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"Point in Time" Regulation Content

Petroleum and Natural Gas Act

Petroleum and Natural Gas Drilling Licence Regulation

B.C. Reg. 10/82

NOTE: Links below go to regulation content as it was prior to the changes made on the effective date. (PIT covers changes made from September 19, 2009 to "current to" date of the regulation.)
SECTIONEFFECTIVE DATE
Title August 1, 2016
Section 1 July 19, 2012
August 1, 2016
February 27, 2020
Section 1.1 February 27, 2020
Section 2 August 1, 2016
November 7, 2016
February 27, 2020
Section 3 August 1, 2016
February 27, 2020
Section 3.01 February 27, 2020
Section 3.1 July 19, 2012
August 1, 2016
February 27, 2020
Section 4 February 27, 2020
Section 4.01 February 27, 2020
Section 4.1 July 19, 2012
August 14, 2012
August 1, 2016
February 27, 2020
Section 5 February 27, 2020
Section 5.01 March 1, 2020
Section 5.1 February 27, 2020
Section 6 August 1, 2016
February 27, 2020
Section 7 August 1, 2016
February 27, 2020
Section 8 May 28, 2020
Schedule 1 July 19, 2012
February 27, 2020
Schedule 3 February 27, 2020

 Title BEFORE amended by BC Reg 198/2016, effective August 1, 2016.

PETROLEUM AND NATURAL GAS
DRILLING LICENCE REGULATION

 Section 1 definition of "earning well" BEFORE amended by BC Reg 226/2012, effective July 19, 2012.

"earning well" means a well

(a) drilled in a spacing area all or part of which is in a location described in a drilling licence, and includes a well redrilled in a spacing area formerly described in a

(i)  permit,

 Section 1 definition of "small drilling licence" BEFORE repealed by BC Reg 226/2012, effective July 19, 2012.

"small drilling licence" means

(a) a drilling licence that confers a right to explore for petroleum and natural gas in no more than 4 spacing areas, or

(b) a drilling licence that, in the opinion of the director, is equivalent to a drilling licence referred to in paragraph (a).

 Section 1 definitions of "5 year lease" and "10 year lease" were added by BC Reg 198/2016, effective August 1, 2016.

 Section 1 BEFORE re-enacted by BC Reg 33/2020, effective February 27, 2020.

Interpretation

1   In this regulation:

"5 year lease" means a lease that has a term of 5 years under section 58 (2) of the Act;

"10 year lease" means a lease that has a term of 10 years under section 58 (2) of the Act;

"Act" means the Petroleum and Natural Gas Act;

"Crown reserve" means petroleum and natural gas rights reserved to her Majesty by the Act;

"drilling licence" means a title to a parcel of Crown reserve petroleum and natural gas rights granted under this regulation conferring a right to explore for petroleum and natural gas;

"earning well" means a well designated as an earning well under section 3.1.

[am. B.C. Regs. 55/94, s. 1; 189/2005, s. 1; 192/2009, s. 1; 226/2012, s. 1; 198/2016, App. 2, s. 2.]

 Section 1.1 was enacted by BC Reg 33/2020, effective February 27, 2020.

 Section 2 (4) and (5) BEFORE repealed by BC Reg 198/2016, effective August 1, 2016.

(4) On receipt of an application, the minister may

(a) accept the application, subject to the changes the minister directs be made, or

(b) refuse the application.

(5) Every tender must be accompanied by

(a) an issuing fee of $500, and

(b) the rental for the first year of the drilling licence calculated at the rate of $3.50 per ha.

 Section 2 (3.1) and (3.2) were added by BC Reg 268/2016, effective November 7, 2016.

 Section 2 BEFORE re-enacted by BC Reg 33/2020, effective February 27, 2020.

Applications and tenders

2   (1) Any person may apply to have a drilling licence offered for disposition by public tender.

(2) No disposition shall be made under subsection (1) until 2 weeks have elapsed after publication in the Gazette.

(3) An application under subsection (1) must be delivered to the director with a description and map outline of the location for the drilling licence.

(3.1) On receipt of an application, the minister may

(a) accept the application, subject to the changes the minister directs be made, or

(b) refuse the application.

