BC Tenure RegulationsCAPL October 20, 2009 Page 1.
SEMINAR OUTLINE PART 1 • Oil & Gas in British Columbia • Current MEMPR Initiatives • Energy Plan Implementation • Service Sector Strategy • Royalty Programs • Infrastructure Programs • Oil & Gas Stimulus Package • New Markets Page 2.
SEMINAR OUTLINE PART 1 (continued) • First Nations and Community Engagement • First Nations Relationships and Agreements • Land Agent Licensing Review • Oil & Gas Activities Act • Ministry & Division Structure • Acquiring Oil & Gas Tenure • Division Accomplishments • Current Initiatives
SEMINAR OUTLINE PART 2 • Resources for Tenure Managers • Introduction to BC’s tenure, land, and zone systems • Permits • Drilling Licences • Leases • ePayments Training • Transfers, Encumbrances, and Related
OIL AND GAS IN BRITISH COLUMBIA
World-Class Oil & Gas Resources • Abundant opportunities in conventional natural gas plays • Emerging opportunities from unconventional sources (shale, tight, coalbed gas) • New infrastructure will connect B.C. to Asia, diversifying our export markets
Sedimentary Basins in B.C. Western Canada Sedimentary Basin Whitehorse Trough Fort Nelson Ft. St. John Bowser Basin Dawson Creek PrinceRupert Quesnel Trough PrinceGeorge Nechako Basin Queen Charlotte Basin Fernie Basin Winona Basin Vancouver Tofino Basin Victoria Georgia Basin
Attractive Investment Climate • Land sales totalled $2.66 billion in 2008 – an all time record • 90% of 2008 sales came from shale gas plays • $1.1 B from the Horn River • $1.3 B from the Montney
The BC Energy Plan • Focus on Environmental Leadership • Strong Commitment to Energy Conservation and Efficiency • Energy Security • Investing in Innovation
Energy Plan Policies • Electricity Self-sufficient by 2016. • 50 percent of BC Hydro’s incremental electricity resource needs met by conservation by 2020. • Net zero greenhouse gas emission from electricity generation. • A five percent average renewable fuel standard for diesel and gasoline by 2010.
Delivering the Energy Plan • Innovative Clean Energy Fund • BC Bioenergy Strategy • BC Hydro Calls for Power • BC Utilities Commission Act
Service Sector Strategy • Strengthen and support B.C. service sector businesses • Service Sector Advisory Committee • Partner to deliver key initiatives • Enhance industry job participation by British Columbians • Increase B.C. job and business opportunities
Service Sector Advisory Committee • Mandate: Examine business environment and support growth of oil and gas service sector in B.C. • Work with MEMPR to identify growth opportunities and mitigations to growth challenges • Annual report to Minister, EMPR
Partners to Deliver Key Initiatives • Energy Services BC • Online searchable database of over 1200 B.C. service sector companies • Procurement help offices opened in Fort Nelson and Dawson Creek • Calgary Tradeshow • Horn River Basin Producers Group • Procurement Report Card
Job Participation by British Columbians • Training and employment programs • Petroleum Field Services Entrepreneur Training • Professional Truck Driving Training for Women • Northern BC Newcomers Integration Services Centre • Education and labour market advisory committees • Career fairs throughout B.C.
Other Oil and Gas Initiatives A number of other initiatives are underway by MEMPR that will increase job and business opportunities for the B.C. service sector…….
Royalty Programs Royalty Credit Program Infrastructure Royalty Credit Program Oil & Gas Stimulus Package
What Royalty Programs Does British Columbia Have to Offer? Programs provide reduced royalty rates Programs provide credits
BC Ministry of Energy, Mines and Petroleum Resources How Can These Royalty Programs Help Develop Unconventional Resources? • These programs can be combined in many cases, thus providing enough margin to move certain projects to economic territory. • Example - a well that… • a road project (an infrastructure credit), • is drilled in the “summer”, • is deep, and • is marginal… • …can receive all the associated benefits for those programs.
