As the world turns….. 

A number of changes continue in our industry, bringing new challenges and uncertainties, although in 2019 there has been some clarity and resolution on a few issues that we faced in prior years. As landmen, we continue to look for new ways to do business, streamline processes and implement innovative technologies that make our role agile.  We keep engaged with governments, regulatory bodies and our peers to ensure the best practices, guidelines, directives, and principles in which we do business can be met to set the stage for success.

The role of Business Development is to participate and influence these government bodies/regulators and provide feedback from our industry through participation in meetings via CAPP, CALEP and other Sub-Committees that assist with open, transparent advocacy.

Alberta

Tenure Industry Advisory Committee (TIAC) met in September this year, representative attendees from Alberta Energy (AE), Alberta Energy Regulator (AER), Canadian Association of Petroleum Producers (CAPP), Explorers & Producers Association of Canada (EPAC), CALEP and CAPLA were present.

CAPP provided an Alberta Energy Issues binder to AE in May, which identifies many opportunities and recommendations to PNG Tenure regulations and other red tape reduction initiatives.   Modernizing the current P&NG framework to align validation and continuation requirements better with operational cycle times to licence, drill, complete, equip and tie-in unconventional and horizontal wells is one of the key desired outcomes.    

AE is in the process of reviewing this P&NG framework, working with AER to align and make changes that have been raised by industry. More to come on this front in 2020.

Discussion on IB 2019-01, was well received by industry to address the ownership issue.  However, there is an impact on metallic and industrial permits and potential for these rights holders’ objections to disposal activities. It was not addressed in the IB whether spacing would be considered for disposal zones to account for the large plumes.  Technical issues are to be referred to the AER as the IB relates to process and ownership clarification.  

Delinquent leases and process was streamlined so industry can determine if a lease is in arrears for either Rental or Royalty payments as AE has made changes to the “Rental Paid to date” in public search, this field now reflects real time rentals paid to date when rentals are paid within the 90 day period prior to the annual term date expiry.  This change was fully implemented on June 7^th, 2019.

Some issues have been raised by a number of companies with respect to process in which AE is serving Offset notices.   Clarity on this process has been requested for consistency and a review of the practice and timelines to elect may be outdated due many factors such as surface access, caribou/wildlife restrictions, and market uncertainty including curtailment issues.  Also noted was AE no longer provides notification warnings on their land sale publication offerings of an Offset as they do for other caveats identifying surface and wildlife restrictions. 

AER OneStop system has had some positive impact changes to ensure assets with A&D transactions are properly conveyed by the Vendor to the Purchaser.  Licensed wells/facilities are transferred through the AER DDS system and the working interest participants (WIP) that have an ownership in the well/facility can be updated at the time of transfer.  With the implementation of OneStop, the Licensee can now update the WIPs at any time.  This means that the Vendor interest in the well/facility (licensed or not) can be transferred through OneStop to the Purchaser.  This process will involve the Vendor contacting the Licensee to request that the WIP be updated, by simply adding another document/letter to the numerous conveyancing documents prepared in all A&D transactions.

AER provided the Draft Public Involvement Directive in August for comment by industry.   There were a number of committee’s formed and feedback provided to AER.  AER has formed an industry inclusive working group and is thoroughly reviewing and assessing the next steps for this new process.

AER is also engaged with industry as part of the red tape reduction program to augment the Orphan Well Association’s authority to be able to list distressed sites under an expedited bidding process managed by the Crown.  More to come in 2020 on both of these initiatives.

 

Oil Sands

CAPP along with industry members have collaborated to create a framework for Alberta Oil Sands lease tenure system that adopts an oil sands lease tenure approach  that allows companies flexibility to determine the best allocation of investment to develop the resource, which are developed systematically over the life cycle of oil sands projects.

 

The Alberta Oil Sands lease tenure recommendations were provided to AE in the Energy Issues binder and some discussions with CAPP and DOE have taken place to review further.  More to come in 2020.