(3.2) Every tender must be accompanied by

(a) an issuing fee of $500, and

(b) the rental for the first year of the drilling licence calculated at the rate of $3.50 per ha.

(4) and (5) Repealed. [B.C. Reg. 198/2016, App. 2, s. 3.]

(6) A drilling licence must be issued to a person whose tender is accepted by the minister.

(7) The maximum number of

(a) units,

(b) quarter sections in the Peace River block, or

(c) units and quarter sections in the Peace River block combined,

must not exceed 144 in an application under this section.

(8) Repealed. [B.C. Reg. 189/2005, s. 2.]

[am. B.C. Regs. 91/92, s. 1; 55/94, s. 2; 354/98, s. (a); 189/2005, s. 2; 198/2016, App. 2, s. 3; 268/2016.]

 Section 3 (5.3) (d) BEFORE amended by BC Reg 198/2016, effective August 1, 2016.

(d) the drilling licence is included in a scheme approved under section 100 of the Act for the development or production of natural gas from a stratum or strata that mainly contain coal.

 Section 3 (5.4) (a) and (c) BEFORE amended by BC Reg 198/2016, effective August 1, 2016.

(a) apply to a zone that does not include the coal-bearing stratum or strata subject to the scheme referred to in subsection (5.3) (d),

(c) include land that is not included in the scheme referred to in subsection (5.3) (d).

 Section 3 (7) (part) BEFORE amended by BC Reg 198/2016, effective August 1, 2016.

(7) The expiry date of a drilling licence is extended to the date the drilling of an earning well is completed if

 Section 3 BEFORE amended by BC Reg 33/2020, effective February 27, 2020.

Drilling licences

3   (1) The minister must set the form of a drilling licence.

(2) A drilling licence may contain only the conditions set out in the tender notice.

(3) Subject to an extension under subsection (5), (5.1), (5.3) or (7), a drilling licence that describes a location entirely contained in

(a) Area 1 of Schedule 2 subsists for 3 years,

(b) Area 2 of Schedule 2 subsists for 4 years,

(c) Area 3 of Schedule 2 subsists for 5 years,

(d) 2 of those areas subsists for the longer of the applicable periods, or

(e) 3 of those areas subsists for the longest of the applicable periods.

(3.1) Subject to subsection (5) (b), the annual rent for a drilling licence is $3.50 per ha payable before the anniversary date of the drilling licence.

(3.2) If a licensee does not pay the rental required under this or another section, the licence expires 60 days after the rental was due unless, on or before the 60 days have elapsed, the rental due is paid plus a fee of $500.

(3.3) If a licence expires under subsection (3.2), the director may reinstate the licence for the balance of the term that was in effect immediately before its expiry, if

(a) the director is satisfied the non-payment of the rental was due to inadvertence or circumstances beyond the control of the licensee, other than financial circumstances,

(b) there has been no disposition under sections 71 or 72 of the Act of any petroleum and natural gas that was subject to the licence immediately before its expiry, and

(c) the licensee submits an application plus, in addition to the amounts set out in the Act, a fee of $500.

(4) A drilling licence commences on the date it is issued.

(5) A drilling licence must be extended once, for a period of one year, if the application

(a) is made before the end of the term, and

(b) is accompanied by an extension fee of $500 and rental of $7 a hectare.

(5.1) The minister may grant one or more extensions of a drilling licence each for a period of one year or less if

(a) an application is made to the director before the end of the current term of the licence and is accompanied by rental of $3.50 per ha a year,

(b) an application to drill an earning well has been made to the commissioner at least 30 days before the end of the current term of the licence, and

(c) drilling of an earning well has been delayed pending completion of

(i) an environmental or socioeconomic study,

(ii) a public hearing, or

(iii) a planning or consultation process.

(5.2) Repealed. [B.C. Reg. 189/2005, s. 3.]

(5.3) The minister may extend a drilling licence for a period of one year if

(a) the drilling licence has previously been extended under subsection (5),

(b) the application for the extension is made during the term of a current extension of the licence under

(i) subsection (5),

(ii) subsection (5.1), or

(iii) this subsection,

(c) the application for the extension is accompanied by rental of $3.50 for each hectare, and

(d) the drilling licence is included in a special project designated under section 75 of the Oil and Gas Activities Act for the development or production of coalbed gas.

