Transcript British Columbia Ministry of Energy and Mines October 18, 2011
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
Assistant Deputy Minister
Oil and Gas Division
Executive Lead
Titles and Corporate Relations Division
Assistant Deputy Minister
Electricity and Alternative Energy Division
British Columbia Ministry of Energy and Mines October 18, 2011 Page 5.
TITLES & CORPORATE RELATIONS DIVISION
Executive Lead
Titles and Corporate Relations Division
Petroleum & Natural Gas Titles Branch Corporate Services Branch Corporate Policy, Planning & Legislation Branch British Columbia Ministry of Energy and Mines October 18, 2011 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
Debbie Fischer Director Tenure & Revenue Management Terry Branscombe Senior Tenure Management Advisor Geoff Turner Director
Policy & Planning
Dave Richardson Manager
Geology
British Columbia Ministry of Energy and Mines October 18, 2011 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
British Columbia Ministry of Energy and Mines October 18, 2011
12 sales per year 106 day process
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
Active PNG Tenure (all types) Drilling Licences: Leases converted from Licence Average turnaround (days) Leases: New s.58(3)(a) continuations New s.58(3)(c) continuations New s.61 continuations 2011 (to Sept) 14,626 105 64 389 53 11 2010 (to Dec) 14,637 288 109 377 54 3 2009 (to Dec) 14,710 284 122 283 41 18
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?
BC drilling activity very concentrated during winter months, when ground frozen Western Canada sedimentary basin deepens towards the West New, conventional wells with lower productivity Tight gas development Coalbed gas potential development challenges “White spaces” and areas with limited infrastructure (roads/pipes) available Huge potential in new, remote, high-risk unconventional resources
What was the solution?
Summer Royalty Credit Program Deep Royalty Credit Program Marginal Royalty Program Ultra-marginal (tight gas) Royalty Program Coalbed Methane Royalty Program Infrastructure Royalty Credit Program 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 TACRD 11-01 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-11 02.aspx
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 Columbia Ministry of Energy and Mines October 18, 2011 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 TACRD 11-03 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 2011 (to Sept) 243 201 150,212 121,165 $ 123,189,109 $ 1,017 2010 (to Sept) 549 481 367,269 335,094 $ 780,550,974 $ 2,329 2010 (to Dec) 615 543 414,375 381,132 $ 844,414,026 $ 2,216
British Columbia Ministry of Energy and Mines October 18, 2011 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 .
British Columbia Ministry of Energy and Mines October 18, 2011
PART 2
Tenure
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
PTS Web (
Petroleum Titles System
)
From PTO, click “Title Searches (PTS Web)” link [email protected]
ePayments
https://epayments.gov.bc.ca
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-than normal 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.
4 ° lat.
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 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 .
D L 1 10 91 100 1 10 91 100 1 10 91 100 K C
X
1 10 91 100 1 10 91 100 1 10 91 100 B J 1 10 91 100 1 10 91 100 1 10 91 100
X
A 1 10 91 100 1 10 91 100 1 10 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 31 50 40 21 11 30 20 1 10 91 100 81 71 90 80 61 51 70 60
British Columbia Ministry of Energy and Mines October 18, 2011
1 9 1
Page 56 .
OTN – NWT / Yukon boundaries
X X X X X X X X British Columbia Ministry of Energy and Mines October 18, 2011 X X X
G
X X X X
1 91
X
10 100
X X X X X X X YT / NWT
91 100
X
I
X X X X X X X X X
H
X X X X X X X X X X X X
L
X X X X X
1 91
X
10 100
X X X X X X X
E
X X X X X X X X X X X 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 Group Block Unit 94 EFGH 5 to 8 E F G H 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 .
