Update on the Modernization of the Act,

IOGC Quarterly Newsletter Volume VII, Issue 1

Reporting Period April 1, 2017 to June 30, 2017

I. IOGC and MARS Project Update:

In the prior issue (IOGC Quarterly Newsletter Volume VI, Issue 4), the Minister decided to put the approval of the proposed regulations into abeyance as a result of a resolution passed at the January 31, 2017 Indian Resource Council (IRC) Annual General Meeting.

In 2006 Canada and First Nations agreed to continue working jointly on amending the Indian Oil and Gas Act and to develop new supporting regulations. The understanding was that an amended Act and new regulations would primarily focus on enhancing Canada's ability to continue its role as a modern regulator of oil and gas activity on First Nations' reserve lands. A new set of transparent operational rules for industry was expected to foster or attract additional investment on First Nations reserve lands. Economic development was considered a secondary objective of the new on-reserve oil and gas legislative and regulatory regime.  A conflict of interest may have been perceived if Indian Oil and Gas Canada (IOGC) were directly involved in attracting investment for First Nations' oil and gas. Therefore, the resultant Indian Oil and Gas Act, 2009, and its proposed regulations, contain what could be described as "passive" measures to attract investment – a legislative and regulatory regime comparable to that within the surrounding province in key competitive areas. "Active" measures to attract industry investment would continue to be the responsibility of the Department, and not IOGC.

However, it should be noted that since this understanding in 2006, a number of global events have dramatically affected the industry. Notably, the worldwide economic downturn in 2008 and the persistent, near record-low world oil prices.  Whereas economic development and investment were originally considered secondary objectives of the 2009 Act and proposed regulations, they then became the primary areas of concern for First Nations.

The proposed regulations were ready for implementation in February 2017, but have since been adjusted to accommodate these First Nations' concerns. The most recent accommodations provide First Nations with increased involvement and flexibility for oil and gas-related business deals – providing First Nations with greater say over economic development on their reserve lands. Agreement has been reached on updated regulatory drafting instructions with both the Joint Technical Committee One (JTC-1) and the IRC. Both bodies have now agreed to support the regulations for Treasury Board consideration and approval for pre-publication in the Canada Gazette, Part I, provided the proposed regulations are consistent with the regulatory drafting instructions that have been agreed upon by all parties.  IOGC intends to consult oil and gas First Nations on these latest changes over the summer months of 2017.

Upon completion of the consultation process, the new, official, Blue-Stamped regulations will be prepared by Justice Canada.  The updated Phase I regulations would again undergo the appropriate government review and approvals processes.  Depending on the extent of the required changes, this could happen as early as fall of 2017. During pre-publication in the Canada Gazette, Part I, the draft regulations would be subjected to a 30-day public review and comment period. Simultaneously, IOGC will also be publishing the draft Phase I regulations in the First Nations Gazette.  All feedback received will be considered and accommodated, where appropriate. In the next step, the draft Phase I regulations will be updated to become the final Phase I regulations. The final Phase I regulations would once again undergo government review and approvals processes. Once approved, the final Phase I regulations would be published in the Canada Gazette, Part II and shortly thereafter, the Indian Oil and Gas Act, 2009 and the Phase I regulations would both become law.

IOGC's staff continues to prepare for the administration and enforcement of the Indian Oil and Gas Act, 2009 and the Phase I regulations. There are two parallel tracks governing this important process: 1) MARS Implementation, that will ensure processes, policies, procedures, and tools are prepared; and, 2) Organizational Change Management (OCM), that will ensure IOGC's staff are well-equipped. To assist staff through this period of considerable change; a contract is being prepared for an OCM service provider over the long-term. This will enable IOGC to be better-positioned to respond to both internally-driven change (i.e., changes resulting from the new Act and regulations) and externally-driven change (i.e., those changes that affect whole-of-government such as new e-mail and document management systems).

