Acts and Regulations

2001-66 - Licence to Search and Lease

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NEW BRUNSWICK
REGULATION 2001-66
under the
Oil and Natural Gas Act
(O.C. 2001-433)
Filed September 21, 2001
Under section 59 of the Oil and Natural Gas Act, the Lieutenant-Governor in Council makes the following Regulation:
Citation
1This Regulation may be cited as the Licence to Search and Lease Regulation - Oil and Natural Gas Act.
Definitions
2(1)In this Regulation
“Act” means the Oil and Natural Gas Act; (Loi)
“grid area” means a grid area as established by the Survey System Regulation - Oil and Natural Gas Act; (carreau de quadrillage)
“grid map” means the New Brunswick Standard Oil and Natural Gas Grid Map referred to in the Survey System Regulation - Oil and Natural Gas Act; (carte de quadrillage)
“engineer” means an engineer as defined under the Engineering and Geoscientist Professionals Act, chapter 88 of the Acts of New Brunswick, 1986; (ingénieur)
“geoscientist” means a geoscientist as defined under the Engineering and Geoscientist Professionals Act, chapter 88 of the Acts of New Brunswick, 1986; (géoscientifique)
“section” means a section as established by the Survey System Regulation - Oil and Natural Gas Act.(section)
2(2)Exploratory work acceptable to the Minister includes
(a) test drilling,
(b) regional mapping,
(c) surveying,
(d) bulldozing,
(e) geological, geophysical and geochemical exploration, and
(f) other examinations and investigations related to subsurface geology.
Application for a licence to search
3(1)An application for a licence to search shall be on a form provided by the Minister and shall be accompanied by
(a) a map of the area for which the application is made;
(b) a description of the area referred to in paragraph (a) in accordance with the grid map;
(c) a statement of the extent, character and anticipated expenditure of the exploratory work proposed; and
(d) a statement of the applicants financial ability to carry out the exploratory work proposed.
3(2)The Minister shall endorse on each application the date and time the application is received.
Call for tenders for a licence to search
4(1)A call for tenders for the purchase of a licence to search under section 17 of the Act shall
(a) be by publication of a notice of the call for tenders in The Royal Gazette and in such other publication as the Minister considers appropriate at least sixty days before the tender closing date,
(b) state the location where the information to bidders package may be obtained, the fees payable for the package, the tender closing time and date and the place where the tender submission is to be deposited,
(c) state the portion of the deposit referred to in paragraph (2)(a), expressed as a percentage, to be returned upon successful completion of the work to the licensee at the conclusion of the term of the licence to search,
(d) state the annual rental fee for the first year of the term of the licence to search, and
(e) state the tender fee.
4(2)A tender for the purchase of a licence to search under section 17 of the Act shall contain
(a) a deposit in an amount equal to one hundred per cent of the tendered value of the work to be performed during the term of the licence to search, such amount which shall be equal to or greater than the amount prescribed in Schedule B on each hectare covered by the licence to search,
(b) an undertaking to perform the work during the term of the licence to search,
(c) the annual rental fee for the first year of the term of the licence to search in the amount prescribed in Schedule A for each hectare covered by the licence to search,
(d) a statement of the work to be done and the expenditures to be made by the applicant during the term of the licence to search, and
(e) the tender fee prescribed in Schedule A.
4(3)All unsuccessful tenders and accompanying documents except the tender fee shall be returned to the applicant.
Grant of a licence to search
5(1)Where a call for tenders is made under section 17 of the Act and one or more acceptable tenders have been received, the Minister may grant a licence to search to the successful applicant within thirty days after the closing date of the call for tenders.
5(2)Where a licence to search is granted under subsection (1), the date of issuance shall be specified in the licence document.
5(3)Where a licence to search is granted under subsection (1), the non-refundable portion of the deposit referred to in subsection 4(2)(a) accompanying the successful bid shall be retained by the Crown.
Terms and conditions of a licence to search
6The following are terms and conditions of a licence to search:
(a) a licensee shall comply with the provisions of the Act and this Regulation; and
(b) a licensee shall submit such plans of exploratory work as the Minister may require.
Annual rental fee for a licence to search
7The annual rental fee prescribed in Schedule A for a licence area is due and payable in the second year and third year of the term of the licence to search at least thirty days before the respective anniversary dates of the granting of the licence to search.
Exploratory work requirement under a licence to search
8During the term of the licence to search, a licensee shall do or cause to be done exploratory work equal to the tendered value of the work.
Report requirements under a licence to search
9(1)The licensee shall submit, within ninety days after the expiration, cancellation or surrender of a licence to search, a report containing a statement with respect to the total expenditures made by the licensee and such other geophysical, geological, engineering and other data and information as the Minister may require.
9(2)Where expenditures are made by the licensee for exploration outside the licence area for the purpose of obtaining data which in the opinion of the Minister is of value in assessing the potential of the licence area, the Minister, on written application by the licensee, may consider the expenditure to have been made within the licence area.
9(3)A statement of expenditure submitted under this section shall be accompanied by an affadavit of the licensee attesting to its accuracy and correctness.
9(4)Geological, geophysical, engineering or other data or information submitted under this section shall be attested to, as to its accuracy, by an engineer or a geoscientist.
9(5)A report submitted under this section shall include but is not limited to, three copies of
(a) a geological report with respect to the licence area, including geological maps showing the location of wells drilled on the licence area, cross-sections and stratigraphic data,
(b) a geophysical report with respect to the licence area, including gravity, seismic and magnetic data, and
(c) reports of geophysical surveys that were conducted, including well logs and well tests data resulting from exploratory wells that were drilled in the licence area.
9(6)The Minister may, on written application by the licensee before the required date of the submission of the report under subsection (1), grant an extension of the period required for the submission of the report but in no case shall the extension exceed ninety days.
Return of deposit
10(1)Where the value of the exploratory work performed during the term of the licence is satisfactory to the Minister, the Minister shall, on receipt of a report that is acceptable to the Minister, return to the licensee that portion of the deposit specified in the call for tender.
10(2)Where, in the opinion of the Minister, a licensee has not done or caused to be done exploratory work during the term of the licence equal to the amount tendered as a deposit under paragraph 4(2)(a), the portion of the deposit that is equal to the deficiency is forfeited to the Crown.
10(3)Notwithstanding any other provision of this Regulation, where, in the opinion of the Minister, a licensee has not complied with the Act or this Regulation, the Minister may delay the return of all or a portion of the licensees deposit that is refundable until the licensee complies with the Act or this Regulation.
Conversion to lease
