British Columbia Ministry of Energy and Mines October 18, 2011 BC PETROLEUM AND NATURAL GAS (PNG) SEMINAR Presentation to CAPL October 18, 2011 BC PETROLEUM

British ColumbiaMinistry of Energy and MinesOctober 18, 2011

BC PETROLEUM AND NATURAL GAS (PNG)

REGULATIONS SEMINAR

Presentation to CAPLOctober 18, 2011

BC PETROLEUM AND NATURAL GAS (PNG)

REGULATIONS SEMINAR

Presentation to CAPLOctober 18, 2011

May Mah-Paulson Terry Branscombe Dave Richardson

Page 1.Page 1.


SEMINAR OUTLINESEMINAR OUTLINE

PART 1 – MINISTRY UPDATES

Ministry Structure / Organization Update

Acquiring Petroleum and Natural Gas (PNG) Tenure in BC

Resource Development Updates

Tenure Management Updates

Royalty Program Update

Policy and Regulatory Updates

Jobs and the Economy

Page 2.Page 2.



PART 2 – TENURE

Resources for Tenure Managers

Introduction to BC’s land and zone systems

BC’s Tenure Options

Permits

Drilling Licences• Extensions, Groupings and Conversions

• Evaluation of Zones in Earning Wells

Leases• Land Plats

• Continuation Options

• Zone Specific Retention

Page 3.



PART 3 – GENERAL ADMINISTRATION

e-Payments

Transfers, Encumbrances and Related Instruments

Page 4.


MINISTRY STRUCTUREMINISTRY STRUCTURE

Page 5.

Deputy MinisterMinistry of

Energy and Mines

Executive LeadTitles and Corporate Relations Division

Assistant Deputy Minister

Oil and Gas Division


Mines and Mineral Resources Division


Electricity and Alternative Energy

Division


TITLES & CORPORATE RELATIONS DIVISIONTITLES & CORPORATE RELATIONS DIVISION

Page 6.

Executive LeadTitles and Corporate Relations Division

Corporate Services Branch

Petroleum & Natural Gas Titles Branch

Corporate Policy, Planning &

Legislation Branch


PNG TITLES BRANCHPNG TITLES BRANCH

Page 7.

May Mah-PaulsonExecutive DirectorPetroleum & Natural Gas Titles Branch

Terry BranscombeSenior Tenure Management

Advisor

Debbie FischerDirector

Tenure & Revenue Management

Garth Thoroughgood

DirectorResource

Development

Dave RichardsonManagerGeology

Chris BlaneyManager

Crown Sale & GIS Services

Geoff TurnerDirector

Policy & Planning


ACQUIRING PNG TENURE IN BCACQUIRING PNG TENURE IN BC

Page 8.


PNG TENUREPNG TENURE

Page 9.

Tenure does provide:exclusive rights to the subsurface resourceright to apply to the OGC for activities approval

Tenure does not provide:the authority to conduct any activities on lands (e.g., drilling)


DISPOSITION PROCESSDISPOSITION PROCESS

Page 10.

12 sales per year

106 day process


ADDITIONAL INFORMATION SOURCESADDITIONAL INFORMATION SOURCES

Posting Requests

http://www.empr.gov.bc.ca/Titles/OGTitles/SalesNotices/Pages/Instructions.aspx

Submitting a Bid

http://www.empr.gov.bc.ca/Titles/OGTitles/InfoLetters/IssueDate/Pages/TACRD-11-03.aspx

Disposition Dates for 2011-2012


Page 11.


RESOURCE DEVELOPMENT UPDATESRESOURCE DEVELOPMENT UPDATES

Page 12.

First Nations Engagement

Community Engagement

Boreal Caribou


FIRST NATIONS ENGAGEMENTFIRST NATIONS ENGAGEMENT

“PNG Tenure 101” Presentations to Chief & Council and Lands Staff

Responsive to First Nation comments

Provide more detailed mapping and information for specific sites

Meet to resolve area-specific issues

Page 13.


TREATY 8 CONSULTATION PROCESS AGREEMENTS (CPAs)TREATY 8 CONSULTATION PROCESS AGREEMENTS (CPAs)

To assist in the First Nations’ capacity to review and respond to oil and gas activity referrals

A number of Treaty 8 CPAs expired March 31, 2011

BC’s Ministry of Aboriginal Relations and Reconciliation is leading the negotiations for new Treaty 8 CPAs

The BC Oil and Gas Commission has developed Interim Consultation Procedures to guide consultation where there is no signed CPA in effect with a Treaty 8 First Nation

http://www.bcogc.ca/firstnations/consult.aspx

Page 14.


COMMUNITY ENGAGEMENTCOMMUNITY ENGAGEMENT

Landowner Notification Program

Forum for community engagement

Farmers’ Advocacy Office

Page 15.


BOREAL CARIBOUBOREAL CARIBOU

Page 16.


BOREAL CARIBOU RRAsBOREAL CARIBOU RRAs

In June 2010, 500,000 hectares of boreal caribou habitat were set aside as “resource review areas” (RRAs) where no PNG tenure requests would be accepted for a minimum of five years

For more information, see Information Letter TACRD-10-10


Page 17.


BOREAL CARIBOU – UPDATESBOREAL CARIBOU – UPDATES

August 2011

Ministry of Environment (MOE) publicly released the “Implementation Plan for the Ongoing Management of Boreal Caribou”

Province initiated engagement with First Nations to discuss implementation activities

Industry supportive of a collaborative approach in implementing the Plan, including an industry funding model

September 2011 – MOE legally established environmental objectives for boreal caribou (Wildlife Habitat Areas and Ungulate Winter Ranges) which must be considered by the BC Oil and Gas Commission when issuing a permit

Page 18.


BOREAL CARIBOU – NEXT STEPSBOREAL CARIBOU – NEXT STEPS

Consultation with First Nations and stakeholders on the “Implementation Plan for the Ongoing Management of Boreal Caribou”

Establishment of habitat management polygons for the Chinchaga boreal caribou range

Establishment of operating practices to be applied to oil and gas activities within designated caribou habitat management polygons

Page 19.


TENURE MANAGMENT UPDATESTENURE MANAGMENT UPDATES

Page 20.


ACTIVE PNG TENUREACTIVE PNG TENURE

Page 21.

2011 (to Sept)

2010 (to Dec) 2009 (to Dec)

Active PNG Tenure (all types)

14,626

14,637

14,710

Drilling Licences:

- Leases converted from Licence 105 288 284 - Average turnaround (days) 64 109 122

Leases:

- New s.58(3)(a) continuations 389 377 283 - New s.58(3)(c) continuations 53 54 41 - New s.61 continuations 11 3 18


GEOLOGYGEOLOGY

Land Plats

Zone Specific Retention

New Zone Designations

Page 22.


eBUSINESSeBUSINESS

Integrated Petroleum System (iPS)

iPS will transition 3 legacy applications to current technologyPetroleum Titles System (PTS)

Petroleum Accounts Receivable System (PARS)

Sales Parcel System (SPS)

May 2012 – Completion of application delivery and integration testing

September 2012 - Production launch, including eBidding

ePayments

New service provider

To enhance performance and response time, all code is being reviewed and rewritten, if necessary

Page 23.


ROYALTY PROGRAM UPDATEROYALTY PROGRAM UPDATE

Page 24.


TARGETED ROYALTY PROGRAMSTARGETED ROYALTY PROGRAMS

What was the challenge? What was the solution?

