Energy Safety and Security Act (S.C. 2015, c. 4)
Full Document:
Assented to 2015-02-26
Marginal note:1992, c. 35, s. 25; 1994, c. 10, s. 10
21. (1) Subsections 27(1) to (2) of the Act are replaced by the following:
Marginal note:Financial responsibility
27. (1) An applicant for an authorization under paragraph 5(1)(b) shall provide proof of financial responsibility in the form of a letter of credit, guarantee or indemnity bond or in any other form satisfactory to the National Energy Board,
(a) in the case of the drilling for or development or production of oil or gas in any area referred to in paragraph 3(b), in the amount of $100 million or, if the Board considers it necessary, in a greater amount that it determines; or
(b) in any other case, in an amount that is satisfactory to, and determined by, the Board.
Marginal note:Pooled fund
(1.01) An applicant to which paragraph (1)(a) applies may, rather than provide proof of financial responsibility in the amount referred to in that paragraph, provide proof that it participates in a pooled fund that is established by the oil and gas industry, that is maintained at a minimum of $250 million and that meets any other requirements that are established by regulation.
Marginal note:Increase in amount by regulation
(1.02) The Governor in Council may, by regulation, on the recommendation of the Minister, increase the amount referred to in subsection (1.01).
Marginal note:Continuing obligation
(1.1) The holder of an authorization under paragraph 5(1)(b) shall ensure that the proof of financial responsibility referred to in subsection (1) or (1.01) remains in force for the duration of the work or activity in respect of which the authorization is issued.
Marginal note:Extended obligation
(1.2) The holder of an authorization under paragraph 5(1)(b) shall also ensure that the proof referred to in paragraph (1)(a) or subsection (1.01) remains in force for a period of one year beginning on the day on which the National Energy Board notifies the holder that it has accepted a report submitted by the holder indicating that the last well in respect of which the authorization is issued is abandoned. The Board may reduce that period and may decide — other than in the case of a holder that participates in a pooled fund — that the proof that is to remain in force during that period is for an amount that is less than the amount referred to in paragraph (1)(a) and that is determined by the Board.
Marginal note:Payment of claims
(2) The National Energy Board may require that moneys in an amount not exceeding the amount prescribed for any case or class of cases, or determined by the Board in the absence of regulations, be paid out of the funds available under the letter of credit, guarantee or indemnity bond or other form of financial responsibility provided under subsection (1), or be paid out of the pooled fund referred to in subsection (1.01), in respect of any claim for which proceedings may be instituted under section 26, whether or not those proceedings have been instituted.
(2) Section 27 of the Act is amended by adding the following after subsection (4):
Marginal note:Reimbursement of pooled fund
(5) The holder of an authorization under paragraph 5(1)(b) that is liable for a discharge, emission or escape of oil or gas that is authorized by regulation or for any spill or debris in respect of which a payment has been made under subsection (2) out of the pooled fund, shall reimburse the amount of the payment to the fund in the prescribed manner.
22. The Act is amended by adding the following after section 27:
Marginal note:Lesser amount
27.1 (1) The Minister may, by order, on the recommendation of the National Energy Board, approve an amount that is less than the amount referred to in paragraph 26(2.2)(a) or (d) or 27(1)(a) in respect of an applicant for, or a holder of, an authorization under paragraph 5(1)(b).
Marginal note:Financial resources — exception
(2) If the Minister approves an amount that is less than the amount referred to in paragraph 26(2.2)(a) or (d) in respect of an applicant for an authorization under paragraph 5(1)(b), that applicant, for the purposes of subsection 26.1(1), shall only provide proof that it has the financial resources necessary to pay the adjusted amount approved by the Minister.
Marginal note:No contravention
(3) No applicant for an authorization under paragraph 5(1)(b) contravenes paragraph 27(1)(a) if that applicant provides proof of financial responsibility in the amount that is approved by the Minister under this section.
