Canada–Newfoundland and Labrador Atlantic Accord Implementation and Offshore Renewable Energy Management Act (S.C. 1987, c. 3)

Significant Discoveries

Marginal note:Application for declaration of significant discovery

• 71 (1) Subject to section 124, where a significant discovery has been made on any portion of the offshore area that is subject to an interest or a share therein held in accordance with section 66, the Regulator shall, on the application of the interest holder of the interest or the share thereof made in the form and manner and containing such information as may be prescribed, make a written declaration of significant discovery in relation to those portions of the offshore area in respect of which there are reasonable grounds to believe that the significant discovery may extend.

• Marginal note:Declaration on initiative of Regulator

  (2) Where a significant discovery has been made on any portion of the offshore area, the Regulator may, by order subject to section 124, make a declaration of significant discovery in relation to those portions of the offshore area in respect of which there are reasonable grounds to believe the significant discovery may extend.

• Marginal note:Description of offshore area subject to declaration

  (3) A declaration made pursuant to subsection (1) or (2) shall describe the portions of the offshore area to which the declaration applies.

• Marginal note:Amendment or revocation of declaration

  (4) Subject to subsection (5), where a declaration of significant discovery is made pursuant to subsection (1) or (2) and, based on the results of further drilling, there are reasonable grounds to believe that a discovery is not a significant discovery or that the portions of the offshore area to which the significant discovery extends differ from the significant discovery area, the Regulator may, subject to section 124 and as appropriate in the circumstances,

  • (a) amend the declaration of significant discovery by increasing or decreasing the significant discovery area; or

  • (b) revoke the declaration.

• Marginal note:Idem

  (5) A declaration of significant discovery shall not be amended to decrease the significant discovery area or revoked earlier than

  • (a) in the case of a significant discovery area that is subject to a significant discovery licence issued pursuant to subsection 73(1), the date on which the exploration licence referred to in that subsection expires; and

  • (b) in the case of a significant discovery area that is subject to a significant discovery licence issued pursuant to subsection 73(2), three years after the effective date of the significant discovery licence.

• Marginal note:Notice

  (6) A copy of a declaration of significant discovery and of any amendment or revocation thereof made under this section in relation to any portion of the offshore area subject to an interest shall be sent by registered mail to the interest owner of that interest.

Significant Discovery Licences

Marginal note:Rights under significant discovery licence

72 A significant discovery licence confers, with respect to the portions of the offshore area to which the licence applies,

• (a) the right to explore for, and the exclusive right to drill and test for, petroleum;

• (b) the exclusive right to develop those portions of the offshore area in order to produce petroleum; and

• (c) the exclusive right, subject to compliance with the other provisions of this Part, to obtain a production licence.

Marginal note:Significant discovery licence in relation to areas subject to exploration licences

• 73 (1) Where a declaration of significant discovery is in force and all or a portion of the significant discovery area is subject to an exploration licence or a share therein held in accordance with section 66, the Regulator shall, on application of the interest holder of the exploration licence or the share made in the form and manner and containing such information as may be prescribed, issue to the interest holder a significant discovery licence in respect of all portions of the significant discovery area that are subject to the exploration licence or the share.

• Marginal note:Significant discovery licence in relation to Crown reserve areas

  (2) Where a declaration of significant discovery is in force and the significant discovery area extends to a Crown reserve area the Regulator may, after making a call for bids in relation to that Crown reserve area or any portion thereof and selecting a bid submitted in response to the call in accordance with subsection 59(1), issue a significant discovery licence to the person who submitted that bid in relation to the Crown reserve area specified in the call.

• Marginal note:Fundamental decision

  (3) The making of a call for bids and the issuance of a significant discovery licence by the Regulator pursuant to subsection (2) is subject to sections 31 to 40.

• Marginal note:Terms and conditions of significant discovery licence

  (4) A significant discovery licence shall be in the form prescribed and may contain any other terms and conditions, not inconsistent with this Part or the regulations, as may be agreed on by the Regulator, subject to sections 31 to 40, and the interest owner of the significant discovery licence.

Marginal note:Reduction of area subject to significant discovery licence

• 74 (1) Where a significant discovery area in relation to a declaration of significant discovery is decreased pursuant to an amendment made under subsection 71(4), any significant discovery licence that was issued on the basis of that declaration shall be amended by decreasing accordingly the portions of the offshore area subject to that licence.

