a owner or payor
Required for Titles not covered by ePayments
The registered Owner’s intent is implied
by authorizing the Designated Payor to
make decisions on the title
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 148.
Training Information
Online Help
Follow link in Resources slide
Getting Started
Self-Tutoring
FAQs
Quick Reference Tool
Formal courses in Calgary
Possibly CAPLA, based on demand
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 149.
Power-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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 150.
Partnerships
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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 151.
Title Transfers
No 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 Columbia
Ministry of Energy and Mines
October 18, 2011
Page 152.
Title 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 153.
Title 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 154.
Title 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 155.
Split 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 156.
Split 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 157.
Pooling 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 158.
Encumbrances
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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 159.
Recording 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 160.
Discharging Encumbrances
Requests 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 161.
Copies 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 162.
Name 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
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 163.
Signed 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
Mail
Courier (sent collect)
Fees $7.50 per title number
Invoice will be returned with request
British Columbia
Ministry of Energy and Mines
October 18, 2011
Page 164.
KEY CONTACTS
May Mah-Paulson, Executive Director, Petroleum and Natural Gas Titles Branch
250-952-0335
POSTINGS, PETROLEUM TITLES ONLINE, WEBMASTER, MAPPING
Chris Blaney, Manager, Crown Sale and GIS Services
250-952-0344
PRE-TENURE REFERRALS, TENURE CAVEATS
Garth Thoroughgood, Director, Resource Development
250-952-6382
GEOLOGY, ZONE DESIGNATION
Dave Richardson, Manager, Geology
250-952-0359
TENURE POLICY
Geoff Turner, Director, Policy & Planning
250-952-0709
DRILLING LICENCES, WORK PROGRAMS, PERMITS
Terry Branscombe, Senior Tenure Management Advisor
250-952-0340
DRILLING LICENCES, LEASE CONTINUATIONS
Cindy Kocol, Tenure Management Advisor
250-952-0342
DRILLING LICENCES, TRANSFERS, ENCUMBRANCES
Christine McCarthy, Tenure Management Advisor
250-952-0341
E-PAYMENTS, BCeID, PRE-AUTHORIZED DEBITS
Carolyn Desjardins, Manager, Revenue Collection, Reconciliation and Reporting
250-356-1059
GENERAL INQUIRIES
www.empr.gov.bc.ca/Titles/OGTitles
British Columbia
Ministry of Energy and Mines
October 18, 2011
250-952-0333
[email protected]
Page 165.

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