23. (1) The definition “unitization order” in section 29 of the Act is replaced by the following:
“unitization order”
« arrêté d’union »
“unitization order” means an order made under section 41 or 48.23;
(2) Section 29 of the Act is amended by adding the following in alphabetical order:
“expert”
« expert »
“expert” means a person who is appointed under subsection 48.27(2) or an expert panel appointed under subsection 48.27(3);
“perimeter”
« bande limitrophe »
“perimeter” means
(a) the area in the Northwest Territories or Nunavut that is within 20 km of the limit of that territory; and
(b) the portion of the submarine area referred to in paragraph 3(b) that is within 10 nautical miles of the seaward limit of that submarine area;
“regulator”
« organisme de réglementation »
“regulator” means a provincial government, a provincial regulatory agency or a federal-provincial regulatory agency that has administrative responsibility for the exploration for and exploitation of oil and gas in an area adjoining the perimeter;
“transboundary”
« transfrontalier »
“transboundary” means, in relation to a pool, extending beyond the National Energy Board’s jurisdiction under this Act or, in relation to a field, underlain only by one or more such pools;
24. The Act is amended by adding the following in numerical order:
Transboundary Pools or Fields
Delineation
Marginal note:Appropriate regulator
48.1 For the purposes of sections 48.11 to 48.14, the appropriate regulator is any regulator that has jurisdiction in an area
(a) adjoining the portion of the perimeter where the drilling took place or where an accumulation of oil or gas exists; or
(b) into which there is reason to believe that, based on the data obtained from any drilling, an accumulation of oil or gas extends.
Marginal note:Information
48.11 (1) If an exploratory well, as defined in subsection 101(1) of the Canada Petroleum Resources Act, is drilled in the perimeter, the National Energy Board shall provide each appropriate regulator, within the prescribed time and in the prescribed manner, with any information in its possession, including any prescribed information, that is relevant to the determination of whether a pool is transboundary and its delineation.
Marginal note:Additional information
(2) The National Energy Board shall, on request, provide the regulator with any additional information in its possession, that is relevant to the determination of whether a pool is transboundary and its delineation.
Marginal note:Notice — as soon as feasible
48.12 (1) If the data obtained from any drilling in the perimeter provides sufficient information for the National Energy Board to determine whether a pool exists, the Board shall notify each appropriate regulator as soon as feasible of its determination.
Marginal note:Notice — after three drillings
(2) If no notice is given under subsection (1), the National Energy Board shall, no later than one year after the day on which it receives data from the last of three drillings of the same geological feature in the perimeter, notify each appropriate regulator of its determination or that there is insufficient information to make a determination based on the data from those drillings.
Marginal note:Notice — transboundary pool
(3) If the National Energy Board determines that a pool exists, the Board shall also specify in the notice whether or not there is, in its opinion, reason to believe that the pool is transboundary.
Marginal note:Reasons
(4) The National Energy Board shall provide each appropriate regulator and the Minister with the reasons for its determination and opinion.
Marginal note:Notice from regulator
48.13 (1) If the National Energy Board receives a notice from a regulator indicating the regulator’s determination as to whether a pool exists in an area adjoining the perimeter and, if applicable, whether there is reason to believe the pool extends into the perimeter, the Board shall, within 90 days after the day on which the notice is received, inform the regulator of its agreement or disagreement with the content of the notice.
Marginal note:Reasons
(2) If the National Energy Board disagrees with the content of the notice, it shall provide the regulator with the reasons for its disagreement.
Marginal note:Delineation
48.14 (1) If, after receiving a notice under section 48.12 or 48.13, the National Energy Board and the regulator in question agree that a pool exists, the Board and that regulator shall jointly determine whether that pool is transboundary and, if so, they shall jointly delineate its boundaries.
Marginal note:Disagreement
(2) The National Energy Board or the regulator may, if they disagree about whether a pool exists, whether the pool is transboundary or its delineation, refer the matter to an expert, no later than 180 days after the day on which the Board issues a notice under section 48.12, or the regulator issues an equivalent notice.
Agreements Relating to Development
Marginal note:Appropriate regulator
48.15 For the purposes of sections 48.16 to 48.27, the appropriate regulator is the regulator that has jurisdiction in an area into which the transboundary pool or field in question extends.
Marginal note:Joint exploitation agreement
48.16 The Minister and the appropriate regulator may enter into a joint exploitation agreement providing for the development of a transboundary pool or field as a single field. The agreement shall include any matters provided for by regulation.
Marginal note:Development as a single field
48.17 (1) If a joint exploitation agreement has been entered into, the transboundary pool or field may only be developed as a single field. The development of that field is subject to the following agreements having been entered into and subsequently approved under subsection 48.2(2) or 48.23(4):
(a) a unit agreement that includes the details referred to in paragraphs 40(2)(a) to (d); and
(b) a unit operating agreement that includes the details referred to in paragraphs 40(3)(a) to (e).
Marginal note:Joint exploitation agreement prevails
(2) The joint exploitation agreement prevails over the unit agreement and the unit operating agreement to the extent of any inconsistency between them.