Royalty Credit Programs • Summer Royalty Program • Deep Royalty Programs • Calculation example for vertical well, horizontal well and multi-lateral well • Coalbed Methane Royalty Program • Deep Re-entry well • Deep Discovery Well • Infrastructure Royalty Program (RFP only)
Royalty Rate Reduction Programs • Marginal Royalty Program • Ultra-marginal Royalty Programs • Net Profit Royalty Program (RFP only)
Infrastructure Royalty Credit Program (Request for Application, RFA) • To stimulate investment in the oil and gas roads and pipelines an additional $50 million were approved for a fall 2009 RFA. • The Program is designed to facilitate access to new and under-developed areas of British Columbia, and/or provide all-season access to oil and gas resources. • Up to 50% of the cost of building high grade oil and gas roads and pipelines can be received in royalty credits • Request for Application (RFA): • opened Sep 10, 2009 and closes Nov. 10, 2009 • Detailed requirement regarding the RFA can be found at: http://www.empr.gov.bc.ca/OG/oilandgas/royalties/infdevcredit/Pages/default.aspx
Other Infrastructure Programs • SYD Road - Public Private Partnership • Key 180 Km access road to east side of Horn River Basin • March 2009, committed $187 million to major upgrades over 3 years • Public Road Upgrades in the Peace • $175 million invested over 5 years under Heartlands Oil and Gas Road Rehabilitation Strategy (HOGRRS) • In 2009 and 2010, additional $94 million in public road upgrades committed
Oil and Gas Stimulus Package • Package announced August 6th, 2009 • Objectives: • Address the economic slowdown by generating new stimulus for drilling in the Province • Attract additional oil and gas investment during the recovery phase • Increase GDP, employment and investment • Maximize revenues to the Crown
Stimulus Package Contents Four Royalty Initiatives • A one-year 2% royalty relief for new wells drilled between September 1st 2009 and June 30th, 2010; • An increase of 15 percent in all the deep royalty credit tables; • Qualification of horizontal wells drilled between 1,900 metres and 2,300 into the Deep Royalty Credit Program; and • Fall 2009 call for the Infrastructure Royalty Credit Program for $50 million. Two Regulatory Initiatives • OGC announcement of commingling for Plains area; and • Amendments to the Drilling Licence Regulation
Drilling Licence Regulation Amendments • Collaborative approach by Ministry/Industry working group • DL Reg amendments identified as short-term priority • Shared principles developed by working group to guide the development of the amendments • DL Reg amended to be more responsive to exploration for unconventional gas plays • Amendments apply to entire province & both conventional & unconventional gas
HST starting July 2010 • Announced July 23, 2009, effective July 1,2010 7% PST + 5% GST = Lowest HST rate in Canada • Annual saving of $80 million for mining, oil and gas industries in BC • Industry will no longer have to pay the provincial portion of HST due to Input Tax Credits (ITCs) • Industrial and commercial users of natural gas and heating oil will be eligible for ITCs
Long Term Results: Becoming a Leader in North American Natural Gas Markets • Second natural gas producer in Canada, after Alberta • Increasing market share in Canada • Potential to triple production as unconventional natural gas develops – existing production 1 Tcf/year
Short Term Results: BC’s Oil and Gas Competitiveness during the recession • Oil and Gas Stimulus package started Sep. 1st – already seeing recovery in key indicators • BC less impacted by the recession than other North American jurisdictions
Open up New Market - PTP & KLNG Projects Shale gas from northeast British Columbia is a key potential source of natural gas for the pipeline and facility. Economic benefits to northern British Columbia from PTP and KLNG projects: 2500 construction jobs 150 permanent jobs • Pacific Trails Pipeline Project • 463 km in length • from Summit Lake to Kitimat • Kitimat Liquid Natural Gas Project • Build a NG liquefaction export facility near Kitimat • Export NG to Asian markets
First Nation and Community Engagement • First Nation Engagement • New Relationship • Treaty 8 • Economic Benefits Agreements (EBA) • Long-Term Oil & Gas Agreements (LTOGA) • Caribou Conservation & Habitat Protection • Community Engagement • Living Together – Working Together • Northeast Energy and Mines Advisory Committee (NEEMAC) • Land Owner Notification Program • Standard Surface Lease • Farmers Advocate
First Nation Engagement • Recent legal decisions confirm Aboriginal rights exist in B.C. Means consultation at a pre-tenure stage • Aboriginal and Treaty rights are protected under section 35 of the Constitution Act • 1998 Halfway (Metachia) decision confirmed government must consult • Results in change in government policy dealing with First Nations and confirms need to consult at the tenures stage
First Nation Engagement • Assign caveats in the Notice of Public Tender that respond to First Nation comments • "Oil and Gas Tenure 101" Presentations to Chief & Council and Lands Staff • Responsive to First Nation comments • Provide more detailed mapping and information for specific sites • Meet to resolve area-specific issues
New Relationship • Significant steps taken by government to recognize and reconcile the gap between aboriginal people and other British Columbians • Milestones reached: • Improved Treaty process • Reconciliation and economic benefit agreement • Land Use Plans • Language and culture preservation • Support for aboriginal learners • Improved health care and housing • For further information visit: http://www.gov.bc.ca/themes/new_relationship.html
Treaty 8 • Treaty originally signed in 1899 • For further information visit: http://www.ainc-inac.gc.ca/al/hts/tgu/pubs/t8/trty8-eng.asp#chp4
Economic Benefits Agreement • Outlines obligations of British Columbia • Outlines when benefits are paid to a band • Outlines dispute resolution procedures • Outlines obligations of Treaty 8 First Nations • Blueberry • Fort Nelson • Doig River • Prophet River • West Moberly • EBA enables resource management agreements. More specifically the Long Term Oil and Gas Agreement • For further information visit:http://www.gov.bc.ca/arr/treaty/key/down/treaty_8_eba.pdf
T8-BC Long Term Oil and Gas Agreement (LTOGA) • The Ministry and the OGC are negotiating a LTOGA with BC-based Treaty 8 First Nations. • A completed LTOGA is separate from the OGC’s Consultation Process Agreements, it is intended to cover a broad range of topics from tenuring to reclamation. • The Ministry/OGC and Treaty 8 had 2 workshops with First Nation and Industry participation (including CAPL and CAPP representatives). • In December 2008, the first workshop focused on identifying issues and collaborative solutions in the tenuring process. • In September 2009 the Ministry/OGC and Treaty 8 held a follow up workshop with CAPL and CAPP representatives that focused on how First Nation related terms and conditions could be made more clear and transparent for First Nations, industry and Government. • The target for completion of LTOGA is Dec 2009.