• Marginal note:Increase in area subject to significant discovery licence

  (2) Where a significant discovery area in relation to a declaration of significant discovery is increased pursuant to an amendment made under subsection 71(4), any significant discovery licence that was issued on the basis of that declaration shall be amended to include all portions of the amended significant discovery area that are subject to any exploration licence held by the interest owner of that significant discovery licence at the time the significant discovery area is so increased.

Marginal note:Exploration licence ceases to have effect

• 75 (1) On the issuance of a significant discovery licence pursuant to subsection 73(1) with respect to a significant discovery area, any exploration licence ceases to have effect in relation to that significant discovery area.

• Marginal note:Effective date of significant discovery licence

  (2) The effective date of a significant discovery licence is the date of application for the licence.

• Marginal note:Term of significant discovery licence

  (3) Subject to subsection 85(1), a significant discovery licence continues in force, in relation to each portion of the offshore area to which the licence applies, for a term of 25 years.

• Marginal note:Automatic extension of term

  (3.1) If the interest owner has made an application for a declaration of commercial discovery referred to in subsection 78(1) or for the issuance of a production licence referred to in subsection 81(1), the term of the significant discovery licence is extended until the Regulator makes a decision respecting that application.

• Marginal note:Cancelling automatic extension

  (3.2) The extension to the term of the significant discovery licence remains in force after the Regulator makes a declaration of commercial discovery, but the Regulator may cancel the extension if the interest owner fails to submit an application for the issuance of a production licence within a reasonable time.

• Marginal note:Crown reserve area on expiration of licence

  (4) On the expiration of a significant discovery licence, any portion of the offshore area to which the significant discovery licence related and that is not subject to a production licence becomes a Crown reserve area.

Drilling Orders

Marginal note:Drilling orders

• 76 (1) Subject to subsections (2) to (4) and sections 31 to 40, the Regulator may, at any time after making a declaration of significant discovery, by order subject to section 124, require the interest owner of any interest in relation to any portion of the significant discovery area to drill a well on any portion of the significant discovery area that is subject to that interest, in accordance with such directions as may be set out in the order, and to commence the drilling within one year after the making of the order or within such longer period as the Regulator specifies in the order.

• Marginal note:Exception

  (2) No order may be made under subsection (1) with respect to any interest owner who has completed a well on the relevant portion of the offshore area within six months after the completion of that well.

• Marginal note:Condition

  (3) No order may be made under subsection (1) within the three years immediately following the well termination date of the well indicating the relevant significant discovery.

• Marginal note:Idem

  (4) No order made under subsection (1) may require an interest owner to drill more than one well at a time on the relevant portion of the offshore area.

• Definition of well termination date

  (5) For the purposes of subsection (3), well termination date means the date on which a well has been abandoned, completed or suspended in accordance with any applicable drilling regulations.

Marginal note:Information may be disclosed

• 77 (1) The Regulator may, notwithstanding section 119, provide information or documentation relating to a significant discovery to any interest owner who requires such information or documentation to assist the interest owner in complying with an order made under subsection 76(1).

• Marginal note:Idem

  (2) An interest owner shall not disclose any information or documentation provided to that interest owner under subsection (1) except to the extent necessary to enable the interest owner to comply with an order made under subsection 76(1).

DIVISION IVProduction

Commercial Discoveries

Marginal note:Application for declaration of commercial discovery

• 78 (1) Subject to section 124, where a commercial discovery has been made on any portion of the offshore area that is subject to an interest or a share therein held in accordance with section 66, the Regulator shall, on the application of the interest holder of the interest or the share made in the form and manner and containing such information as may be prescribed, make a written declaration of commercial discovery in relation to those portions of the offshore area in respect of which there are reasonable grounds to believe that the commercial discovery may extend.

• Marginal note:Declaration on initiative of Regulator

  (2) Subject to section 124, where a commercial discovery has been made on any portion of the offshore area, the Regulator may, by order, make a declaration of commercial discovery in relation to those portions of the offshore area in respect of which there are reasonable grounds to believe that the commercial discovery may extend.

• Marginal note:Application of certain provisions

  (3) Subsections 71(3), (4) and (6) apply, with such modifications as the circumstances require, with respect to a declaration made pursuant to subsection (1) or (2).