(5.4) An extension under subsection (5.3) must not

(a) apply to a zone that does not include the coal-bearing stratum or strata subject to the special project referred to in subsection (5.3) (d),

(b) be given if 5 extensions under subsection (5.3) have been given previously for the same drilling licence, or

(c) include land that is not included in the special project referred to in subsection (5.3) (d).

(6) A licensee may assign or sublet all or a portion of the licensee's interest in a drilling licence but may not assign or sublet that interest on the basis of all or a portion of any area in the location.

(7) The expiry date of a drilling licence is extended to the date the drilling of a well eligible for designation as an earning well is completed if

(a) the drilling licence would otherwise expire before the drilling of the well is completed,

(b) drilling of the well has reached at least 150 metres on the date the drilling licence would otherwise expire,

(c) drilling of the well is being diligently conducted, and

(d) the drilling licence has previously been extended under subsection (5).

(8) If an expiry date is extended under subsection (7), no other well may be commenced in the location of the drilling licence after the expiry date that applied immediately before the extension under subsection (7) except as provided under subsection (9).

(9) If the expiry date of a drilling licence is extended under subsection (7) and drilling of the well must be discontinued for mechanical reasons, a new well may be commenced in its place during the period of the extension under subsection (7).

(10) The expiry date of a drilling licence that has been grouped, under section 4.1, with another drilling licence extended under subsection (7) is extended to the expiry date of that other drilling licence if the first licence

(a) would otherwise expire before the drilling of the well is completed, and

(b) has previously been extended under subsection (5).

[am. B.C. Regs. 62/92; 91/92, s. 2; 55/94, s. 3; 111/2002; 189/2005, s. 3; 192/2009, s. 2; 198/2016, App. 2, s. 4.]

 Section 3.01 was enacted by BC Reg 33/2020, effective February 27, 2020.

 Section 3.1 was enacted by BC Reg 226/2012, effective July 19, 2012.

 Section 3.1 (2) (a) BEFORE amended by BC Reg 198/2016, effective August 1, 2016.

(a) is drilled in a spacing area all or part of which is in a location described in a drilling licence that is either in effect on the date of designation or that ceased to be in effect not more than 60 days before the date of the designation, or is a well re-drilled in a spacing area formerly described in a

(i) permit,

(ii) drilling licence, or

(iii) lease

no longer in effect, and

 Section 3.1 (1) and (2) (part) BEFORE amended by BC Reg 33/2020, effective February 27, 2020.

(1) A licensee may apply to the director to have a well designated as an earning well for a gas spacing area if another well has not been designated as an earning well for that gas spacing area.

(2) On application under subsection (1), the director may designate a well as an earning well for a gas spacing area if the well

 Section 3.1 (2) (b) BEFORE amended by BC Reg 33/2020, effective February 27, 2020.

(b) has generated well reports and well data, as defined in section 14 of the Oil and Gas Activities Act General Regulation, B.C. Reg. 274/2010, that, in the opinion of the director, sufficiently evaluate a zone in the gas spacing area.

 Section 4 BEFORE re-enacted by BC Reg 33/2020, effective February 27, 2020.

Drilling licences and leases

4   (1) A licensee may terminate

(a) the licensee's drilling licence, or a portion of it, at any time if spacing areas are not split,

(b) a portion of the licensee's drilling licence if an application is made for a lease based on an earning well, or

(c) a portion of the licensee's drilling licence if

(i) an application is made for a lease, and

(ii) the portion is included in a unitization agreement entered into by the minister under section 114 of the Act.

(2) The lease entitlement of an earning well

(a) must not exceed in size the number of whole gas spacing areas corresponding to the measured wellbore length of the earning well as set out in Schedule 1,

(b) may extend only to the base of the deepest zone that has been drilled into and evaluated by means of the earning well named in the application,

(c) may be combined, in whole or in part, with the lease entitlement of another earning well named in the application, and

(d) may be deferred, in whole or in part, to a later application.

(3) A lease issued after application under subsection (1) (b) must be located entirely in the location described in a single drilling licence.

(4) Zones not included in a lease issued under subsection (1) continue as part of the drilling licence.

(5) Whole gas spacing areas in the location described in a drilling licence may not be split unless, in the opinion of the minister, a petroleum well is located in the area described in the lease.

