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Canada Oil and Gas Operations Act (R.S.C., 1985, c. O-7)

Act current to 2022-09-22 and last amended on 2022-07-30. Previous Versions

PART IIProduction Arrangements (continued)

Compulsory Unitization (continued)

Marginal note:Effective date of unitization order

  •  (1) Subject to subsection (2), a unitization order becomes effective on the day that the Committee determines in the order, but that day shall be not less than thirty days after the day on which the order is made.

  • Marginal note:Effective date when unit agreement or unit operating agreement varied

    (2) Where a unit agreement or unit operating agreement is varied by the Committee in a unitization order, the effective date prescribed in the order shall be a date not less than thirty days following the day the order is made, but the order becomes ineffective if, before the effective date, the applicant files with the Committee a notice withdrawing the application on behalf of the working interest owners or there are filed with the Committee statements in writing objecting to the order and signed

    • (a) in the case of the unit agreement, by

      • (i) one or more working interest owners who own in the aggregate more than twenty-five per cent of the total working interests in the area and were included within the group owning sixty-five per cent or more of the total working interests as described in subparagraph 41(2)(a)(i), and

      • (ii) one or more royalty owners who own in the aggregate more than twenty-five per cent of the total royalty interests in the unit area and were included within the group owning sixty-five per cent or more of the total royalty interests as described in subparagraph 41(2)(a)(ii); or

    • (b) in the case of the unit operating agreement, by one or more working interest owners who own in the aggregate more than twenty-five per cent of the total working interests in the unit area and were included within the group owning sixty-five per cent or more of the total working interests as described in subparagraph 41(2)(a)(i).

  • Marginal note:Revocation of order

    (3) Where a unitization order becomes ineffective under subsection (2), the Committee shall forthwith revoke the order.

  • R.S., 1985, c. O-7, s. 42
  • 1992, c. 35, s. 28(E)

Marginal note:Technical defects in unitization order

 A unitization order is not invalid by reason only of the absence of notice or of any irregularities in giving notice to any owner in respect of the application for the order or any proceedings leading to the making of the order.

  • R.S., c. O-4, s. 32

Marginal note:Amending unitization order

  •  (1) A unitization order may be amended on the application of a working interest owner, but before amending a unitization order the Committee shall hold a hearing at which all interested parties shall have an opportunity to be heard.

  • Marginal note:Voluntary proposal for amendment by owners

    (2) If the Committee finds that, at the date of the commencement of a hearing of an application for the amendment of a unitization order, one or more working interest owners who own, in the aggregate, sixty-five per cent or more of the total working interests and one or more royalty interest owners who own, in the aggregate, sixty-five per cent or more of the total royalty interests in the unit area have consented to the proposed amendment, the Committee may amend the unitization order in accordance with the amendment proposed.

  • R.S., c. O-4, s. 33

Marginal note:Protection of tract participation ratios

 No amendment shall be made under section 44 that will alter the ratios between the tract participations of those tracts that were qualified for inclusion in the unit area before the commencement of the hearing, and, for the purposes of this section, the tract participations shall be those indicated in the unit agreement when it became subject to a unitization order.

  • R.S., c. O-4, s. 34

Marginal note:Production prohibited except in accord with unitization order

 After the date on which a unitization order comes into effect and while the order remains in force, no person shall carry on any operations within the unit area for the purpose of drilling for or producing oil or gas from the unitized zone, except in accordance with the provisions of the unit agreement and the unit operating agreement.

  • R.S., c. O-4, s. 35

Marginal note:How percentages of interests to be determined

  •  (1) The percentages of interests referred to in subsections 39(1), 41(2), 42(2) and 44(2) shall be determined

    • (a) with respect to royalty interests, on a prorated area basis; and

    • (b) with respect to working interests, on the basis of tract participations shown in the unit agreement.

  • Marginal note:Owner deemed to be royalty owner on a prorated area basis

    (2) Where a working interest in a unit tract is held as an incident of the ownership of a fee simple estate in oil or gas, the owner who holds that working interest shall, for the purposes of subsection (1), be deemed to be a royalty owner in respect of the tract on a prorated area basis under paragraph (1)(a).