11(1)An application to convert a licence to search to a lease under section 27 of the Act shall be on a form provided by the Minister and shall be accompanied by
(a) a map of the area for which the application is made;
(b) a description of the area referred to in paragraph (a) in accordance with the grid map; and
(c) the application fee for a lease prescribed in Schedule A and the rental fee prescribed in Schedule A for the first year of the lease.
11(2)A lease may be granted if the Minister is satisfied that the work undertaken under subsection 4(2) or work which is equivalent to that described in subsection 4(2) has been completed and an acceptable report submitted under section 10.
Application for a lease
12An application for a lease under 27.1 of the Act shall be on a form provided by the Minister and shall be accompanied by
(a) a map of the area for which the application is made,
(b) a description of the area referred to in paragraph (a) in accordance with the grid map,
(c) a statement of the extent, character and anticipated expenditure of the work proposed, and
(d) a statement of the applicants financial ability to carry out the work proposed.
Call for tenders for a lease
13(1)A call for tenders for the purchase of a lease under section 27.1 of the Act shall
(a) be by publication of a notice of the call for tenders in The Royal Gazette and in such other publication as the Minister considers appropriate at least sixty days before the tender closing date,
(b) state the location where the information to bidders package may be obtained, the fees payable for the package, the tender closing time and date and the place where the tender submission is to be deposited,
(c) specify the amount of the minimum non-refundable cash bonus,
(d) state the annual rental fee for the first year of the term of the lease, and
(e) state the tender fee.
13(2)A tender for the purchase of a lease shall contain
(a) a non-refundable cash bonus equal to or greater than the minimum bonus specified in the notice of the call for tenders,
(b) a statement describing the work to be done and the expenditure to be made by the applicant during the initial term of the lease,
(c) the annual rental fee for the first year of the term of the lease in the amount prescribed in Schedule A for each hectare covered by the lease,
(d) a statement of the applicants financial ability to carry out the work proposed, and
(e) the tender fee prescribed in Schedule A.
13(3)All unsuccessful tenders and accompanying documents except the tender fee shall be returned to the applicant.
Grant of a lease
14(1)Where a call for tenders is made under section 27.1 the Act and one or more acceptable tenders have been received, the Minister may grant a lease to a successful applicant within thirty days after the closing date of the call for tenders.
14(2)Where a lease is granted under subsection (1), the date of issuance shall be specified in the lease document.
14(3)Where a lease is granted under subsection (1), the non-refundable cash bonus accompanying the successful bid shall be retained by the Crown.
Term and condition of a lease
15It is a term and condition of a lease that the lessee shall comply with the provisions of the Act and this Regulation.
Annual rental fee for a lease
16The annual rental fee prescribed in Schedule A in respect of a lease area is due and payable in the second year and subsequent years of the initial term of a lease and in each year of a continued period of a lease at least thirty days before the anniversary of the date of the granting of the lease.
Report requirements under a lease
17(1)The lessee shall submit, within ninety days after the expiration, cancellation or surrender of a lease, a report containing a statement with respect to the total expenditures made by the lessee and such other geophysical, geological, engineering and other data and information as the Minister may require.
17(2)A statement of expenditure submitted under this section shall be accompanied by an affidavit of the lessee attesting to its accuracy and correctness.
17(3)Geological, geophysical, engineering or other data or information submitted under this section shall be attested to, as to its accuracy, by an engineer or a geoscientist.
17(4)A report submitted under this section shall include but is not limited to, three copies of
(a) a geological report with respect to the lease area, including geological maps showing the location of wells drilled on the lease area, cross-sections and stratigraphic data,
(b) a geophysical report with respect to the lease area, including gravity, seimic and magnetic data, and
(c) reports of geophysical surveys that were conducted, including well logs and well tests data resulting from exploratory wells that were drilled in the lease area.
Discontinuance of a portion of a lease
18Where the Minister discontinues a portion of a lease area, the Minister shall amend the description of the lease area included in the lease and forward a copy of the amended description to the lessee.
Discovery of oil or natural gas
19A licensee or lessee shall report immediately to the Minister on each oil or natural gas occurrence and, at the Ministers request, supply samples from all fluids encountered in each well drilled.
Confidential information
20(1)Information furnished under sections 9, 17 and 18 may be released to the public
(a) one year after the date of the expiry, cancellation or surrender of a licence to search,
(b) one year after the expiry of the initial term of a lease, its cancellation or surrender, or
(c) at any time upon permission granted by the licensee or lessee for the release.
20(2)Notwithstanding subsection (1), well logs, well test data, well cuttings, well core data and other well information submitted as confidential information may be released to the public one year after the release of the rig from a well.
Transfer, assignment, agreement or instrument
21(1)The fee for an application to record a transfer, assignment, agreement or instrument affecting the title to a licence to search or a lease is prescribed in Schedule A.
21(2)The fee for registering an instrument made pursuant to section 426 of the Bank Act, (Canada), is prescribed in Schedule A.
Royalties
22(1)The royalty to be computed, levied and collected by the Crown on oil won, worked, recovered, or obtained under a licence to search or lease shall be that percentage of the oil so produced from each well during each calendar month, as specified in Schedule C, free and clear of any deductions calculated on the actual selling price or fair market value at the time and place of production, whichever is the greater.
22(2)The royalty on natural gas shall be ten per cent of the actual selling price or fair market value at the time and place of production, whichever is the greater, free and clear of any deductions.
22(3)The royalty on all by-products obtained from oil or natural gas by processing or separation, including but not limited to sulphur, helium, natural gas liquids and condensate, shall be ten per cent of the actual selling price or fair market value at the time and place of production, whichever is the greater, less the lessees or licensees proportionate share of production, processing and transportation charges.
22(4)Every sale of oil, natural gas or by-products from a lease area or licence area shall include, and the lessee or licensee is authorized to include, the royalty share of the oil, natural gas or by-products belonging to the Province and the lessee or licensee shall for every sale account for and pay to the Minister the Provinces royalty share by the twenty-fifth day of the month following the calendar month of the sale.
22(5)No royalty is payable for oil or natural gas that is
(a) consumed by a lessee or licensee in direct connection with development work under a lease or licence to search,
(b) returned to a formation, or
(c) flared.
Repeal
23New Brunswick Regulation 86-192 under the Oil and Natural Gas Act is repealed.
Commencement
24This Regulation comes into force on September 24, 2001.
Schedule A
1Application fees are as follows:
(a)licence to search - transfer, assignment, agreement or instrument
$  50
 