(6) The maximum number of units or quarter sections that a licensee is entitled to lease for each earning well is to be determined in accordance with Schedule 1.

[en. B.C. Reg. 189/2005, s. 4; am. B.C. Reg. 192/2009, s. 3.]

 Section 4.01 was enacted by BC Reg 33/2020, effective February 27, 2020.

 Section 4.1 (1) BEFORE amended by BC Reg 226/2012, effective July 19, 2012.

(1)  The director, on the written application of the licensees, must approve the grouping of 2 drilling licences as one drilling licence if

(a) one of the licensees has drilled an earning well on one of the drilling licences being grouped,

(b) the application is submitted to the director on or before the earliest expiry date of the drilling licences being grouped,

(c) the distance between the locations of the drilling licences being grouped does not exceed 4 kilometres at their closest point, and

(d) the grouping well has not been used previously to group a drilling licence.

 Section 4.1 (1.1) BEFORE repealed by BC Reg 226/2012, effective August 14, 2012.

(1.1)  The director, on the written application of the licensees, must approve the grouping of 2 or more small drilling licences as one drilling licence if

(a) one of the licensees has drilled an earning well on one of the drilling licences being grouped,

(b) the application is submitted to the director on or before the earliest expiry date of the drilling licences being grouped,

(c) the distance between the locations of the drilling licences being grouped does not exceed 4 kilometres at their closest point, and

(d) the grouping well has not been used previously to group a drilling licence.

 Section 4.1 (1) (c) BEFORE amended by BC Reg 198/2016, effective August 1, 2016.

(c) the distance between the locations of the drilling licences being grouped does not exceed 4 kilometres at their closest point, and

 Section 4.1 (2) and (3) BEFORE amended by BC Reg 33/2020, effective February 27, 2020.

(2) Subject to section 4 (3), drilling licences grouped under this section must be treated as one drilling licence for the purposes of a lease application under section 4.

(3) Despite section 4 (2) (d), deferred lease entitlements of an earning well must not be applied to drilling licences grouped under this section.

 Section 5 BEFORE repealed by BC Reg 33/2020, effective February 27, 2020.

Leases

5   (1) Despite section 4, no lease will be issued under this regulation unless

(a) the application for it is received by the director within 60 days after the date of expiry of the drilling licence, and

(b) the application is accompanied by the amounts required by the Act.

(2) Part 6 of the Act applies to leases issued under this regulation.

[en. B.C. Reg. 189/2005, s. 4.]

 Section 5.01 was enacted by BC Reg 33/2020, effective March 1, 2020.

 Section 5.1 was enacted by BC Reg 33/2020, effective February 27, 2020.

 Section 6 was enacted by BC Reg 198/2016, effective August 1, 2016.

 Section 6 (1) (b) BEFORE amended by BC Reg 33/2020, effective February 27, 2020.

(b) pays the penalty set out in section 7.

 Section 6 (2) BEFORE amended by BC Reg 33/2020, effective February 27, 2020.

(2) A 5 year lease may be continued under section 62 (1) of the Act only once.

 Section 6 (3) (b) BEFORE amended by BC Reg 33/2020, effective February 27, 2020.

(b) pays the penalty set out in section 7.

 Section 7 was enacted by BC Reg 198/2016, effective August 1, 2016.

 Section 7 BEFORE repealed by BC Reg 33/2020, effective February 27, 2020.

Penalty amount

7   The penalty prescribed for the purposes of section 62 (1) of the Act is

(a) $15 for the first year, and

(b) $25 for the second and third years, if applicable,

multiplied by the number of hectares in the location.

[en. B.C. Reg. 198/2016, App. 2, s. 7.]

 Section 8 was enacted by BC Reg 112/2020, effective May 28, 2020.

 Schedule 1 (part) BEFORE amended by BC Reg 226/2012, effective July 19, 2012.

over 4 400182430

 Schedule 1, 4,801 to 5 200 and over 5 200 were added by BC Reg 226/2012, effective July 19, 2012.

 Schedule 1 section description BEFORE amended by BC Reg 33/2020, effective February 27, 2020.

(section 4 (2) (a) )

 Schedule 3 was enacted by BC Reg 33/2020, effective February 27, 2020.