  • R.S., c. O-4, s. 36
  • 1976-77, c. 55, s. 5(E)

General

Marginal note:Pooled spacing unit included in unit area

  •  (1) A pooled spacing unit that has been pooled pursuant to a pooling order and on which a well has been drilled may be included in a unit area as a single unit tract and the Committee may make such amendments to the pooling order as it deems necessary to remove any conflict between the provisions of the pooling order and the provisions of the unit agreement, or the unit operating agreement or the unitization order, if any.

  • Marginal note:Effect of including pooled spacing unit in unit area

    (2) Where a pooled spacing unit is included in a unit area pursuant to subsection (1), the provisions of the unit agreement, the unit operating agreement and the unitization order, if any, prevail over the provisions of the pooling order in the event of a conflict.

  • Marginal note:Exceptions

    (3) Notwithstanding subsection (2),

    • (a) the share of the unit production that is allocated to the pooled spacing unit shall in turn be allocated to the separately owned tracts in the pooled spacing unit on the same basis and in the same proportion as production actually obtained from the pooled spacing unit would have been shared under the pooling order;

    • (b) the costs and expenses of the unit operation that are allocated to the pooled spacing unit shall be shared and borne by the owners of the working interests therein on the same basis and in the same proportion as would apply under the pooling order; and

    • (c) the credits allocated under a unit operating agreement to a pooled spacing unit for adjustment of investment for wells and equipment thereon shall be shared by the owners of the working interests therein in the same proportion as would apply to the sharing of production under the pooling order.

  • R.S., c. O-4, s. 37

Straddling Resources — Inuvialuit Settlement Region

Definitions

Marginal note:Definitions

 The following definitions apply in this section and in sections 48.02 to 48.096.

notification area

notification area means the following:

  • (a) that part of the offshore that is situated within 20 kilometres of the onshore; and

  • (b) that part of the onshore that is situated within 20 kilometres of the offshore. (zone de notification)

offshore

offshore means that part of the Inuvialuit Settlement Region that is not situated in the onshore. (région extracôtière)

  • 2014, c. 2, s. 25

Determination

Marginal note:Commission of the Canadian Energy Regulator’s obligations

 If the data obtained from conducting a survey or drilling an exploratory well — as defined in subsection 101(1) of the Canada Petroleum Resources Act — in the notification area provide sufficient information for the Commission of the Canadian Energy Regulator to determine that a pool or field exists, the Commission shall

  • (a) determine whether the pool or field is a straddling resource;

  • (b) without delay notify the Minister and the Government of the Northwest Territories of its determination and the reasons for it; and

  • (c) on request, provide that Minister or that Government with the information that is in the Commission’s possession and pertinent to that determination.

Marginal note:Information sharing

 The Minister and the Government of the Northwest Territories shall, on request, provide the other with the information that is in their possession and is relevant to the proper and efficient exploration for and the management, administration and exploitation of the straddling resource.

  • 2014, c. 2, s. 25

Exploitation of Straddling Resources

Marginal note:Single pool or field

  •  (1) A straddling resource may be exploited as a single pool or field, as the case may be.

  • Marginal note:Single exploration or drilling program

    (2) An exploration or drilling program related to a straddling resource is, to the extent practicable, to be managed as a single exploration or drilling program.

  • 2014, c. 2, s. 25

Marginal note:Notice — intention to start production

  •  (1) If an interest owner, as defined in section 2 of the Canada Petroleum Resources Act, advises the Minister or the Commission of the Canadian Energy Regulator — including by way of an application under section 38 of the Canada Petroleum Resources Act or paragraph 5(1)(b) of this Act, as the case may be — that it intends to start production of a straddling resource, the Minister shall, without delay, notify the Government of the Northwest Territories of the interest owner’s intention.

