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"Petroleum &
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Petroleum & Natural Gas Rights in British Columbia
Most of the petroleum and natural gas rights in British Columbia are
owned by the province, with small percentages privately-owned or held by the federal
government.
The province has not included subsurface rights in most land grants
issued after 1891. As a result, the surface owner of property rarely owns underlying
petroleum and natural gas rights, except in areas of early settlement such as Vancouver
Island and the Fraser Valley.
The Titles Division, Ministry of Energy and Mines, manages
provincially-owned petroleum and natural gas rights, including:
 | issuing rights in an equitable manner; |
| administering issued rights; and, |
| collecting and accounting for revenues associated with the rights. |
Managing Oil and Gas Rights
B.C. manages rights similar to other western provinces. The private
sector explores for, develops, produces and markets oil and gas through tenure agreements
with the province. These agreements give rights to specific areas, and may include rights
to all depths, or may be restricted to certain geological formations.
Typically, agreements are for three to 10 years and can be renewed or
extended, require exploration or development, and call for payment of rents and royalties
to the province.
As of March 1999, the branch is managing 10,000 petroleum and natural
gas agreements covering 6 million hectares of rights.
Three types of agreements are used in British Columbia:
| permits, carrying an obligation to conduct exploration; |
| drilling licences, conveying the exclusive right for permission to drill
oil and gas wells in a defined area; and, |
| leases, allowing production, in addition to providing exclusive drilling
rights. |
Parts of permits and drilling licences may be converted to leases if all
obligations have been met. The remainder of the rights revert to the province. If the
tenure holder does not meet the commitments, all rights revert to the province.
Exploration and Development
Although provincial tenure agreements contain obligations to conduct
exploratory or development work, approval to carry out the work is not included. Each
activity, such as a geophysical survey or drilling a well, must have specific approval
from the Oil and Gas Commission. The Oil and Gas Commission is a Crown corporation
responsible for regulating the exploration, development, production and pipeline
transportation of oil and gas in British Columbia. The Commission conducts a review
process to identify any environmental sensitivities or access issues, before approving any
on-the-ground activities.
Sharing Production
An important feature of the oil and gas rights management system in
western Canada is the protection of correlative or adjacent rights, where owners of oil
and gas in a reservoir share production fairly. This applies to both provincial and
private rights.
The sharing is achieved in part by dividing the province into normal
spacing areas and allowing, in most cases, only one well to be drilled in each spacing
area. For gas wells, these areas are about 2.6 square kilometres. Production from a well,
regardless of where it is drilled within the spacing area, must be shared among all owners
of oil and gas rights in the spacing area.
Acquiring Rights
Provincial petroleum and natural gas rights can be acquired by bidding
in competitions held monthly. These public competitions are held in the same manner as
those in the other western provinces. The competition process is as follows:
| interested parties request rights be made available as tenures in a
competition; |
| competitions are announced in local newspapers and trade journals; |
| details of tenures are provided in the B.C. Gazette and posted on the
ministry’s internet site; and, |
| the province receives sealed bids and awards the tenures to the parties
that submit the highest cash bids, providing the bids offer fair value. |
An inter-agency referral and notification process is part of the
disposition process. This allows provincial agencies, local governments, First Nations and
the public to identify areas where access constraints may apply, and to have specific
conditions included in the disposition notice.
Information available from the Titles Division includes:
| dates of tenure competitions; |
| procedures and conditions for bidding; |
| an electronic compact disk (CD) containing information on all tenures
managed by the branch; |
| reports of selected parts of the data base; and, |
| encumbrances recorded against the various tenures by the financial
community (information concerning these documents is available by requesting a title
search letter). |
For more information about Petroleum and Natural Gas Rights in B.C.
visit our Internet site at http://www.gov.bc.ca/em/
Ministry of Energy and Mines
Titles Division
6th Floor, 1810 Blanshard Street
PO Box 9326 Stn Prov Govt
Victoria, B.C. V8W 9N3
Phone: (250) 952-0542
Fax: (250) 952-0331
For information about regulation of oil and gas activities visit the Oil
and Gas Commission Internet site at http://www.ogc.gov.bc.ca/
Oil and Gas Commission
Ste. 200, 10003, 110th Avenue
Fort St. John, B.C. V1J 6M7
Phone: (250) 261-5700
Fax: (250) 261-5744 |
