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Page Page 11..Ministry of
Energy & Mines
Oil & Gas Tenure Update
2004
Page Page 22..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
TOPICSTOPICS
MISCELLANEOUS POLICY CHANGESMISCELLANEOUS POLICY CHANGES
PERMIT, FEE AND WORK REQUIREMENT REGULATION PERMIT, FEE AND WORK REQUIREMENT REGULATION CHANGESCHANGES
DRILLING LICENCE REGULATION CHANGESDRILLING LICENCE REGULATION CHANGES
ZONE RETENTION (SHALLOW RIGHTS REVERSION)ZONE RETENTION (SHALLOW RIGHTS REVERSION)
PETROLEUM TITLES ONLINE PROJECTPETROLEUM TITLES ONLINE PROJECT
Page Page 33..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
MISC. POLICY CHANGESMISC. POLICY CHANGESDocument ExecutionRequirement to return executed tenure documents rescinded.
Issue date Documents now dated day after sale.
DL Term Extensions for CBG Projects 5 one-year extensions available for CBG projects
Single Tenure Issuance Fee - June 1/04 New $500 tenure issuance fee cover future transfers and miscellaneous
feesfees
Page Page 44..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
PERMIT, FEE AND WORK REQUIREMENTPERMIT, FEE AND WORK REQUIREMENT
REGULATION CHANGESREGULATION CHANGES
Revised rental rates in effect June 1, 04
Revised work requirements rates under review
Page Page 55..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
(by Year and Permit Type)
A-type B-type C-type D-typeYEAR Rent Work Rent Work Rent Work Rent Work
1 0.75 1.00 0.75 1.00 0.75 1.00 0.45 0.502 0.75 2.00 0.75 1.50 0.75 1.00 0.45 0.503 0.75 4.00 0.75 3.00 0.75 2.00 0.45 1.004 1.15 5.00 1.15 4.00 1.15 2.50 0.75 2.505 1.15 5.00 1.15 4.00 1.15 3.00 0.75 3.00
6 2.25 7.50 1.90 6.00 1.15 5.00 0.75 5.007 3.00 15.00 2.65 10.00 1.15 7.50 0.75 7.508 3.75 20.00 3.00 15.00 1.15 7.50 0.75 7.50
All amounts expressed as $/Ha.
Page Page 66..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
New Permit Fees, Rental and Work Requirements
New Rental Schedule
PermitYears YearsClass 1 – 5 6+
A,B,C,D $1.05 $1.75(all)
Page Page 77..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
New Work Schedule
PermitYears YearsClass 1 – 5 6+
A, B $5.00 $20.00C, D $3.00 $10.00
Proposed Permit Work Requirements
Page Page 88..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
DRILLING LICENCE REGULATION CHANGESDRILLING LICENCE REGULATION CHANGES
Administration
Term
Groupings
Lease Earnings
Page Page 99..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
Administration
$500 reinstatement fee
Rescind requirement for a written posting request
A single late rental payment fee of $500
Rescind requirement to publish tenure conditions in the BC Gazette
Clarify process for Production from Drilling Licence
i
Page Page 1010..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
Term (Applies to new drilling licences only)
Clarify extension provisions
3 year term boundary - no change
4 year term boundary – Fort Nelson - Liard
5 year term boundary – balance of Province
Page Page 1111..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
Page Page 1212..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
GroupingGrouping
Rescind requirement for oil or gas or well
Allow licences to be grouped for each qualifying well
Re-entered wells to qualify as grouping wells
Grouping distance changed from 4K to one gas spacing area
Page Page 1313..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
Lease Earnings
Separate earning schedule for each term area scaled to recognize risk
Earnings defined as gas spacing areas
Earnings based on combined well bore length of all drilling events
Selection rules more flexible
Page Page 1414..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004Proposed Earning Schedules
0
2
4
6
8
10
12
14
16
18
20
22
24
26
28
30
32
Meas. Wellbore Length (m)
Ear
ned
Gas
Spa
cing
Are
as
Peace (3-yr)
Liard (4-yr)
Cordillera (5-yr)
Page Page 1515..Ministry of
Energy & Mines
ZONE ZONE RETENTIONRETENTION
Page Page 1616..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
ZONE RETENTIONZONE RETENTION
Why is BC Considering Zone Specific Retention?Acceleration of activity would lead to earlier new pool discoveries with very positive revenue implications for both industry and the province.
Larger contiguous blocks of land would become available providing economies of scale for development of marginal
plays.
Accessible land tenure is a competitiveness issue.
Our tenure system must evolve in a maturing basin.
ZSR has been requested by a significant number of industry clients..
Page Page 1717..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
BC implemented Deep Rights Reversion in 1985, following Alberta. Acknowledged benefits to industry and provinces.
Shallow Rights Reversion or Zone Specific Retention is the next logical step.
February 2003: Titles staff began first consultation with cross section of clients in Calgary.