Marginal note:Intention to start production
48.18 (1) If an interest owner — as defined in the Canada Petroleum Resources Act — advises the Minister or the National Energy Board, including by way of an application under paragraph 5(1)(b) of this Act or under section 38 of the Canada Petroleum Resources Act, that it intends to start production from a transboundary pool or field, the Minister shall notify the appropriate regulator as soon as feasible of the interest owner’s intention.
Marginal note:Referral to expert
(2) If the Minister and the regulator have attempted to enter into a joint exploitation agreement but have been unsuccessful, the Minister or the regulator may, 180 days after the day on which the Minister gives notice under subsection (1), refer the matter to an expert to determine the particulars of the agreement. They may, however, agree to refer the matter to an expert at any time before the end of those 180 days.
Marginal note:Unit agreement
48.19 (1) The royalty owners and the working interest owners in a transboundary pool or field that is to be developed as a single field may enter into a unit agreement and, once approved, shall operate their interests in accordance with it, including any amendment to it.
Marginal note:Applicable provisions
(2) Subsections 37(2) and (3) apply to the unit agreement.
Marginal note:Condition precedent
48.2 (1) A unit agreement and unit operating agreement are to be jointly approved by the Minister and the appropriate regulator before an authorization is issued under paragraph 5(1)(b) for a work or activity proposed to be carried on in relation to the development of a transboundary pool or field as a single field.
Marginal note:Approval
(2) The Minister and the appropriate regulator may approve the unit agreement if all the royalty owners and all the working interest owners in the pool or field are parties to it; the Minister and the appropriate regulator may approve the unit operating agreement if all the working interest owners in the pool or field are parties to it.
Marginal note:Application for unitization order
48.21 (1) One or more working interest owners who are parties to a unit agreement and a unit operating agreement and own in total 65% or more of the working interests in a transboundary pool or field that is to be developed as a single field may apply for a unitization order with respect to the agreements.
Marginal note:Contents
(2) The application shall be submitted to both the Minister and the appropriate regulator. It shall include the documents and statements referred to in subsection 40(1) and may be made by the unit operator or proposed unit operator on behalf of the working interest owners.
Marginal note:Appointment of expert
(3) The Minister and the regulator shall, for the purposes of section 48.22, appoint an expert in accordance with subsections 48.27(2) to (4).
Marginal note:Hearing
48.22 (1) Once seized of an application made under section 48.21, the expert shall hold a hearing at which all interested persons shall be given an opportunity to be heard.
Marginal note:Conclusion of hearing
(2) On the conclusion of the hearing, the expert shall request that the Minister and the appropriate regulator
(a) order that the unit agreement is a valid contract enuring to the benefit of all the royalty owners and working interest owners who have an interest in the unit area and binding on and enforceable against all such owners, and that the unit operating agreement is a valid contract enuring to the benefit of all the working interest owners who have an interest in the unit area and binding on and enforceable against all such owners; and
(b) include in the order any variations to the unit agreement or unit operating agreement that the expert determines are necessary to allow for the more efficient or more economical production of oil or gas from the unitized zone.
Marginal note:Exception
(3) Despite subsection (2), the expert shall end the hearing and request that the Minister and the appropriate regulator take the measure outlined in paragraph (2)(a) if the expert finds that,
(a) on the day on which the hearing begins,
(i) the unit agreement and the unit operating agreement have been executed by one or more working interest owners who own in total 65% or more of the total working interests in the unit area, and
(ii) the unit agreement has been executed by one or more royalty owners who own in total 65% or more of the total royalty interests in the unit area; and
(b) the unitization order applied for would allow for the more efficient or more economical production of oil or gas from the unitized zone.
Marginal note:Unitization order
48.23 (1) The Minister shall issue an order in accordance with the expert’s request under subsection 48.22(2) or (3).
Marginal note:Effect of unitization order
(2) The unit agreement and the unit operating agreement have the effect given to them by the Minister’s order.
Marginal note:Equivalent order
(3) A unitization order becomes effective only if the appropriate regulator has issued an equivalent order.
Marginal note:Joint approval
(4) The issuance of a unitization order by the Minister and of an equivalent order by the regulator is deemed to be their joint approval of the unit agreement and the unit operating agreement.
Marginal note:Effective date of unitization order
(5) Subject to subsections (3) and (6), a unitization order becomes effective on the date set out in the order, but that date shall not be less than 30 days after the day on which the order is made.