 

Key Industry recommendations:

• Minimum Level of Evaluation (MLE) i) government to allow for cores from multiple wellbores to be used and only require coring from a representative portion of a  bitumen bearing zone; ii) well locations within agreements should be dictated by the area geology, not centricity within the Lease.
• Consolidation –government to allow industry to consolidate oil sands agreements for MLE/MLP purposes by amending the current tenure rules.
• Minimum Level of Production (MLP) –once leases achieve the producing status of MLP, escalating rents do not apply to those leases.
• Escalating Rentals/Offsets – i) current implementation of escalating rents should be updated to provide more certainty of allowable offsets; ii) allow an expanded list of development activity to field activity regardless of whether it is exploration or development to count towards offsetting escalating rentals iii) allow for efficient project management and provide for carryover of activity expenses over multiple years to provide credit against future escalating rentals.
• Transition – grandfather oil sands leases from any new tenure policy.

 

Curtailment continues as announced November 8^th, 2019, all producers can drill new conventional oil wells without being restricted by production limits.  Existing producing wells will remain under curtailment.  These adjustments provide flexibility for industry while aligning with the objective of curtailment – protecting the value of Alberta’s oil by maintaining a balance between production and takeaway capacity. 

 

BC

BC CAPP Tenure Committee includes a number of representatives from industry companies, along with CAPL, OGC and Ministry attendees.

BCOGC dormancy regulations IB 2019-02 was released May 31^st, 2019 which introduced Dormancy, Shutdown Regulation and Comprehensive Liability Management plans.  This sets forth the timelines in which four types of Dormant Sites have for Decommissioning and Restoration Activities.   Permit holders are to submit work plans each calendar year in accordance with their dormant sites for any planned and completed work programs.  

Status of certain deferred mineral land parcels is on-going with no clear status timelines, although Ministry has been conducting a review of a number of these parcels and has released some parcels at recent land sales.

Changes to Interim Measures under IB 2018-15 are no longer in effect and the Interim Consultation Procedure with Treaty 8 First Nations IB 2019-13, provides the guide consultation process improvements implemented in Area 2 by the Commission, and timely offset restoration in Area 1 & 3 will continue to be required.

Permitting changes issued under IB 2019-16 during Interim Moratorium for Caribou recovery was announced June 26^th, 2020, with new resource development in the vicinity of Mackenzie, Tumbler Ridge and Chetwynd.  The 2-year interim moratorium became effective June 20^th, 2020.   Maps and shape files are available on the government website.

 

Saskatchewan

Saskatchewan’s portfolio is represented by Sk-IPTAC  (Saskatchewan-Industry Petroleum Tenure Advisory Committee).  This committee includes a broad spectrum of representatives from CAPP, EPAC, CAPL, CAPLA and various other sub-committees that continue to meet semi-annually.

Current discussion tabled at the October meeting included the updates to the Lease continuance review guidelines, Licensed Well/Surveyed section production does not apply during the extension period, Drilling Operations for lease continuance – a well considered ‘spud’ as long as surface casing is set, extended surface restrictions and Offsets.

IRIS update, LMT is currently working on two IRIS projects so that industry can self-report permit obligations and work expenditures for heavy oil projects in IRIS, instead of submitting this information manually. These two IRIS projects are still in the funding-approvals phase. No specific date as to when these projects will be approved and initiated.

 

LMT Opportunities for developing a subcommittee with the Energy Regulation Division (ERD) to address issues, such as PNG operational and technical aspects, that go beyond Sk-IPTAC’s scope.

 

In closing, I want to thank all of you CALEP volunteers who stay directly involved with government, regulator bodies, CAPP, EPAC and other committees that provide continued ongoing dialogue and dedication to further enhancements of our industry processes and requirements for today’s needs.

CALEP will continue to provide you with updates via the emailer distribution, a great resource for up to date news as well as the new CALEP Website “Business Development” page which will be up and running shortly with brand new information by province, with updates on implementation of new initiatives, regulations and current industry news.

As always, if you have any concerns, questions or interest in volunteering, please feel free to contact me to discuss.  

 

Respectfully yours,
CANADIAN ASSOCIATION OF PETROLEUM LANDMEN

Jacquie Farquhar
Business Development