(b)lease - transfer, assignment, agreement or instrument
$  50
 
(c)conversion from licence to search to lease under section 27 of the Act
$250
2Tender fees are as follows:
(a)licence to search
$250
 
(b)lease
$250
3The rental fee for each year of a licence to search or a lease is as follows:
(a)rental of a licence area
$0.15 per hectare per year
 
(b)rental of a lease area
$4.00 per hectare for each year during the continuance of the lease
4The registration fee for an instrument referred to in subsection21(2) is fifty dollars.
2004-41
Schedule B
For the purpose of the Act and this Regulation, the minimum expenditure required for exploratory work to be completed during the term of a licence to search is prescribed as follows:
(a)on-shore licence to search:
$10 per hectare
 
(b)off-shore licence to search:
$20 per hectare
Schedule C
For the purpose of calculating the royalty on oil, the stated percentage of the oil produced is as follows:
Monthly
Production in m3
Royalty Rate
for the Month
    1 −   49 m3
5%
  50 −   79 m3
5% of 50 m3 + 7½% of remainder
  80 − 109 m3
6% of 80 m3 + 9½% of remainder
110 − 139 m3
7% of 110 m3 + 11½% of remainder
140 − 179 m3
8% of 140 m3 + 13% of remainder
180 − 219 m3
9% of 180 m3 + 15% of remainder
220 − 289 m3
10% of 220 m3 + 14% of remainder
290 − 719 m3
11% of 290 m3 + 13½% of remainder
720 m3 and over
12%
N.B. This Regulation is consolidated to August 1, 2004.