October 2003: Brian Scarfe of BriMar Consultants completed economic analysis showing significant benefits to industry and BC.
Economic Considerations
Page Page 1818..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
Cretaceous and Triassic zones are approaching maturity in extensively drilled areas of BC.
Significant new pools can still be discovered in these formations.
A new fiscal regime for low productivity wells adds to the incentive to find new pools.
Geology
Page Page 1919..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
Substantial benefits to industry and BC if activity is brought forward by as much as five years.
Example:Expected Net Present Values to industry for the Gething play trend would increase by 62% over the case with no ZSR (full cycle netback value to producers at 10% real discount rate).
Public NPVs for royalties, other provincial revenues and federal tax would increase by about 28% (5% public discount rate).
Analysis Results
Page Page 2020..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
Previous consultation showed ZSR may be acceptable to industry if implemented:
1. On a “go forward” basis (original proposal included current tenure);
2. Clear technical criteria in place to retain secondary undeveloped productive zones
3. Earliest implementation in 6 years
4. Manageable administrative burden
Consultation
Page Page 2121..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
Leases only, on a “go forward” basis. (new leases)
Implementation no sooner than six years from now.
No major changes to posting requests: New tenures would continue to convey rights to pre-specified zones, including “all available rights”.
Notification one year before end of primary term specifying zones that can be retained.
Proposed Approach
Page Page 2222..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
Consultation with industry on technical retention criteria before implementation.
Any reasonable indication of productive potential should be acceptable to retain a specific zone – for example, log analysis, DST, mud log.
Goal is to accelerate development, not retrieve land.
Proposed Approach
Page Page 2323..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
Meet with CAPP BC Committee May/04
Review options
Final Decision on whether to proceed by June 30/04
Next Steps
Page Page 2424..Ministry of
Energy & Mines
PETROLEUM TITLES ONLINEPETROLEUM TITLES ONLINE
Page Page 2525..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
PETROLEUM TITLES ONLINEPETROLEUM TITLES ONLINE
• WEB based petroleum titles transactions
• Joint Development Project MEM/MSRM
• Links to New Integrated Land Registry under development
Page Page 2626..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
PETROLEUM TITLES ONLINEPETROLEUM TITLES ONLINE
Phase 1 - Phase 1 - Web Enabled Map Viewer
Phase 2 - Phase 2 - Sale Notice Maps
Phase 3 - Phase 3 - Posting Requests Online
Page Page 2727..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
Phase 1
Development of map query tool Petroleum Titles NE BC
Title Search Function
• Title • Owner • Number• Term• Issue date• Legal Description
Page Page 2828..Ministry of
Energy & Mines
The Petroleum Titles On-Line Project is a joint initiative being developed by the Ministry of Energy and Mines (MEM) and the Ministry of Sustainable Resource Management (MSRM) to facilitate petroleum tenure-related transactions through the internet. Click on the links below to search for existing titles or parcels requested for sale.
Petroleum
Oil & Gas Tenure Oil & Gas Tenure 20042004
•Find Parcels Offered for Sale •Find Petroleum Active Titles •Find Parcels Requested for Sale
Petroleum Title Online
Page Page 2929..Ministry of
Energy & Mines
Page Page 3030..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
Phase 2Phase 2
Web based maps for sale notice and results reports
Will display surface lots for improved land owner notification and consultation
Page Page 3131..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
Page Page 3232..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
Page Page 3333..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
Page Page 3434..Ministry of
Energy & Mines
Posting Online
Oil & Gas Tenure 2004Oil & Gas Tenure 2004
Phase 3
Page Page 3535..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
Page Page 3636..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
Registration and SecurityRegistration and Security
Only able to view own requests up Only able to view own requests up to closing data of sale to closing data of sale
Access provided through electronic Access provided through electronic registration with BCeIDregistration with BCeID
Page Page 3737..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
Page Page 3838..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
Page Page 3939..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
Page Page 4040..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
Page Page 4141..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
Page Page 4242..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
Page Page 4343..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
Page Page 4444..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
Page Page 4545..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
Page Page 4646..Ministry of
Energy & Mines
Oil & Gas Tenure Oil & Gas Tenure 20042004
Oil & Gas Tenure Oil & Gas Tenure 20042004
VisionVision
A spatially enabled, efficient and accessible electronic A spatially enabled, efficient and accessible electronic register of all legal interests in Crown and private land register of all legal interests in Crown and private land and resources, which serves the business needs of a and resources, which serves the business needs of a diversity of users and clients.diversity of users and clients.
Being Piloted in the Northeast for implementation by Being Piloted in the Northeast for implementation by March 2005.March 2005.
Page Page 4747..Ministry of
Energy & Mines
Oil & Gas Oil & Gas Development Development
StrategyStrategy
Oil & Gas Oil & Gas Development Development
StrategyStrategy
Cameron Lewis
Director Oil and Gas Policy