Development Orders

Marginal note:Notice of order to reduce term of interest

• 79 (1) Subject to sections 31 to 40, the Regulator may, at any time after making a declaration of commercial discovery, give notice to the interest owner of any interest in relation to any portion of the commercial discovery area where commercial production of petroleum has not commenced before that time stating that, after such period of not less than six months as may be specified in the notice, an order may be made reducing the term of that interest.

• Marginal note:Opportunity for submissions

  (2) During the period specified in a notice sent to an interest owner under subsection (1), the Regulator shall provide a reasonable opportunity for the interest owner to make such submissions as the interest owner considers relevant to determining whether the Regulator should make an order reducing the term of the relevant interest.

• Marginal note:Order reducing term of interest

  (3) Notwithstanding any other provision of this Act but subject to sections 31 to 40, where the Regulator is of the opinion that it is in the public interest, the Regulator may, at any time not later than six months after the expiration of the period specified in a notice in respect of an interest sent under subsection (1), by order subject to section 124, reduce the term of the interest to three years after the date the order is made or such longer period as may be specified in the order.

• Marginal note:All interests cease

  (4) Notwithstanding any other provision of this Act but subject to subsections (5) and (6), where an order is made under subsection (3), any interest in respect of a portion of the offshore area within the area to which the interest that is the subject of the order applied on the date the order was made ceases to have effect at the end of the period specified in the order.

• Marginal note:Order ceases to have effect where production commences

  (5) Where commercial production of petroleum on any portion of the offshore area referred to in subsection (4) commences before the expiration of the period specified in an order made under subsection (3) or the period extended pursuant to subsection (6), the order ceases to have effect and is deemed to have been vacated.

• Marginal note:Extension of period

  (6) Subject to sections 31 to 40, the Regulator may extend the period specified in an order made under subsection (3) or may revoke the order.

Issuance of Production Licences

Marginal note:Rights under production licence

• 80 (1) A production licence confers, with respect to the portions of the offshore area to which the licence applies,

  • (a) the right to explore for, and the exclusive right to drill and test for, petroleum;

  • (b) the exclusive right to develop those portions of the offshore area in order to produce petroleum;

  • (c) the exclusive right to produce petroleum from those portions of the offshore area; and

  • (d) title to the petroleum so produced.

• Marginal note:Exception

  (2) Despite subsection (1), the Regulator may, subject to such terms and conditions as the Regulator deems appropriate, authorize any interest holder of a petroleum-related interest or a share in such an interest to produce petroleum on the portions of the offshore area subject to the interest or share for use in the exploration or drilling for or development of petroleum on any portion of the offshore area.

Marginal note:Issuance of production licence

• 81 (1) Subject to section 87, the Regulator, on application made in the form and manner and containing such information as may be prescribed,

  • (a) shall issue a production licence to one interest owner, in respect of any one commercial discovery area or portion thereof that is subject to an exploration licence or a significant discovery licence held by that interest owner; and

  • (b) may, subject to such terms and conditions as may be agreed on by the Regulator and the relevant interest owners and to sections 31 to 40, issue a production licence to

    • (i) one interest owner, in respect of two or more commercial discovery areas or portions thereof that are subject to an exploration licence or a significant discovery licence held by that interest owner, or

    • (ii) two or more interest owners, in respect of one or more commercial discovery areas or portions thereof that are subject to an exploration licence or a significant discovery licence held by any of those interest owners.

• Marginal note:Production licence in relation to Crown reserve areas

  (2) Where a declaration of commercial discovery is in force and the commercial discovery area extends to a Crown reserve area, the Regulator may, after making a call for bids in relation to that Crown reserve area or any portion thereof and selecting a bid submitted in response to the call in accordance with subsection 59(1), issue a production licence to the person who submitted that bid in relation to the Crown reserve area specified in the call.

• Marginal note:Fundamental decision

  (3) The making of a call for bids and the issuance of a production licence by the Regulator pursuant to subsection (2) is subject to sections 31 to 40.

• Marginal note:Terms and conditions of production licence

  (4) A production licence shall be in the form prescribed and may contain any terms and conditions, not inconsistent with this Part or the regulations, as may be agreed on by the Regulator, subject to sections 31 to 40, and the interest owner of the production licence.