BC drilling activity very concentrated during winter months, when ground frozen

Summer Royalty Credit Program

Western Canada sedimentary basin deepens towards the West

Deep Royalty Credit Program

New, conventional wells with lower productivity

Marginal Royalty Program

Tight gas development Ultra-marginal (tight gas) Royalty Program

Coalbed gas potential development challenges

Coalbed Methane Royalty Program

“White spaces” and areas with limited infrastructure (roads/pipes) available

Infrastructure Royalty Credit Program

Huge potential in new, remote, high-risk unconventional resources

Net Profit Royalty Program

Page 25.


TARGETED ROYALTY PROGRAMS (CONT’D)TARGETED ROYALTY PROGRAMS (CONT’D)

These programs can be combined in many cases, thus providing enough margin to move certain projects to economic territoryExample - a well that…

is a road project (an infrastructure credit), is drilled in the “summer”, is deep, and is marginal…

…can receive all the associated benefits for those programsFor more information:

http://www.empr.gov.bc.ca/OG/oilandgas/royalties/Pages/default.aspx

Page 26.


POLICY & REGULATORY UPDATESPOLICY & REGULATORY UPDATES

Page 27.

Industry Engagement

New Policies & Information Letters

Hydraulic Fracturing & Disclosure

Review of the PNG Act & Regulations


INDUSTRY ENGAGEMENTINDUSTRY ENGAGEMENT

In May 2008, the BC Tenure Working Group was established with participants from both industry and government. The Working Group continues to meet regularly to discuss:

Improved communication

Legislation and Regulations

Opportunities to work more efficiently and effectively

Educational opportunities

eBusiness

Shared Principles have been developed to help guide discussions around policy, legislation and regulation changes

Page 28.


NEW - POSTING LARGERPNG LEASESNEW - POSTING LARGERPNG LEASES

As of February 2011, the Ministry no longer limits lease posting size to an area of one gas spacing area

All posting requests will continue to be evaluated on a case-by-case basis and the Ministry may request written justification to support the request



Page 29.


NEW - SECTION 3(5.1) DRILLING LICENCE EXTENSION POLICYNEW - SECTION 3(5.1) DRILLING LICENCE EXTENSION POLICY

Policy developed in February 2011 which includes a set of factors the Ministry will consider in evaluating extension requests under s3(5.1)



Page 30.

DL Regulation, Section 3(5.1), “The minister may grant one or more extensions of a drilling licence each for a period of one year or less if

(a) an application is made to the director before the end of the current term of the licence and is accompanied by rental of $3.50 per ha a year, (b) an application to drill an earning well has been made to the commissioner at least 30 days before the end of the current term of the licence, and (c) drilling of an earning well has been delayed pending completion of

(i) an environmental or socioeconomic study, (ii) a public hearing, or (iii) a planning or consultation process.”


REVISED - BIDDING PROCEDURESREVISED - BIDDING PROCEDURES

The “Bidding Procedures for Dispositions of Crown Petroleum and Natural Gas Rights” were revised in April 2011

Bid letters must include the total amount tendered (including fee, rent and bonus)



Page 31.


NEW - HYDRAULIC FRACTURING AND DISCLOSURENEW - HYDRAULIC FRACTURING AND DISCLOSURE

The online registry, announced in September 2011, supports the Ministry’s goal of creating a more open and transparent government

It will be accessible to everyone, allowing anyone interested to search for the locations of where hydraulic fracturing activities are taking place, and for detailed information about the practices and additives used during these activities

The site will closely mirror the U.S. version known as FracFocus.org

Public disclosure will be mandatory and enforced

Page 32.


REVIEW OF THE PNG ACT & REGULATIONSREVIEW OF THE PNG ACT & REGULATIONS

The Petroleum and Natural Gas Act (PNG Act) has not had an overall review since the late 1980s

Due to significant technological advances allowing the development of unconventional PNG resources, the implementation of the Oil and Gas Activities Act and emergent environmental issues, the Ministry has decided that a full review of the PNG tenure system within the PNG Act and regulations is warranted at this time

Page 33.


DISCUSSION PAPERDISCUSSION PAPER

To seek input from interested parties regarding what changes to the tenure provisions of the PNG Act and regulations are required to improve the PNG tenure system

Comments received in response to the discussion paper will be used to help inform the proposal for future amendments to the PNG Act and regulations

The discussion paper was made publicly available on September 15, 2011

http://www.empr.gov.bc.ca/Titles/OGTitles/OtherPublications/Documents/PNG%20Tenure%20Discussion%20Paper.pdf

Submission deadline for comments - October 17, 2011

Page 34.


NEXT STEPSNEXT STEPS

The Ministry will be compiling a list of suggested changes to the PNG tenure system

Analyses will be conducted on the suggested changes to assess whether they will help meet the provincial government’s direction and the Ministry’s objectives for the BC energy sector

Suggested changes to the PNG tenure system may be accommodated by a change to the PNG Act, one of its regulations or a change in Ministry policy that does not require any change to the Act or its regulations

Page 35.


JOBS & THE ECONOMYJOBS & THE ECONOMY

Page 36.


CROWN SALESCROWN SALES

Page 37.

2011 (to Sept)

2010 (to Sept) 2010 (to Dec)

# parcels offered 243 549 615 # parcels disposed 201 481 543 # hectares offered 150,212 367,269 414,375 # hectares disposed 121,165 335,094 381,132 Total tender bonus $ 123,189,109 $ 780,550,974 $ 844,414,026 Average price/hectare $ 1,017 $ 2,329 $ 2,216


LIQUEFIED NATURAL GAS (LNG)LIQUEFIED NATURAL GAS (LNG)

In September 2011, the Premier confirmed Provincial commitment to the development of LNG export capacity in BC

The announcement included commitments in four areas:

Greater emphasis on the permitting and decision making processes

Skills training and development

Investment and attraction

International marketing

Page 38.


PNG OPPORTUNITIESPNG OPPORTUNITIES

Continue to develop and implement strategies to make PNG tenure available

Continue to create and implement progressive and innovative strategies and approaches for effective policy, legislation and regulations that support a modernized tenure issuance and management system

Continue to provide an attractive investment environment through royalty and infrastructure programs

Page 39.


QUESTIONS?QUESTIONS?

Page 40.


Page 41.

PART 2

Tenure


Tenure ManagementTenure Management

Resources AvailablePublished Information• Legislation and Regulations – QP• Land Plats (GIS shapefiles) – DataBC• DLS Spacing Areas and Hectares maps – QP• Branch website

Online Tools• Petroleum Titles Online (PTO)

– Postings– Map creation and viewing– PTS Web – title searches – FREE

• e-Payments

Page 42.


PTS Web – Title SearchesPTS Web – Title Searches

www.ptonline.gov.bc.ca

Title number and type

Term and Area

Key Dates: Issuance, Effective, Expiry

Tracts – Lands and Rights held

Ownership

Continuation History

Transfer History

Encumbrance History

Special Projects, Wells, Units, Groupings

Page 43.


Online Tools – PNG Titles HomeOnline Tools – PNG Titles Home

Page 44.

Subscription Services (e-mail)

Posting MapsSale NoticesSale ResultsInfo Letters

Acts & RegsPublicationsPTO & PTS WebePayments


Acts and RegulationsActs and Regulations

Petroleum and Natural Gas ActGrid Regulation

Drilling Licence Regulation

Fee, Rental and Work Requirement Regulation

Storage Reservoir Regulation

Page 45.