Fort Nelson First Nation • Fort Nelson First Nation (FNFN) were an original signatory to the Treaty 8 Economic Benefit Agreement (EBA) and participant in the negotiation of the Collaborative Management Agreements, including the Long Term Oil and Gas Agreement. • In April of 2009, FNFN voted to withdraw from the Treaty 8 EBA in favour of pursuing solutions outside of the Treaty 8 EBA framework. • The Ministry and the OGC are currently working with the leadership of FNFN and the Horn River Producers Group with regard to their interests and concerns.
Treaty 8 Consultation Process Agreements • Treaty 8 Consultation Process Agreements (CPA) are due to expire March 31, 2011. • The CPA Implementation Committee is currently undertaking a review to prepare for the renewal of these agreements. • Implementation Committee is composed of Treaty 8 land managers and representatives from the OGC and MEMPR.
Caribou Conservation and Habitat Protection • The federal Species at Risk Act (SARA) requires recovery planning for threatened species; including the boreal caribou. • The Ministry of Environment, MEMPR and the OGC are developing an action plan to mitigate the impacts of oil and gas activity on boreal caribou habitat in northeast BC. • The action plan will provide an interim provincial management strategy that will link recovery planning efforts to the implementation of the OGAA Environmental Protection and Management Regulations.
Community EngagementLiving Together – Working Together • Minimizing Impacts – Maximizing Benefits • Voluntary Registry • Key Principles developed jointly; • Industry “Social License” Committee and NEEMAC. • How do surface or field land agents interface with their company’s Community Relations or “Living Together/Working Together” program?
Living Together – Working Together: Industry Guiding Principles • Living TogetherWe will work collaboratively with landowners, local and Aboriginal communities, government and other industries to identify opportunities and minimize the impacts of our operations in a safe and responsible manner. • Working Together We recognize the need to work together with local residents and communities, and acknowledge that: • We will be respectful of our shared use of the land • We can further minimize impacts through cooperation and coordination amongst industry by sharing best practices related to local issues such as traffic safety, speed control, dust, noise, and roadway maintenance, among others • It is important to identify and participate in opportunities to support the communities in which we operate
Principles • Respect & CommunicationWe are committed to ongoing communication in a timely and proactive manner through: • Open and respectful two-way dialogue • Identifying company representatives and providing contact information • Responding to local residents and communities to understand and address concerns • Education and information exchange about oil and gas activities • AccountabilityWe will demonstrate accountability by: • Applying these guiding principles to both our employees and our contractors in our operations • Reporting on our Living Together - Working Together activities
Participating Companies as of September 24, 2009 ARC Resources Encana Devon Talisman Conoco- Phillips Shell Suncor Energy Canadian Natural How can your company get involved? Visit: http://www.gov.bc.ca/empr/ Contact: Richard Sawchuk, Manager, Community Relations Ministry of Energy, Mines and Petroleum Resources 250 952-0165
Northeast Energy and Mines Advisory Committee - NEEMAC • NEEMAC was established in 2006 to facilitate community engagement in relation to energy, mining and petroleum issues • 2008 achievements: • Landowner Notification Program • Oil and Gas Activities Act input • Coordination Agreement between OGC and Mediation and Arbitration Board • Creation of Regional Executive Director position in NE British Columbia • Subcommittee consisting of industry, landowners and govt., working on a Standard Surface Lease Agreement for private landowners to be included as part of LON Program • For further information on NEEMAC visit: http://www.empr.gov.bc.ca/MACR/CommunityRelations/Pages/NEEMAC.aspx
Landowner Notification • Program initiated in April 2008 to fulfill an Energy Plan policy action and a NEEMAC recommendation • Landowner Notification Program provides landowners with information about oil and gas exploration and development and opportunity to provide companies surface feature information. • The highest bidder is provided checklist(s) with Landowner comments • Six month evaluation completed, recommendations being implemented: • Revision of package materials – more user-friendly, more useful information • Inclusion of return stamped envelopes for Landowners • Ensuring comments are received by companies and are useful to industry • Creation of a Standard Surface Lease Agreement which will be included in future Landowner Notification packages • For further information visit: http://www.landownernotification.gov.bc.ca/
Standard Surface Lease (Voluntary) Progress: • Negotiated 2007-08: CAPL, SEPAC, CAPP together with MEMPR and Land Owner groups • Final Version “Completed” with organizational commitment: September, 2009 • Inclusion in BC Landowner Notification materials (Fall) • Covering “affirmation”