TITLES-05-03
TITLES DIVISION
SUBJECT: Petroleum and Natural Gas Drilling Licence Regulation Amendments
The Ministry of Energy and Mines has amended the Petroleum and Natural Gas Drilling Licence Regulation, effective March 31, 2005. The changes are a result of discussions with industry association representatives over the past year and are designed to improve efficiency and provide greater reward for risk and effort. With the exception of the changes to the term area for new licences, the changes will be retroactive and will apply to all existing drilling licences, in addition to new drilling licences issued after March 31, 2005. OIC 376 contains a detailed description of the specific changes and can be viewed at:
http://www.em.gov.bc.ca/Titles/OGTitles/InfoLetters/IssueDate/Documents/OIC_376.pdf
An outline of the changes is as follows:
ADMINISTRATION
1. Posting Procedures
Existing paper-based posting procedures are now enhanced with additional online web-based options through the Ministry's Petroleum Titles Online service. Regulatory changes were required in several areas to accommodate this change.
Detailed parcel descriptions are now limited to the online Notice of Sale and will no longer be listed in BC Gazette sale notice. Publication in the Gazette notice will continue, but will contain only a short parcel summary.
2. Reinstatement
Under the current Regulation the Director must cancel a Drilling Licence if rental has not been paid in full within 60 days following its expiry date. The Director now has limited discretion to reinstate cancelled Drilling Licences in cases where non-payment can be demonstrated to have been inadvertent.
3. Late Rentals and Selection Fees
The current late rental payment penalties in sections 3(3.2) and 5(2) have been consolidated into a single late fee of $500 simplifying administration for industry and the Ministry.
GROUPING
4. Grouping Well Status
The requirement that a grouping well must be an oil well or a gas well has been eliminated. All earning wells will now qualify as grouping wells.
5 Multiple Groupings of a Single Licence
The limitation of only allowing a licence to be grouped once has been eliminated. Two-licence groupings may now be formed for each earning well drilled on a licence.
6 Re-entered Wells as Grouping Wells
Re-entered wells will also now qualify as grouping wells.
PRIMARY TERM & EXTENSIONS
7 Term Area Boundaries
Term area boundaries have been adjusted as detailed on the attached pdf map.
For new licences, the term of the former five-year term area has been reduced to four years, to recognize increased infrastructure development north of the Peace River Block. The former four-year term area has been increased to five years to encourage exploration in the more under-explored basins in the Province.
8 Special Extensions
The criteria for granting a special extension when licensees encounter unforeseeable delays in meeting the drilling deadlines has been clarified.
LEASE EARNINGS
9 Earning Schedules
The earning schedule has been increased by the addition of separate, and incrementally higher, earning schedule for each of the 4-year and 5-year term areas. This recognizes the relatively higher costs of drilling in those areas given the same drilling effort, thereby tying risks and rewards more closely together.
10 Combining Earnings from Multiple Wells
Two or more earned leases in the same drilling licence may now be combined into a single larger lease. This provides industry with greater flexibility and should reduce administrative effort for both government and industry.
For further information contact:
Colin Magee
Director, Oil and Gas Titles Branch
Titles Division
PO Box 9326, Stn Prov Gov't
6th floor, 1810 Blanshard Street
Victoria, BC V8W 9N3
Telephone: 250-952-0335
Facsimile: 250-952-0331
E-mail: Colin.Magee@gems8.gov.bc.ca
Gerald German
Executive Director
Titles Division