Online ResourcesOnline 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]

ePaymentshttps://epayments.gov.bc.ca

[email protected]

Page 46.


BC’s Land & Rights SystemsBC’s Land & Rights Systems

Dominion Land Survey (DLS)

Petroleum Grid (NTS)

Spacing Areas

Well Locations

Zones, Pools, & Plats

Page 47.


DLSDLS

PNG Grid Regulation Schedule 1Limited to Peace River Block

TWPs 76 - 88RGEs 13 – 26 W6M

Legal hectarages are as surveyedRefer to published map entitled “Peace River Block Gas Spacing Units and Hectarage Map” available from Queen’s Printer (Crown Publications division)

Page 48.


DLS – Peace River BlockDLS – Peace River Block

Page 49.

Expect other-than-normal spacing areas


Petroleum Grid (NTS)Petroleum Grid (NTS)

PNG Grid Regulation Schedule 3

Applies everywhere the DLS does not

Based on longitude and latitude

Sub-divisions achieve oil and gas spacing areas similar in size to DLS

Areas taken from lookup tables

Download from “Other Publications”

Also for geothermal and coal tenures

Page 50.



Page 51.

8° long.

4° lat.

Well location example:d-010-A/094-H-16

Title description example:094-H-16 Blk A Unit 10



Page 52.

Well location example:d-010-A/094-H-16

Title description example:094-H-16 Blk A Unit 10


Page 53.

1 10 1 10 1 10 1 10 1 10

91 100 91 100 91 100 91 100 91 100

X

1 10 1 10 1 10 1 10 1 10

91 100 91 100 91 100 91 100 X 91 100

1 10 1 10 1 10 1 10 1 10

91 100 91 100 91 100 91 100 91 100

D C B A

L K J

Normal Spacing – NTSNormal Spacing – NTS


Other-than-Normal SpacingOther-than-Normal Spacing

OGAA: Drilling and Production RegulationOTN’s are an OGC approval

PNG Act – section 65.1

Generally larger than normal spacing areasSome are already declared

Peace River Block – Petroleum GridBC – YT, NWT, AB boundariesBC – USAProtected Areas

1 OTN gas spacing = 1 gas spacing for calculating earnings from Drilling Licences

Page 54.


Page 55.

OTN – Peace River BlockOTN – Peace River Block


Page 56.

41

50

31

40

21

30

11

20

1

10

1

91

100

9 1

81

90

71

80

61

70

51

60

OTN – Alberta boundaryOTN – Alberta boundary


Page 57.

91 100

91 100

1 10

1 10

91 100

91 100

J I L

G H E

YT / NWT

X X X X X X

X X X X X X

X X X X X X

X X X X X X

X X X

X X X

X X X

X X X

X X X

X X X

X X X

X X X X X X X X X

X X X X X X X X X

X X X X X X X X X

X X X

X X X

X X X

X X X

OTN – NWT / Yukon boundariesOTN – NWT / Yukon boundaries


Tenure Size (hectares)Tenure Size (hectares)All tenure rentals are based on area, measured in whole hectaresPetroleum Grid (NTS) Unit

“NTS Unit Areas” (download)Crown Publications map GM15For NWT/YT and other boundary areas, call us

Peace River Block (DLS)Crown Publications map GM14 (2 sheets)• Includes size of fractional spacing's on NTS/DLS

boundary• Depicts lands in other-than-normal spacing areas

Regardless of source, calculate area the sameSum individual unit areas in title, keep intermediate fractionsRound sum to nearest whole hectare

Page 58.


Tenure Size – NTSTenure Size – NTS

Exercise; find the combined area of NTS Units 42-47 of Block E in 094-H-06

Map

94 EFGH

Group

5 to 8

Block

E F G H

Unit

41-50Page 59.

Total6 X 69.8 or 418.8

Rental Size: 419 ha.


Tenure Size – DLSTenure Size – DLS

Page 60.

Exercise; find the total area of the two gas spacing areas outlined at right

OTN: 19.0 + 21.4 + 39.7 + 38.0 + 66.0 + 66.0 = 250.1 ha.

Sec 8-88-25: infer 263.9

Total250.1 + 263.9 = 514.0Rental Size: 514 ha.


Well IDs and LocationsWell IDs and LocationsWell Authorization (WA)

Simple 5-digit number assigned to each OGC well permitPlease use wherever possible in correspondence

Unique Well Identifier (UWI)16-digit code issued at spudExamples• DLS: 102041308617W603• NTS: 200D024H094H1604

Digit 1: DLS (1) or NTS (2)Digit 2: Always zeroDigit 3: Sequence of the well at that bottom-hole location

• Value of 1 never used

Digits 4-14: Approved (then actual) bottom-hole locationDigits 15-16: drilling or completion event sequence

• First CE gets same code as its DE

Well NameOperator(s), HZ, and surface location

Page 61.


BC’s PNG Zone SystemBC’s PNG Zone System

Page 62.

Zones are packages of one or more formations (marked in white on diagram)

Defined by specific intervals on specific logs of a reference well

Zone boundaries carefully selected to avoid disputes; primarily widespread markers in non-productive strata

5-digit codeDigits 1-3: Zone seriesDigits 4-5: Geographic IDCode value increases as age decreases

Available for download as a PDF wall chart


Zones, Pools, & PlatsZones, Pools, & Plats

Page 63.

Rights usually described in relation to a zone base, e.g.:

PNG Down to Base 36002 (from surface)NG In 36002PET From Base 38001 To Base 36002PNG Below Base 36002

A land plat depicts the spacing areas recognized to include a specific productive stratum or pool in a specific tenure area

LeaseProve a spacing area covers a productive pool; continue the zone

Drilling Licence

Evaluate a formation (first); earn the zone


Permits

Drilling Licences

Leases

Page 64.

BC’s Oil and Gas TenuresBC’s Oil and Gas Tenures


Other Tenure We ManageOther Tenure We Manage

Underground Storage Lease

PNG Act sections 126 – 132

Special Agreement

PNG Act section 72

Geothermal Resources Act

Permits

Leases

Page 65.


Permits

Page 66.


Main FeaturesMain Features

A right to explore for oil and gas

Available only by Crown salePostings up to one NTS block accepted, with cause

One year primary term

Term renewal requires annual exploration spending

Actual exploration spending or cash-in-lieu paymentRates defined in Fee, Rental and Work Req. Reg.Renewal options and work requirements vary by class

Page 67.


Page 68.

Permits – Classes, Rents, and WorkPermits – Classes, Rents, and Work

by Year and Permit Class(Dollars per Hectare)

Class A Class B Class C Class DYEAR Rent Work Rent Work Rent Work Rent Work

1 1.05 1.00 1.05 1.00 1.05 1.00 1.05 0.502 1.05 2.00 1.05 1.50 1.05 1.00 1.05 0.503 1.05 4.00 1.05 3.00 1.05 2.00 1.05 1.004 1.05 5.00 1.05 4.00 1.05 2.50 1.05 2.505 1.05 5.00 1.05 4.00 1.05 3.00 1.05 3.00 6 1.75 7.50 1.75 6.00 1.75 5.00 1.75 5.007 1.75 15.00 1.75 10.00 1.75 7.50 1.75 7.508 1.75 20.00 1.75 15.00 1.75 7.50 1.75 7.50

Source: PNG Fee, Rent and Work Requirement Regulation


Permit RenewalsPermit Renewals

Renewal optionsAffidavit of expenditures for work done

Cash-in-lieu payment for work not done

Refundable deposit in amount equal to past year plus upcoming year work requirement, along with a written work commitment

May surrender all or part of a Permit at renewal

Payment of applicable rent, fees, deposits, and penalties within 60 days after expiry

Page 69.


