SUBJECT:    ZONE SPECIFIC RETENTION – MISCELLANEOUS STATUES

AMENDMENT ACT, 2007 – BILL 12

The Ministry of Energy, Mines and Petroleum Resources (Ministry) works to encourage long-term investment in energy development for the benefit of all British Columbians.  To support continued growth in the oil and gas industry, the Province has amended section 59 of the Petroleum and Natural Gas Act (Act) following several years of discussion with industry.  All title existing before March 29, 2007 is exempt from Zone Specific Retention.

What does Zone Specific Retention mean?
The effect of the 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.  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, work programs and the simple payment of penalty for ten-year leases.

What are the implications of Zone Specific Retention?
Applying Zone Specific Retention to all new leases, with all pre-existing title exempt, will create greater development opportunities while protecting holders of existing titles.  This change allows the Province to re-post these rights, giving the industry additional opportunities to explore for oil and gas in a more timely fashion. This amendment will result in:

Please note that accepted 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.

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. 

Amendments to the Act are listed under BILL 12 –Miscellaneous Statutes Amendment Act, 2007, under Sections 59 and 67.  The provisions of the legislation that exempt all pre-existing title from these changes are found in Section 67 of this Bill.   A copy can be found at:http://www.leg.bc.ca/38th3rd/3rd_read/gov12-3.htm

The Oil and Gas Titles Branch will continue to engage industry on the implementation of Zone Specific Retention, especially through working level contacts at the Canadian Association of Petroleum Landmen.

Patrick O’Rourke
Assistant Deputy Minister
Titles and Offshore Division

August 17, 2007

For further information contact:
Laurel Nash, Director
Titles & Offshore Division
6^th floor, 1810 Blanshard Street
Victoria, BC  V8W 9N3
Telephone:  250-952-0335
Facsimile:   250-952-0331
Email:  Laurel.Nash@gov.bc.ca