Canada Oil and Gas Land Regulations (C.R.C., c. 1518)

31. (1) An exploration agreement shall be for a term not exceeding 10 years from the date the agreement takes effect and may be renewed for a term or terms not exceeding 10 years in the aggregate.

(2) An exploration agreement and any renewal thereof shall be subject to such terms and conditions as are determined by the Minister.

(3) Notwithstanding subsection (1), where the holder of an exploration agreement makes a significant discovery during the term of the agreement and a declaration thereof made under section 124 is in force on the expiration of the term, the exploration agreement continues in force, in respect of any grid area that is specified in the declaration, for so long as the declaration is in force, and the terms and conditions and royalty provisions that applied during the term of the agreement shall continue to apply during the continuation thereof.

32. (1) Subject to these Regulations, a person acting under an exploration agreement may, for the purpose of searching for or developing oil or gas, enter on and use any land described in the agreement in order to

• (a) carry out or cause to be carried out exploratory work and the drilling of wells without limitation as to depth, including delineation and development wells;

• (b) mine, quarry, extract and produce from the land such quantities of oil or gas or other minerals and substances in association therewith as, in the opinion of the Minister or person designated by the Minister, are necessary for test purposes or for conducting the operations by any person acting under the exploration agreement; and

• (c) carry out any other work or activity agreed to under the exploration agreement.

(2) Subject to these Regulations, every exploration agreement confers on the holder thereof the exclusive option to obtain an oil and gas lease for the Canada lands described thereof.

33. (1) Subject to subsections (2) to (8), Petro-Canada Limited has the right, in priority to any other person,

• (a) during a period of one year commencing on August 3, 1977, to select lands from among the lands that are Crown reserve lands on such date in the manner and quantities approved by the Minister or a person designated by the Minister; and

• (b) during a period of seven years commencing on August 3, 1977, to select, in the manner approved by the Minister or a person designated by the Minister, within one year from the date the Minister or a person designated by the Minister gives notice that the lands are available for selection, up to a maximum of 25 per cent of such Crown reserve lands as are specified in the notice.

(2) The Minister or a person designated by the Minister shall give prompt notice to Petro-Canada Limited of lands that are or have become Crown reserve lands whereupon Petro-Canada Limited may exercise the rights granted by subsection (1).

(3) In exercising its right to select lands pursuant to subsection (1), Petro-Canada Limited shall not select more than 25 per cent of the land in respect of which it has the right unless the Minister authorizes the selection of a greater percentage in any case where he considers it appropriate due to the limited area of land available.

(4) Any land selected by Petro-Canada Limited pursuant to subsection (1) shall be held by it under an exploration agreement subject to such terms and conditions consistent with these Regulations as are agreed on between it and the Minister or a person designated by the Minister.

(5) Where the Minister intends to give notice pursuant to section 30 calling for the submission of proposals in respect of any Crown reserve lands for which Petro-Canada Limited has the rights granted by subsection (1), he shall send notice in writing of his intention to Petro-Canada Limited specifying the lands in respect of which he intends to call for the submission of proposals and Petro-Canada Limited shall have 60 days from the day such notice is sent to make its selection of not more than 25 per cent of such lands, in the manner approved by the Minister or a person designated by the Minister.

(6) The Minister may, after the expiration of the 60-day period referred to in subsection (5), give public notice pursuant to section 30 calling for the submission of proposals in respect of any lands not selected by Petro-Canada Limited pursuant to subsection (1) and Petro-Canada Limited and all other persons are equally entitled to submit such proposals.

(7) Any lands not disposed of pursuant to a proposal submitted under subsection (6) or an exploration agreement entered into under subsection 30(6) shall remain subject to the rights granted to Petro-Canada Limited but nothing done under this section extends or suspends the period available to Petro-Canada Limited to exercise its rights under subsection (5).

(8) Petro-Canada Limited shall not, without the prior approval in writing of the Minister, which may be given on application by any interested party, transfer, assign or in any other manner dispose of any interest or right in lands it has selected pursuant to subsection (1), or any interest or right in an exploration agreement affecting such lands, otherwise than by way of charge or mortgage.