Permits – Lease SelectionPermits – Lease Selection

Must meet 5th-year work requirement (Class B)

May convert up to 50% of the Permit area

Leases must be configured, where possible, with 4 sides in 1 of 6 shapes defined by NTS units, and

Shapes must coincide with gas spacing areas

Leases must corner other leases, or be separated by at least 2 NTS units

No splitting of gas spacing areas

Exceptions made to reach 50% of Permit area

No one Lease may exceed 9 GSUs

Page 70.


Page 71.

Possible Configurations - PNG Act s.55

1 10 1 10 1 10

91 100 91 100 91 100

1 10

1 10

1 10

91 100 91 100 91 100

1 10

1 10

1 10

91 100 91 100 91 100

K J

F G

6 x 6

4 x 8

4 x 6

2 x 2

2 x 4

4 x 4

LEGEND

Permit Boundary

Selected Leases

Permits – Lease SelectionPermits – Lease SelectionAllowable Lease configurationsExceptions may be considered if 50% rule cannot be met with these configurations


Drilling Licences

Page 72.


DL - Main FeaturesDL - Main Features

A right to explore for oil and gas by drilling wells

Not a right to take production (for sale); testing OK

Acquired only from Crown SalePostings: 1 – 36 gas spacing areas

Term is 3, 4, or 5 years; “Prescribed Area”

Term may be extended, at least once, more depending on circumstances

Splits not allowed; but partial surrenders OK

Convertible to Lease by drilling or grouping

May convert some GSAs to Lease for production and defer any unused entitlement to later in DL term

Page 73.


DL - Term ExtensionsDL - Term Extensions

Section 3(5) - “Standard Extension”One year period

Available once only at any time after primary term

Pre-requisite for some other extension types

$500 fee; double rent ($7/ha)

Written application not required• Apply from e-Payments Statement; do not use Submission

• Available only up to expiry date (NO GRACE PERIOD)

Page 74.



Section 3(5.1) - “Special Extension”Available after term expiry or another extension

Renewable for one year or less, by application

Requires:• Application submitted to MEM before expiry

• WA application filed with OGC at least 30 days before expiry

• Start of drilling is delayed past term expiry or extension by one of:– Environmental or socio-economic study

– Public hearing

– Planning or consultation process

Application• No extra fee, normal DL rent ($3.50/ha)

Approval is discretionary• Decisions will be based on policies in Information Letter TACRD-11-02

Page 75.



Section 3(5.3) - “Coal Bed Gas Extension”Applications must be sent before expiry

Applies only to land and rights within a coalbed gas project approved by the OGC under s.75 of OGAA

Lands and zones outside the project revert to Crown reserve

May be used up to 5 times after the primary term and the “standard" extension have expired

Page 76.


DL - Term ExtensionsDL - Term ExtensionsSections 3(7) – “Drilling past expiry”

Available only after the “standard” extension

Extends DL term to the date a rig is released from drilling operations

Drilling must be:• Past 150m (from surface) at midnight on expiry date

• Conducted “diligently”– Rig may be withdrawn during drilling interruptions due to road bans or

unsafe working conditions, e.g., avalanche hazard

Section 3(9): No other well may be started during extension, except in the event of mechanical failures in the first well

Section 3(10): Other DLs expiring after standard extension may be extended to the same date if they are grouped with the DL being drilled

Page 77.


DL - GroupingDL - Grouping

One Group per Earning Well

Earning well may be used only once to group DLs

Criteria for inclusion:In the opinion of the Director, an "earning" well was drilled on one of the DLs to be grouped

All DLs to be grouped lie within 4 km. of the DL deemed to contain the earning well• Verify using scaled map, GIS, PTO Viewer• If in doubt, call to receive written verification

Written application sent before earliest expiring DL

Written authority of one titleholder of each DL if applicant is not the Payor or a titleholder of all DLs

Page 78.


DL - GroupingDL - Grouping

Number of DLs per GroupIf any one DL had more than four gas spacing areas, normal or OTN), when it was issued, that DL may be grouped with only one other DL for each earning well drilled on it

If all DLs to be grouped contained four or fewer gas spacing areas when they were issued, the number of DLs in the group is limited only by the 4 km. distance rule

Page 79.


Why Small DL Grouping?Why Small DL Grouping?

Page 80.

3,500m 3,500m

DL 1

DL 2

DL 1

DL 16


Page 81.

Grouping – Distance GuideGrouping – Distance GuideFour NTS Units or DLS quarter-sections are always less than 4 kilometres when measured directly north-south or east-west

For all other cases, use a scaled map, GIS-capable software, or PTO Viewer

1 10 1 10 1 10

91 100 91 100 91 100

1 10

1 10

1 10

91 100 91 100 91 100

1 10

1 10

1 10

91 100 91 100 91 100

K J

F G

ok

?

? ok

Earning well


Page 82.

Relies on precise point selection, so zoom in as close as possible, keeping both endpoints visible

1. Click the ‘Measure Distance’ icon on the PTO toolbar (hover)

2. Click on first endpoint

3. Click on second endpoint

4. Read measured distance from right sidebar

PTO – Distance Tool HowToPTO – Distance Tool HowTo

1

2

3

4


Awarded in terms of gas spacing areas and zonesGSAs awarded depends on:

Prescribed Area 1, 2, or 3• When DL spans two or more Areas, earnings are based on the

Area with the greatest earnings• Information Letter TITLES-05-03

Combined lengths of drilling events• Less any length drilled through rights held by lease that are

not necessary for the purpose of evaluating the DL

Zones awarded are to base of deepest zone "evaluated”One well may penetrate 2 or more DLs

Licensee must nominate one to be the ‘drilled’ DLEarnings attach to ‘drilled’ DL onlyNominated DL may be grouped with any qualified DL

Page 84.

Lease EarningsLease Earnings


Page 85.

DL Term – Prescribed AreasDL Term – Prescribed Areas Primary Term

Measured Wellbore Length (meters)

Column 2 3 years

Column 3 4 years

Column 4 5 years

less than 1001 2 2 3

1 001 to 1 300 3 3 4

1 301 to 1 500 4 5 6

1 501 to 1 800 5 6 8

1 801 to 2 100 6 7 9

2 101 to 2 400 7 8 10

2 401 to 2 600 8 9 11

2 601 to 2 800 9 10 12

2 801 to 3 000 10 12 14

3 001 to 3 200 11 13 16

3 201 to 3 400 12 14 18

3 401 to 3 600 13 15 20

3 601 to 3 800 14 16 22

3 801 to 4 000 15 18 24

4 001 to 4 200 16 20 26

4 201 to 4 400 17 22 28

over 4 400 18 24 30

Download from link in “Info Letters”

Info Letter TITLES-05-03

Link: “NEBC DL Boundary .pdf Map”


Earning WellsEarning Wells

Definition before August 20, 2009 remains in force:"A well drilled in a spacing area all or part of which is in a location described in a drilling licence, and includes a well redrilled in a spacing area formerly described in a permit, drilling licence, or lease”

A "redrilled" well refers to a “re-entered” well, so the work carried out may consist of one or more of:• deepening the existing well sufficiently far to log and evaluate one or more

underlying zones (where ‘zone’ refers to zone as defined in the PNG Act)• completing a formation not previously completed in the well• re-completing one or more formations in the well

Re-entry must yield significant new geological informationFor lease entitlements, total wellbore length for re-entered wells is measured from surface to the base of the new bottom-hole location or from surface to the base of the deepest new completion interval, whichever is applicable

Page 86.


