Oil and Gas Land Order No. 2-1961 (C.R.C., c. 1520)

Short Title

1 This Order may be cited as Oil and Gas Land Order No. 2-1961.

Interpretation

2 In this Order, Regulations means the Canada Oil and Gas Land Regulations and all other words and phrases used in this Order have the same meaning as in those Regulations.

Oil and Gas Leases

3 Tenders may be called for oil and gas leases for the Canada lands referred to in subsection 57(1) of the Regulations that have not been disposed of under Oil and Gas Land Order No. 1-1961.

4 Tenders for an oil and gas lease will, pursuant to section 57 of the Regulations, be called upon in one of the following sets of terms and conditions:

• (a) a cash bonus whereby the lessee will, in addition to complying with all provisions of the Regulations, pay to Her Majesty a fixed sum of money;

• (b) an exploratory work bonus whereby the lessee will, in addition to complying with all the provisions of the Regulations, deposit with the Chief money, bonds or an approved note of a value equal to the amount that the lessee undertakes to expend for exploratory work on the lease area within one or more fixed periods; or

• (c) a cash bonus plus a drilling commitment whereby the lessee will, in addition to complying with all the provisions of the Regulations, pay to Her Majesty a fixed sum of money and undertake to drill a well within the lease area to a fixed depth or horizon within one or more fixed periods.

5 Where a lease is granted on the condition of an exploratory work bonus,

• (a) the amount of expenditure made by the lessee under the condition shall be determined in the same way as the allowable expenditure referred to in section 43 of the Regulations is determined;

• (b) the portion of the deposit equal to the expenditure made during the period set out in the condition shall be returned to the permittee;

• (c) the portion of the deposit not returned to the permittee is forfeited to Her Majesty; and

• (d) expenditure incurred by the lessee in order to obtain a return of the deposit cannot be used to effect a reduction of rental pursuant to section 80 of the Regulations.

6 Where an oil and gas lease is granted on the condition of a cash bonus plus a drilling commitment

• (a) the size of the oil and gas lease area will vary with the location of the area and the depth of the potential reservoir horizons;

• (b) the oil and gas lease will be cancelled if the lessee does not, within the period set out in the condition, drill to commercial production, to a precambrian horizon or to the depth set out in the condition;

• (c) the period within which the well is to be drilled may be extended by the Chief, where in the opinion of the Chief, operations for the drilling of the well have been commenced; and

• (d) expenditure incurred by the lessee in drilling the well referred to in the condition cannot be used to effect a reduction of rental pursuant to section 80 of the Regulations.

7 Any person may request that an oil and gas lease be offered for tender under any one of the sets of terms and conditions set out in this Order.

• 8 (1) Subject to subsection (2), every oil and gas lease granted under this Order is granted upon the condition that the lessee must be a person or corporation that meets the requirements of subsection 54(2) of the Regulations.

• (2) Subsection (1) does not apply to an oil and gas lease granted under this Order for Canada lands that have been held under an earlier permit where the oil and gas lease is issued to the person or corporation who held that earlier permit.