British Columbia Ministry of Energy and Mines October 18, 2011
Permits
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
YEAR 1 2 3 4 5 Class A Rent Work
1.05
1.05
1.05
1.05
1.00
2.00
4.00
5.00
1.05
5.00
by Year and Permit Class (Dollars per Hectare) Class B Rent Work Class C Rent Work
1.05
1.05
1.05
1.05
1.00
1.50
3.00
4.00
1.05
1.05
1.05
1.05
1.00
1.00
2.00
2.50
1.05
4.00
1.05
3.00
Class D Rent Work
1.05
1.05
1.05
1.05
0.50
0.50
1.00
2.50
1.05
3.00
6 7 8
1.75
1.75
1.75
7.50
15.00
20.00
1.75
1.75
1.75
6.00
10.00
15.00
Source: PNG Fee, Rent and Work Requirement Regulation 1.75
1.75
1.75
5.00
7.50
7.50
1.75
1.75
1.75
5.00
7.50
7.50
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 5 th -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 91 100
4 x 6
1 10 91 100 1 10 91 100 F K
2 x 2
1 10 91 100 1 91
4 x 4
10 100 1 10 91 100 J G Permit Boundary 1 10 91 100 1 91 10 100 1 10 91 100
Allowable Lease configurations Exceptions may be considered if 50% rule cannot be met with these configurations British Columbia Ministry of Energy and Mines October 18, 2011 Page 71 .
British Columbia Ministry of Energy and Mines October 18, 2011
Drilling Licences
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 DL 1 3,500m 3,500m DL 2 British Columbia Ministry of Energy and Mines October 18, 2011 DL 16 Page 80 .
Grouping – Distance Guide
1 91 10 100 ok 1 10 91 100 1 10 91 100 K Earning well F 1 91 10 100 1 10 91 100 1 10 91 100 ? J ok 1 91 10 100 G ? 1 10 91 100 1 10 91 100
Four 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 British Columbia Ministry of Energy and Mines October 18, 2011 Page 81 .
PTO – Distance Tool HowTo
1 2 4
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.
4.
Click on second endpoint 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” Measured Wellbore Length (meters) 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
Column 2 3 years 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Primary Term Column 3 4 years 2 3 5 6 7 8 9 10 12 13 14 15 16 18 20 22 24 Column 4 5 years 3 4 6 8 9 10 11 12 14 16 18 20 22 24 26 28 30
British Columbia Ministry of Energy and Mines October 18, 2011 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 Lease
British Columbia Ministry of Energy and Mines October 18, 2011 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
2 1 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
Earning Well Scenario B-1
1 2 Spacing Area 1 British Columbia Ministry of Energy and Mines October 18, 2011 Spacing Area 2 Page 91 .
Earning Well Scenario B-2
2 1 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
British Columbia Ministry of Energy and Mines October 18, 2011 C E D A B
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-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 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 British Columbia Ministry of Energy and Mines October 18, 2011 Page 102 .
British Columbia Ministry of Energy and Mines October 18, 2011
Leases
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
British Columbia Ministry of Energy and Mines October 18, 2011
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
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:
ALTARES, Gething ‘A’ Gas Pool British Columbia Ministry of Energy and Mines October 18, 2011 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 Years 2 or 3 $15.00 / Ha $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, CO 2 , 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 sub sections 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 case by-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 well chosen 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 .
British Columbia Ministry of Energy and Mines October 18, 2011
PART 3
General Administration
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 e Payments 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 POSTINGS, PETROLEUM TITLES ONLINE, WEBMASTER, MAPPING Chris Blaney,
Manager, Crown Sale and GIS Services
PRE-TENURE REFERRALS, TENURE CAVEATS Garth Thoroughgood,
Director
,
Resource Development
GEOLOGY, ZONE DESIGNATION Dave Richardson
, Manager, Geology 250-
952-0335 250-952-0344 250-952-6382 250-952-0359 TENURE POLICY Geoff Turner,
Director, Policy & Planning
DRILLING LICENCES, WORK PROGRAMS, PERMITS Terry Branscombe,
Senior Tenure Management Advisor
DRILLING LICENCES, LEASE CONTINUATIONS Cindy Kocol,
Tenure Management Advisor
DRILLING LICENCES, TRANSFERS, ENCUMBRANCES Christine McCarthy,
Tenure Management Advisor
250-952-0709 250-952-0340 250-952-0342 250-952-0341 E-PAYMENTS, BCeID, PRE-AUTHORIZED DEBITS Carolyn Desjardins,
Manager
, Revenue Collection, Reconciliation and Reporting
GENERAL INQUIRIES www.empr.gov.bc.ca/Titles/OGTitles
250-356-1059
250-952-0333 [email protected]
British Columbia Ministry of Energy and Mines October 18, 2011 Page 165 .