Earning Well – Off DLEarning Well – Off DL

Page 87.

Drilling Licence Lease


Earning WellsEarning Wells

Amendments of August 20, 2009Wellbore must be the first to evaluate any one zone on at least one spacing area• Rig release date determines drilling order

• Need not be spacing area where bottom-hole is located

• Wells drilled on previous tenures not counted

Evaluation is deemed to have occurred when either:• 150m of wellbore has been drilled in a spacing area, or

• the Director believes the well evaluates the zone first

Page 88.


Page 89.

Earning Well Scenario AEarning Well Scenario A

1

Spacing Area 1 Spacing Area 2

2 3

4


Earning Well Scenario AEarning Well Scenario A

Page 90.

3


2

4

<or>

1


Page 91.

Earning Well Scenario B-1Earning Well Scenario B-1

12



Page 92.

Earning Well Scenario B-2Earning Well Scenario B-2

1

2



Earning Well Scenario BEarning Well Scenario B

Page 93.

1


2


Earning Well Scenario CEarning Well Scenario C

Page 94.

DL 1 DL 2

2

1



Earning Well Scenario CEarning Well Scenario C

Page 95.

DL 1 DL 2

1 or 2


Pad Well ExamplePad Well Example

Page 96.

Your geologist proposes to drill five pad wells as depicted on the left. Each will be drilled to the same depth and drill more than 150m into each spacing area they penetrate

How does the order of drilling affect lease entitlements?

e.g., compare:A-B-C-D-EB-A-C-D-E

B

A

E D

C


Lease Selection ApplicationsLease Selection Applications

e-Payments Submission THEN Application Letteradd Letter of Authority if neither Payor nor Titleholder

Include e-Payments Submission number in subject line

Letter must include, for each earning well:Name and OGC Well Authorization (WA)

Estimated total eligible wellbore length• Enclose the directional survey where applicable

Estimated earnings (gas spacing areas)

Statement of deepest evaluated formation or zone

Desired configuration of Leases• Earnings from two or more WAs may be combined

• Use legal descriptions that match formats used in the Drilling Licence

Page 97.


Lease ConfigurationLease Configuration

The number and location of selected Leases are up to the applicant, except Leases must:

include all spacing areas to be placed on production

be located entirely within one DL

contain only contiguous tracts

not result in split gas spacing areas (oil wells excepted)

Page 98.


Evaluation of Zonesin Earning WellsEvaluation of Zonesin Earning Wells

Page 99.


EVALUATION OF ZONES IN EARNING WELLSEVALUATION OF ZONES IN EARNING WELLS

Conversion of petroleum and natural gas title in Drilling Licence form into Lease form requires the drilling of “earning well(s)”.

The sum of all metres drilled in a well determines Lease geographical size, and the Lease will contain rights down to the base of the deepest geological zone contained in the Drilling Licence that is “evaluated” by the drilling of the earning well.

The Drilling Licence is a form of tenure designed for hydrocarbon exploration by drilling. Therefore, the requirement to evaluate zones is applied in a broad, exploratory sense.

If an earning well drills into and finds significant or substantial new geological information about a zone, then that well is credited with evaluating that zone.

It is not necessary to completely penetrate a zone in order to evaluate it. For example, if a zone is drilled into and, through the recording of well logs, mud logs, chip samples and other well data, significant new information is obtained regarding the zone, then the zone is considered to be evaluated.

Page 100.


EVALUATION OF ZONES IN EARNING WELLSEVALUATION OF ZONES IN EARNING WELLS

Examples of such evaluation include the determination of the existence of a hydrocarbon-bearing reservoir, a wet reservoir, a tight reservoir or the definitive absence of a reservoir, or the geological characterization of a zone in a new area.

The existing state of exploration of a zone in an area is an important factor: if drilling takes place in a remote or wildcat exploratory area, or if little is known about the zone of interest, then smaller amounts of new information will be considered significant in the evaluation of the zone.

Similarly, a zone known to have a great degree of local geological variability will require only a small amount of new significant drilling information in order to be considered evaluated.

Conversely, a thick but geologically uniform zone in an area of existing wells will require a substantial penetration in order to be evaluated.

Page 101.


Geology Section Petroleum and Natural Gas Titles Branch

Geology Section Petroleum and Natural Gas Titles Branch

• Manages the geological Zone Designation System, the framework upon which Crown Petroleum and Natural Gas rights are described and issued

• Creates and maintains the system of GIS Land Plats that illustrate where and in what geological zones the Crown recognizes oil and gas pools developed by industry: this determines where industry may continue title to leased Crown rights versus where rights return to the Crown for re-issue at Crown Land Sales

• Assesses industry technical applications for Licence conversion to Lease and Lease continuation

• Reviews land value of oil and gas potential in parcels offered at Crown Land Sales for fair value

• Provides information on oil, gas and geothermal potential in Land Use

• Contributes to development of policy, regulation and legislation

Page 102.


Leases

Page 103.


LeasesLeases

A right to explore for and produce oil and gas

Available from

Crown Sale• *** NEW*** Large Lease Postings Greater Than

1 Gas Spacing Area are Now Possible, to Facilitate Greater Gas and Oil Recovery and Early Production in Resource Play Areas

Converting Permits and Drilling Licences

Split from another Lease (transfer)

May be continued beyond initial primary term

Page 104.


Leases – TermLeases – Term

Page 105.

Inside Area 1: 5 years

Outside Area 1: 10 years

A Lease overlapping both areas has a 5-year term

Posting requests and Lease selections intersecting the boundary should be done carefully:

Term is the shorter of 5 or 10 years if Lease straddles boundary


LAND PLATSLAND PLATS

Page 106.


LAND PLATSLAND PLATS• The Land Plat illustrates where the Director of Petroleum

Lands has recognized that a pool of natural gas or petroleum has been delimited through the exploration and development work of industry

• The Land Plat has a surface geographical component and a subsurface geological component

• The Land Plat illustrates in map view the gas or oil Spacing Areas delimited in a pool, and names the geological formation in which the pool is recognized

• Land Plats are indexed by naming a Tenure Area (oil or gas field name), Geological Formation, Sequence Letter and Hydrocarbon Type (oil or gas)

Page 107.


LAND PLAT: ALTARES, Gething ‘A’ Gas PoolLAND PLAT: ALTARES, Gething ‘A’ Gas Pool

Page 108.


LAND PLATSLAND PLATSLand Plats are the fundamental record documenting the Director’s recognition of delimited oil and gas pools, both internally to government and, when published, externally to industry

In a Lease, those Spacing Areas falling within a Land Plat can be continued beyond the primary term of the Lease

Lease continuation application process is much simplified: Investment of geological staff expertise in technical submissions can be saved where lands are recognized within Land Plats, and refocused on those Spacing Areas not yet recognized, where recent drilling, evaluation or geophysical work may demonstrate to the Director that lands merit being included in a Land Plat

GeoBC.gov.bc.ca is now developing Land Plat and Tenure Area coverage for its web site service

Page 109.