  • Marginal note:Notice — after production commences

    (2) If, after production commences, the Commission of the Canadian Energy Regulator determines that a pool or field is a straddling resource

    • (a) the Minister or the Government of the Northwest Territories — depending on the jurisdiction in which production commenced — shall, without delay, notify the other of that determination; and

    • (b) either of them may give notice under section 48.06.

Marginal note:Requirement — exploitation as single unit

 The Minister or the Government of the Northwest Territories may, by notice, require of the other that a pool or field that is a straddling resource be exploited as a single pool or field, as the case may be.

  • 2014, c. 2, s. 25

Marginal note:Unit agreement

  •  (1) The royalty owners and the working interest owners in respect of a straddling resource may enter into a unit agreement and, if it is approved under subsection 48.09(1), they shall operate their interests in accordance with it or any amendment to it.

  • Marginal note:Unit operating agreement

    (2) The working interest owners in respect of a straddling resource may enter into a unit operating agreement and, if it is approved under subsection 48.09(1), they shall operate their interests in accordance with it or any amendment to it.

  • Marginal note:Termination

    (3) Unless the Minister and the Government of the Northwest Territories agree to an earlier termination, a unit agreement or a unit operating agreement remains in force until the later of

    • (a) the day on which commercial production from the straddling resources to which the agreement applies ends, and

    • (b) the day on which there are no outstanding obligations in respect of the decommissioning or the abandonment of the production system for a straddling resource to which the agreement applies.

  • 2014, c. 2, s. 25

Marginal note:Order to enter into agreements

 If a straddling resource is required to be exploited as a single pool or field under section 48.06 and the working interest owners have not entered into a unit agreement and a unit operating agreement, the Minister shall order the working interest owners in the portion of the pool or field that is in the Minister’s jurisdiction to do so.

  • 2014, c. 2, s. 25

Marginal note:Approval of agreements

  •  (1) A unit agreement and a unit operating agreement are subject to the approval of the Minister and the Government of the Northwest Territories. They are to be approved only if all royalty owners and working interest owners referred to in subsection 48.07(1) or all working interest owners referred to in subsection 48.07(2), as the case may be, are parties to the agreement.

  • Marginal note:Condition precedent

    (2) No authorization is to be issued under paragraph 5(1)(b) — and no development plan is to be approved under subsection 5.1(4) — in relation to the exploitation of a straddling resource if the unit agreement and the unit operating agreement are not approved under subsection (1).

  • 2014, c. 2, s. 25

Marginal note:Referral to independent expert

 If the royalty owners and the working interest owners in respect of a straddling resource do not enter into a unit agreement — and, in the case of the working interest owners, a unit operating agreement — within 90 days after the day on which the Minister orders the working interest owners to enter into those agreements under section 48.08, the Minister or the Government of the Northwest Territories may notify the other of their intention to refer the matter to an independent expert for a decision in accordance with section 48.095.

  • 2014, c. 2, s. 25

Marginal note:Unitization order

  •  (1) The Minister shall issue a unitization order in accordance with the independent expert’s final decision.

  • Marginal note:Effect

    (2) The unit agreement and the unit operating agreement have the effect given them by the Minister’s order.

  • Marginal note:Government of the Northwest Territories

    (3) A unitization order becomes effective only if the Government of the Northwest Territories issues an equivalent order.

  • Marginal note:Joint approval

    (4) The issuance of a unitization order by the Minister and of an equivalent order by the Government of the Northwest Territories is deemed to be their joint approval of the unit agreement and the unit operating agreement.

  • Marginal note:Effective date

    (5) Subject to subsection (3), a unitization order becomes effective on the day established in the order, but that day is not to be less than 30 days after the day on which the order is issued.

  • 2014, c. 2, s. 25

Marginal note:Redetermination

 The Minister, the Government of the Northwest Territories or a working interest owner may — in respect of future production — request a redetermination of

  • (a) the apportionment of the production from the straddling resource; or

  • (b) one or more of the elements set out in the unit agreement or the unit operating agreement.

  • 2014, c. 2, s. 25
 
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