Work has already begun on some Phase II regulations. Drafting instructions for a number of key modules were shared with JTC-1 in December 2016 including:

  • Surface
  • Exploration (Seismic)
  • Moneys
  • Environment

IOGC is looking forward to receiving feedback from JTC-1 once they have completed their review.

II. Resource Information Management System 2 (RIMS2) Project – Fully Kicks-Off

  • The Resource Information Management System 2 (RIMS2) project completed its kick-off. You may recall that the first RIMS2 sub-project: the Petrinex IOGC Inclusion Project, kicked off last Q4. A total of six project workshops have taken place on the Petrinex IOGC Inclusion Project. The remaining two sub-projects launched in May 2017 to initiate the project preparation by IOGC, with a vendor selection to be completed in July 2017, and design to start shortly thereafter:
  • A new royalty management system for IOGC; and,
  • Introduction of elements of a case management system at IOGC.

The new on-reserve oil and gas legislative and regulatory regime will be implemented via modernized business practices supported by new information systems.  Once the RIMS2 project is completed, IOGC will be able to align business processes and systems with those already in use by the provinces and industry.  By tapping into Petrinex, First Nations and oil and gas companies will benefit via:

  • Reduced royalty under-payments and over-payments due to up-front validation and use of a factor concept to ensure 100% allocations;
  • Fewer amendments and reconciliations for royalty data submitted by industry; and,
  • More effective and reliable data. 

III. Inventory of First Nation Sites

During the consultation process for amendments that resulted in the Indian Oil and Gas Act, 2009, First Nations indicated the importance of protecting sites of cultural importance.  In response, section 5. (1)(a), (b) of the Indian Oil and Gas Act, 2009 was developed.  It provides for the Minister to order the suspension of industry operations if it presents a risk of harm to a site of  "...cultural, spiritual or ceremonial importance to the first nation".

While the process continues to bring the Indian Oil and Gas Act, 2009 and its Phase I regulations into force, it was determined that funding directed to developing an inventory of culturally-significant sites should be utilized.  After a competitive process, the First Nations Technical Services Advisory Group (TSAG) was selected to perform the work necessary to develop the inventory. TSAG is a non-profit organization mandated by the Chiefs of Alberta to provide technical services and training, including for mapping and geographic information systems (GIS). TSAG began working with First Nations on their inventories in mid-2016.  TSAG has reached out to all First Nations with active oil and gas sites on their reserve lands and has initiated projects with over 10 First Nations.

It is important to note that First Nations maintain ownership over their data and maps and IOGC does not receive any of the data collected throughout the project. The inventory of cultural sites is beneficial for a First Nation regardless of the progress made on bringing the Indian Oil and Gas Act, 2009 and Phase I regulations into force and can inform planning and other land management decisions.

Since our last newsletter, there has been one significant development. TSAG, supported by funding from IOGC and from the Canada Mortgage and Housing Corporation (CMHC), has developed a software application for mobile data collection. The software is installed on a mobile device, such as a tablet, thus allowing First Nation's staff in the field to capture data electronically.  Information collected can include text, photos, and video data pertaining to the site (e.g., well location, lay of the land, cultural site information) and this site information can then be transferred electronically onto a computer back at the office.  The use of this system will result in greater efficiency and effectiveness for this project since data is captured once and only once and there will no longer be a need to enter handwritten data, notes, and hand-completed forms into computers.

As the field season is upon us, activity is anticipated to increase so for more information about the "Inventory of First Nation Sites" project, please contact Amanda Doyle at TSAG (adoyle@tsag.net; 780-483-8601).

For further information on IOGC or the MARS Project, please contact IOGC at:

Indian Oil and Gas Canada
100 – 9911 Chiila Blvd.
Tsuu T'ina AB  T2W 6H6
Phone: (403) 292-5625
Fax: (403) 292-5618
Email: aadnc.contactiogc.aandc@canada.ca

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