LAND PLATS LAND PLATS

The Act requires “delimiting” of a pool for Lease continuation under section 58

The Land Plat illustrates the delimited pool

Pools are delimited by Control Points of hard and soft data:

Wells posting hard results at specific locations

2D Seismic line locations; 3D seismic survey grids

Known geological formation characteristics

Mid to long term production and pressure histories

Page 110.


LAND PLATSLAND PLATS

Sources of Evidence Delimiting Land Plats:Industry applications for continuation interpreting the results of drilling, seismic and well evaluation work

Ministry evaluations of drilling, log, sample, drillstem test, completion and production results, posted at the specific well locations, combined with geophysical evidence extending pools beyond well control

Analogous wells, old and new, with similar properties

Evaluations and approvals received from the OGC

Thousands of geophysical and geological interpretations on file from all Crown title holders, representing decades of information and analysis

All Analysed Spacing Area by Spacing Area

Page 111.


LEASE CONTINUATION OPTIONSLEASE CONTINUATION OPTIONS

Page 112.


Leases – ContinuationsLeases – Continuations

Several forms

Section 62 - Penalty Payment

Section 61 - Firm Well Commitment Made Prior to Expiry

Section 61,1 (Disposal wells: rights revert – zone specific)

Section 58 (rights revert – deep or zone specific)

One year, in all cases

Download Guides from Web Site “Other Publications”:

“Lease Continuation Options”

"Recommended Technical Package Contents"

Page 113.


s. 62 Continuations. 62 Continuation

Continuation by Penalty PaymentYear 1 $15.00 / Ha

Years 2 or 3 $25.00 / Ha

Available three times for any 10-year Lease

No rights reversion

Need not be used in consecutive years

Application made through ePaymentsUse the statement when no other continuation types are anticipated for the Lease, or

Use submission and written application when other continuation types (splits) are anticipated or desired for the Lease

Page 114.


s. 61 Continuations. 61 ContinuationContinuation by Drilling Commitment made Before Expiry

Drill one or more wells on Lease during continuation year, evaluating at least one zone held by that Lease

Application Must be in Writing and Must be made Prior to Expiry

Available for any Lease that is expiring

No rights reversion

May be used more than once, but spacing area(s) of successful commitment wells will be split out under s.58

Applies only to Lease(s) being drilled

Director may cancel Lease for non-performance

Applications made through e-Payments

The Act requires sending written application

Page 115.


s. 61.1 Continuations. 61.1 ContinuationContinuation for Disposal Well and Planning Purposes

Continues spacing areas for existing disposal operations and spacing areas the Director believes will be required for effective future disposal, for example Coalbed Methane projects that advance across the land

Water, CO2, frac fluids, waste fluids

Shallow and deep rights revert

Spacing areas included in projects approved under s.75 of the Oil and Gas Activities Act are not eligible

Written application with supporting technical material to accompany e-Payments for first approval

Once approved, application is by annual rental until further notice by Director

Page 116.



Four types of continuation:58(3)(a): Eligible Spacing Areas

58(3)(b): Unit and Royalty Agreements

58(3)(c): Work Programs

58(3)(d): Establishment of a Well

All s.58 continuations subject to rights reversion: deep rights or zone specific (s.59)

Leases approved under two or more s.58 sub-sections may have to be split

Page 117.



s. 58(3)(a) – An Eligible Spacing Area is a spacing area that:

Contains a “petroleum well” or “gas well”

Is located in a project area approved by the OGC under s.75 of the Oil and Gas Activities Act

Director believes >50% covered by a designated MEM pool: The Spacing Area is in a Land Plat

Director believes contains a pool that is able to be drained by a well in an adjacent spacing area: The Spacing Area is in a Land Plat

Once approved, continuation is by rental payment until further notice; subject to annual review under the Act

Page 118.


s. 58 Continuations. 58 ContinuationSection 58(3)(b) - “unit or royalty agreements”

Portions of Lease subject to Unit or Royalty Agreements

Once approved, continuation is by rental payment until further notice; subject to annual review under the Act

Section 58(3)(c) - “work programs”

Must be designed to delimit a pool or field of oil or natural gas

May include multiple Leases

Not intended for multi-year exploration programs, depends on circumstances (e.g., access, scope)

Section 58(3)(d) – “drilling incomplete”

The drilling or work on the establishment of a well is incomplete on the expiry date

The Director is satisfied that the drilling or work will continue

Page 119.


s. 58(3)(c)s. 58(3)(c)

General FeaturesMay include multiple Leases, even multiple target zones, and different expiry dates

Requires written commitment to specific work: drilling, seismic, completions, re-entries - to delimit a pool

Do not suggest future drilling locations in an application under the previously discussed sec. 58(3)(a): these belong in a commitment to a Program of Work under sec. 58(3)(c)

Majority are one year only; exceptions to this on a case-by-case basis, typically due to very limited access and unusually large project scope

Non-performance of commitments jeopardizes future work program approvals

Page 120.


s. 58(3)(c)s. 58(3)(c)Application must include:

The portions of Leases to be included

The formation(s) and spacing areas that will be “delimited”

A firm commitment, e.g. “XYZ Corp. commits to carry out the following program of work: . . .”

A clear depiction (map) of where the work will take place in relation to the locations to be included

A clear explanation of how each spacing area will be evaluated by the work

Technical package contents

must demonstrate how the work will “delimit” a field or pool

Simple – drill a new well

Complex – interpreted seismic, X-sections, well results; some work may be contingent on the results of preceding work

Page 121.


s. 58(3)(c)s. 58(3)(c)

Programs with seismic components require a geophysical report at year end

Must include interpreted results of the work program, with illustrating maps and sections

Held confidential for 10 years, then is deposited with thousands of similar studies, as a future resource for your geological staff

“Requirements for Affidavits and Reports”See Titles Web Site for Report Requirements:

www.empr.gov.bc.ca/Titles/OGTitles/OtherPublications/Pages/Requirements.aspx

Page 122.


s. 58(3)(d)s. 58(3)(d)

Designed to allow leaseholders to finish drilling or “establishing” a well clearly in progress

Applies only to a single Lease

At minimum, must have Well Authorization before expiry

Estimated rig release date well past expiry

60 days to make any s. 58 application, but

We encourage s. 58(3)(a) within 60 days where possible

More scrutiny if well not spud by expiry

All rights below the base of the deepest objective zone named in the Well Authorization (WA) are subject to rights reversion, deep or Zone Specific

Page 123.


ZONE-SPECIFIC RETENTIONZONE-SPECIFIC RETENTION

Page 124.


ZONE SPECIFIC RETENTIONZONE SPECIFIC RETENTION

What does Zone Specific Retention mean?

The effect of the March 29, 2007 Act amendment implementing Zone Specific Retention is to return to the Province, at the end of the primary five-year or ten-year term of a new Lease, all the zones of a Lease that do not contain identified oil or natural gas deposits.

New petroleum and natural gas Leases will retain those zones found to contain oil or gas. The existing Zone Designation System will be used.

All other zones will revert to the Crown unless they can be continued under other applicable sections of the Act, including sections 58(3)(c) and (d) and sections 61 and 62. These sections allow continuation based on drilling, completions, work programs delimiting pools and the simple payment of penalty for ten-year leases.

Page 125.



What are the implications of Zone Specific Retention?

Applying Zone Specific Retention to new Leases, with all pre-existing title exempt, will create greater development opportunities for industry, while protecting the rights of holders of title acquired before the change in legislation, March 29, 2007.