Marginal note:Order revoked
(6) The Minister shall immediately revoke a unitization order that varies a unit agreement or a unit operating agreement if, before the effective date of that order, the applicant files with the Minister a notice withdrawing the application on behalf of the working interest owners or there are filed with the Minister statements objecting to the order and signed
(a) in the case of the unit agreement, by
(i) one or more working interest owners who own in total more than 25% of the total working interests in the unit area and are part of the group that owns 65% or more of the total working interests as described in subparagraph 48.22(3)(a)(i), and
(ii) one or more royalty owners who own in total more than 25% of the total royalty interests in the unit area and are part of the group that owns 65% or more of the total royalty interests as described in subparagraph 48.22(3)(a)(ii); or
(b) in the case of the unit operating agreement, by one or more working interest owners who own in total more than 25% of the total working interests in the unit area and are part of the group that owns 65% or more of the total working interests as described in subparagraph 48.22(3)(a)(i).
Marginal note:Application of sections 43 and 46
(7) Sections 43 and 46 apply to the unitization order.
Marginal note:Amending unitization order
48.24 (1) A unitization order may be amended on the application of a working interest owner submitted to both the Minister and the appropriate regulator.
Marginal note:Appointment of expert
(2) The Minister and the regulator shall appoint an expert in accordance with subsections 48.27(2) to (4) for the purposes of this section.
Marginal note:Hearing
(3) Once seized of the application, the expert shall hold a hearing at which all interested persons shall be given an opportunity to be heard.
Marginal note:Conclusion of hearing
(4) On the conclusion of the hearing, the expert may request that the Minister order the amendment of the unitization order in accordance with the amendment proposed and to include in the order any variations to it that the expert determines are necessary to allow for the more efficient or more economical production of oil or gas from the unitized zone. If the expert makes such a request, the expert shall also request that the appropriate regulator order the amendment of its equivalent order in the same way.
Marginal note:Exception
(5) If the expert finds that, on the day on which the hearing begins, one or more working interest owners who own in total 65% or more of the total working interests and one or more royalty interest owners who own in total 65% or more of the total royalty interests in the unit area have consented to the proposed amendment, the expert may end the hearing and request that the Minister amend the unitization order in accordance with the amendment proposed. If the expert makes such a request, the expert shall also request that the appropriate regulator amend its equivalent order in the same way.
Marginal note:Application of section 48.23
(6) Section 48.23 applies, with any modifications that the circumstances require, to an amended unitization order.
Marginal note:Protection of tract participation ratios
48.25 No amendment shall be made under section 48.24 that will alter the ratios between the tract participations of those tracts that were qualified for inclusion in the unit area before the commencement of the hearing, and, for the purposes of this section, the tract participations shall be those indicated in the unit agreement when it became subject to a unitization order.
Marginal note:Determination — percentages of interests
48.26 The percentages of interests referred to in subsections 48.21(1), 48.22(3), 48.23(6) and 48.24(5) shall be determined in accordance with section 47.
Referral to Expert
Marginal note:Notice
48.27 (1) The party that intends to refer a matter to an expert under subsection 5.1(9), 5.2(6), 48.14(2) or 48.18(2) shall notify the other party of their intention.
Marginal note:Appointment — single expert
(2) Within 30 days after the day on which a notice is given under subsection (1) or an application is made under subsection 48.21(1) or 48.24(1), the parties shall agree on the appointment of an expert who shall be seized of the matter.
Marginal note:Appointment — expert panel
(3) If the parties do not agree on the appointment of a single expert, they shall, within 30 days after the day on which the period to jointly appoint an expert under subsection (2) ends, each appoint one expert to a panel and those experts shall, in turn, jointly appoint an additional expert as chairperson. If there is no agreement on the appointment of a chairperson within 30 days after the day of the last appointment, the chairperson shall be appointed by the Chief Justice of the Federal Court within 30 days after the period for appointing a chairperson ends. Once the chairperson is appointed, the expert panel shall be seized of the matter.
Marginal note:Qualifications — expert
(4) An expert shall be impartial and independent, and have knowledge or experience relative to the subject of disagreement between the parties.
Marginal note:Decisions
(5) Decisions of an expert panel shall be made on the basis of a majority vote of the members. The chairperson’s vote is the deciding vote in the case of a tie.
Marginal note:Time limit
(6) The expert’s decision shall be made no later than 270 days after the day on which they were seized of the matter.
Marginal note:Decision is final and binding
(7) Subject to judicial review, a decision made by an expert is final and binding on all parties specified in the decision from the date specified in it.
Marginal note:Records to be kept
(8) An expert shall cause records to be kept of their hearings and proceedings and shall deposit their records with the Minister when their activities to which the records relate have ceased.
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