The Province may re-post returned rights, giving the industry additional opportunities to explore for oil and gas in a more timely fashion. This amendment will result in:

o Increased opportunities for industry wanting to invest o Earlier discovery and development of new oil and gas poolso Earlier industry production revenue and Crown royalty revenueo The Crown’s recognizing on title the rights to behind-pipe hydrocarbon

zones encountered by a well

Page 126.



How will Zone Specific Retention be implemented?

The zone description framework has been developed and is in place in the standard Zone Designation System.

As is current practice, industry can receive Lease continuation by submitting written applications that assert the presence of hydrocarbon in zones in expiring title, in order to ensure those zones are reviewed for continuation of tenure.

Methods of continuing title to Leases will continue to include Programs of Work, drilling commitments and the submission of geological, geophysical and engineering information on the existence of a pool of oil or gas.

Page 127.


STRATIGRAPHIC CHARTSTRATIGRAPHIC CHART

Page 128.


Page 129.

STRATIGRAPHIC CHART


STRATIGRAPHIC CHART with ZONE DESIGNATION INTERVALS STRATIGRAPHIC CHART with ZONE DESIGNATION INTERVALS

The Stratigraphic Chart illustrates standard geological formation names used in British Columbia

Overlaid on the Stratigraphic Chart are major horizontal intervals, lying between white lines, each containing from one to several major geological formations. These horizontal bands represent slices of rock that are used in the standard Zone Designation System

The Zone Designation System was developed in 1988 for the purpose of administering the requirements of stratigraphic rights reversion, also referred to as “deep rights reversion”. Standard reference descriptions of geological intervals (“Zone Designations”) with well-chosen type wells are used to ensure consistency in the administration of rights . . .

Page 130.


STRATIGRAPHIC CHART with ZONE DESIGNATION INTERVALS STRATIGRAPHIC CHART with ZONE DESIGNATION INTERVALS

In a petroleum and natural gas Lease, when hydrocarbons are found in any part of a standard Zone Designation layer, then the entire layer is eligible for lease continuation.

The boundaries between layers are chosen at points where geological correlations are clear. Conflicts between companies over geological correlations, rights held, and vertical pooling are eliminated.

This system has functioned extremely well since its introduction, and easily facilitates the introduction of Zone Specific Retention

Page 131.



FREQUENTLY ASKED QUESTIONS

Q: Does Zone Specific Retention affect all my title?

A: This change does not affect any Lease that existed before March 29, 2007, nor any Lease issued from Permits or Drilling Licences that themselves existed before that date.

It affects only new title originating on or after March 29, 2007.

Page 132.



Q: What is the earliest date that my Leases may be affected?

A: New five-year Leases will be affected starting in late March, 2012.

Ten-year Leases granted in 2007 will begin to be affected in 2017.

Leases issued from Permits or Drilling Licences that existed before March 29, 2007 will not be affected.

Page 133.



Q: Do I have to complete and flow each zone to continue it?

A: No. If well, geophysical, geological or engineering data shows that a pool of oil or gas exists in a zone in any spacing area, then it qualifies for continuation. This consideration is independent of the status of a well.

The zone may be behind pipe, and in some cases the well may be abandoned, but well information proves a pool exists.

Section 58 of the Act states common eligibility requirements.

Page 134.



Q: How do I apply for continuation, when the time comes?

A: The current Lease continuation application process continues:

Provide a written submission under section 58 of the Act containing information that shows the existence of a pool of oil or gas in each zone in which hydrocarbons have been found.

As now, the Act requires each spacing area in a Lease to be assessed individually as eligible for continuation or not. Each spacing area in a zone should be addressed in an application .

Page 135.



Q: Do I have other options?

A: You may be eligible for continuation under several parts of the Act:

• Commit before expiry to drill a well under section 61 and all Lease zones will be continued.

• If existing well information does not delimit an oil or gas pool over all parts of a Lease, a Sec. 58(3)(c) Program of Work may use well completions, well tests, well drilling or geophysics to confirm or expand a pool.

• If current work on the completion, testing or drilling of a well is ongoing and directed at the establishment of evidence showing a pool exists, then continuation under section 58(3)(d) applies.

Page 136.



Q: How stringent are the requirements of proof?

A: Well information obtained by an operator, combined with existing geological knowledge, provide sufficient information to determine whether a zone does or does not contain hydrocarbons, whether completed, tested or behind pipe. Modern well evaluation technology applied correctly makes clear which zones contain hydrocarbons and which do not. Any remaining uncertainty may be resolved by testing if the zone is of interest to an operator.

If geological, well evaluation and geophysical information show clearly that a zone contains hydrocarbons, then completion of the zone is not required.

Page 137.



Q: If the analysis I submit does not convince the Ministry that a pool exists in a Lease or a spacing area in a zone of interest to my company, what are my alternatives?

A: A negotiated Program of Work, such as a simple completion or testing of a zone where existing well data does not demonstrate a pool, or the acquisition of geophysical data or additional well drilling that shows the extension of a known pool onto the lands, is acceptable under section 58(3)(c) of the Act, work designed to prove a pool exists or to expand a known pool’s limits.

Page 138.


Page 139.

PART 3

General

Administration


ePayments

Support: [email protected]

Page 140.


ePayments – OverviewePayments – OverviewAccepts rents, fees, and penalty payments

Requires self-managed BCeID, electronic passport to BC Gov

Mandatory

Client must initiate payment; not an auto debit system

Key components to remember: Payors, Statements, Submissions, Receipts, Refunds, Surrenders

Issues refunds electronically, also mandatory

e-Payments will not accept payments related to:Split Transfers of PNG LeasesPNG PermitsSection 72 AgreementsUnderground Storage or Geothermal tenure

Page 141.


ePayments – User RolesePayments – User Roles

BCeID Profile Manager

Appointments Company Administrator for each application accessed with BCeID

Company Administrator (e-Payments)

Assigns roles to other users; can perform function of any role

Users may be assigned multiple roles

Land Adminstrator

Creates and ‘opens’ submissions

Payment Administrator

Initiates payments from Statements or Open Submissions

Viewer

Read-only access

Page 142.


Continuing your TenureContinuing your TenureStatements

• When written applications are not required

• Use one of the “Statements” screens• Primary Term• Continuation/Extension

• Leases• Section 62, or• Section 58(3)(a), 58(3)(b), or 61.1

when this would repeat the previous continuation

• Drilling Licences• Section 3(5)

Submissions

• When written applications are required or to reduce title area by partial surrender

• Use “Manage Expiring Titles” screen• Leases

• 58(3)(a),(b) – first time• 58(3)(c),(d) – each time• 61 – each time• 61.1 – first time

• Drilling Licences• Conversions to Lease• 3(5.1) – each time• 3(5.3) – each time

Page 143.


Submission paymentsSubmission paymentsDistinct from payments made from a Statement

Used when written applications are required Certain DL extension and Lease continuation types

All conversions from DL to Lease

An electronic “bucket” to hold a group of tenures related by their inclusion in a common application for extension, continuation, or conversion

Designed to facilitate application tracking by industry and reduce need to contact Branch staff for updates

Submissions are not applications

e-Payments generates a Submission ID number; please reference it in all application correspondence

Tracking with Milestones and Communication Log

Page 144.


Managing Rental DeadlinesManaging Rental Deadlines

Default Notices eliminated July 1, 2010

Manage titles from the All Titles screene-Payments sends a monthly e-mail reminder to view your statementsOverdue titles are shown in purple and fall off ePayments on day 60 past expiry

Page 145.


Late PenaltiesLate Penalties

Late penalties are automatically calculated once the anniversary date has passedPermits (Manual Payment)

Day 1-10 $100.00Day 11-60 $500.00

LeasesDay 1-30 - 1.5 %Day 31-60 – 3.0 %

Drilling LicenceDay 1-60 $500.00

Page 146.


CancellationsCancellationsRequest from All Titles screen

Ministry will cancel 60 days after anniversary date and send confirmation

Check title to be cancelled

Can be reversed by selecting title and hitting Cancel Request

Email ministry to confirm reversal

Please use signed letters for tenure types not managed through e-Payments

Page 147.


Letters of AuthorityLetters of Authority

Letter of Authorization’s are needed when you are neither a owner or payorRequired for Titles not covered by e-PaymentsThe registered Owner’s intent is implied by authorizing the Designated Payor to make decisions on the title

Page 148.


Online HelpFollow link in Resources slideGetting StartedSelf-TutoringFAQsQuick Reference Tool

Formal courses in CalgaryPossibly CAPLA, based on demand

Training InformationTraining Information

Page 149.


Power-of-AttorneyPower-of-Attorney

No fees required

Cover letter is required

Power of Attorney documents should have original signatures or be a Certified True Copy

The document must clearly state the types of document that the person/position is authorized to sign on behalf of the company

A registration number will be assigned to the company upon the initial registration, this number will be used for all future registrations

Page 150.


PartnershipsPartnerships

Permitted to hold title in BC

Partnership needs to provide documentation showing the partnership structure

Documentation must be signed by all parties of the partnership

Page 151.


Page 152.

Title TransfersTitle TransfersNo fees required

Cover letter must accompany documents

Transfers are considered effective from the date received, not the execution date

Stale-dated transfers are acceptable

Changes are recorded against title specified in the document

Only transfers of undivided interest are permissible

Signatures in counterpart are acceptable

Any color ink acceptable for signatures

Electronic Signatures and signature stamps are not acceptable


Title TransfersTitle Transfers

Transfer documents must:Be originals

List all title numbers to be transferred

Be executed by all transferors and all transferees• Subsequent edits must be initialled by all parties

A properly “executed” document is:Dated, and

Signed by a signing officer of the firm or by a person with a Power of Attorney registered with Titles, Aboriginal and Corporate Relations Division, and

Witnessed or affixed with a corporate seal

Page 153.



Schedules are permitted and should include only the title number and the company reference number

Transfer documents must specify interest as a percentage of the undivided interest

8 decimal places (max)

Interests displayed as percentages of percentages are not acceptable:

Interest amounts are not required on transfer of all a companies interest in a title

Page 154.



Sample forms available from the Division website, no prescribed form necessary

Information Letter EMD-008

Must not contain implied or explicit encumbrances, eg: “subject to” clause

Do not send title documents with your transfer request

Use full legal name of companies

If legal descriptions must be included for corporate reasons, they:

Must be identical to registered legal description

Must include complete tract rights

Page 155.


Split TransfersSplit Transfers

A procedure to divide one lease into two or more leases

Leases only

$500.00 fee for each new lease to be issued

Leases may be divided by:Surface hectares

Stratigraphic

A combination of both

Page 156.


Split TransfersSplit Transfers

All criteria applicable to simple transfers are applicable to split transfers, plus:

“in and to a portion of….” must be used on the transfer documents”

Legal descriptions of the transferred portion, including the rights held by that portion, must be specified

Must not divide gas spacing areas containing gas wells

May divide gas spacing areas if:

Contains an oil well; or

Spacing area already split

Page 157.


Pooling AgreementsPooling Agreements

Purpose – joint development of a spacing area

Recorded in the Oil and Gas Titles Branch

Letter contents:Name all title holders

Title numbers

Well authorization No.

UWI of well

Date of Pooling Agreement

Signature of all title holders

Page 158.


EncumbrancesEncumbrances

Information Letter EMD02-01

A claim or lien placed on a title by a third-party

NOT a legal registry; information purposes only

Encumbrances do not restrict the application of any provision of the Petroleum and Natural Gas Act

Examples of types of documents:

Bank Act assignment

Deed of Trust

Debenture

Mortgage

Builder’s Lien

Page 159.


Recording EncumbrancesRecording Encumbrances

Requests must include:

Letter of instruction and fee• State the type of encumbrance

• State the full legal names of the companies involved

Encumbrance document• Original or certified true copy• Document must be dated and signed by a signing officer of the

company holding the encumbrance

Fee:

$50.00 per title per encumbrance, includes discharge

Page 160.


Discharging EncumbrancesDischarging EncumbrancesRequests must:

Be dated and signed by a signing officer of the company holding the encumbrance

Include original encumbrance registration numbers

State the type of encumbrance

State full legal names of the companies named in the encumbrance

Include the date of the original encumbrance registration

Include the date of the encumbrance

Indicate if the discharge is full or partial

List only active title numbers to be discharged

Original signatures or certified true copy

Each encumbrance must be discharged with a separate document

Page 161.


Copies of EncumbrancesCopies of Encumbrances

Requests for copies of encumbrances can be sent by fax

Fax: (250) 952-0331

Fees – minimum charge of $10.00, or .75 cents per page whichever is greater, an invoice will be sent with the documents

We copy the first 10 pages of the documents and the signature page only, due to the size of some encumbrance documents

Return by fax or email up to 50 pages, by collect courier or mail – include your courier name and account number with your request

Page 162.


Name Changes & AmalgamationsName Changes & Amalgamations

Requests must include:

May be sent by mail, fax or email

Copy of certificate and articles of amendment

Photocopies acceptable

Changes are only recorded against “active” title

All federal and provincial certificates are accepted where:

Jurisdiction and registration numbers are included

Full legal names of the parties are used

Page 163.


Signed Title SearchesSigned Title Searches

Available if required

Send request via fax or mail to Diane Jensen

Results can be delivered by:

Fax or email – up to 50 pages

Mail

Courier (sent collect)

Fees $7.50 per title number

Invoice will be returned with request

Page 164.


May Mah-Paulson, Executive Director, Petroleum and Natural Gas Titles Branch 250-952-0335

POSTINGS, PETROLEUM TITLES ONLINE, WEBMASTER, MAPPINGChris Blaney, Manager, Crown Sale and GIS Services 250-952-0344

PRE-TENURE REFERRALS, TENURE CAVEATSGarth Thoroughgood, Director, Resource Development 250-952-6382

GEOLOGY, ZONE DESIGNATIONDave Richardson, Manager, Geology 250-952-0359

TENURE POLICYGeoff Turner, Director, Policy & Planning 250-952-0709DRILLING LICENCES, WORK PROGRAMS, PERMITSTerry Branscombe, Senior Tenure Management Advisor 250-952-0340

DRILLING LICENCES, LEASE CONTINUATIONSCindy Kocol, Tenure Management Advisor 250-952-0342

DRILLING LICENCES, TRANSFERS, ENCUMBRANCESChristine McCarthy, Tenure Management Advisor 250-952-0341

E-PAYMENTS, BCeID, PRE-AUTHORIZED DEBITSCarolyn Desjardins, Manager, Revenue Collection, Reconciliation and Reporting 250-356-1059

GENERAL INQUIRIES 250-952-0333www.empr.gov.bc.ca/Titles/OGTitles [email protected]

KEY CONTACTSKEY CONTACTS

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