2021-2023 Report to Parliament on the Indian Oil and Gas Act, RSC 1985, c I-7
Table of contents
Introduction
About Indian Oil and Gas Canada
Indian Oil and Gas Canada is a special operating agency within Indigenous Services Canada and manages and regulates oil and gas activities on designated First Nation reserve lands (First Nation lands).
Indian Oil and Gas Canada's jurisdiction includes oil and gas activities on First Nation lands across Canada, with most activity and infrastructure concentrated in the Western Canada Sedimentary Basin. There are currently 33 First Nations that produce oil or gas and an additional 17 that have non-producing or historical oil and gas infrastructure.
Indian Oil and Gas Canada's responsibilities are to:
- identify and evaluate oil and gas resource potential on First Nation lands
- encourage companies to explore for, drill, and produce these resources through leasing activity
- ensure equitable production, fair prices, and proper collection of royalties on behalf of First Nations
- secure compliance with and fairly administer the regulatory framework
Indian Oil and Gas Canada operates pursuant to the Indian Oil and Gas Act, RSC 1985, c I-7 (Act) and Indian Oil and Gas Regulations, SOR/2019-196 (Regulations), as well as other relevant legislation. On First Nation lands, oil and gas activity is founded on joint agreements between First Nations, oil and gas companies, and Indian Oil and Gas Canada. The process for new agreements requires dual First Nation and Indian Oil and Gas Canada approval.
Continuation of Phase roman numeral 2 Regulations
The Act and Regulations both came into force on August 1, 2019. The amendments to the Act addressed the need to legislate aspects of industry operations on First Nation lands. Regulation development was split into separate modules and follow a phased approach of approval and implementation.
The first phase was brought into force on August 1, 2019, and the second phase is underway with progress on three (3) of the remaining seven (7) modules including receiving a pre-consultation draft from the Department of Justice on the proposed environment regulations, as well as reviewing and updating the drafting instructions for the exploration and surface modules. The work on the remaining four (4) modules including money management, conservation, enforcement and royalties will be updated as they are prioritized by First Nations. These modules as they are completed will replace existing provisions in the 2019 Regulations that were carried forward from the 1995 Regulations.
Indian Oil and Gas Canada and the Joint Technical Committee (Committee) continue to work together on reviewing and updating drafting instructions, and the regulatory proposals for the subsequent phases. The Indian Resource Council established the Committee, made up of departmental subject matter experts, oil and gas technicians from oil and gas producing First Nations and legal representation. The Committee is responsible to review and provide feedback on the policy intents behind the regulation, on the regulatory drafting instructions, and on proposed regulations.
Consultation and engagement
Indian Oil and Gas Canada will complete consultation and engagement with First Nations, industry and provincial oil and gas regulatory bodies once the Phase roman numeral 2 Environment consultation draft is complete. Any feedback and input received will be taken into consideration and accommodated, where possible. This is the same process that was taken in the development of the 2019 Regulations.
Statistics from section 28.1 of the Act
Section 28.1 states that at least every two (2) years after the coming into force of the present section, the Minister shall prepare a report on the administration of this Act during the two preceding years and shall table a copy of the report in each House of Parliament within the first fifteen days that it is sitting after the completion of the report, which shall include a summary addressing the following matters:
Act Section 28.1(a)
"28.1(a) the progress of the consultations mentioned in paragraph 6(1.1)(a) and a list of concerns raised during such consultations;
- 6(1.1)(a) require that a power of the Minister under this Act in relation to first nation lands be exercised only if prior approval of the council of the first nation is obtained, if the council is first consulted or if prior notice is given to the council, as the case may be. …"
Tables 1-5 below provide detailed information and statistics for the reporting under the Act and Regulations.
Table 1: Consultation summary of when prior approval of the council is obtained for oil and gas provisions within Indian Oil and Gas Act, RSC 1985, c I-7 (Act) and the Indian Oil and Gas Regulations, SOR/2019-196 (Regulations).
| Instance | Regulation | Occurrences | Concerns |
|---|---|---|---|
| 1 | Person accompanying inspector 17 For the purpose of monitoring compliance with the Act and these Regulations, a person may accompany an inspector who is inspecting a contract holder's facilities and operations on First Nation lands if the person is authorized to do so by a written resolution of the council and the person has the certifications, and complies with the occupational health and safety requirements, required or imposed by the holder or by law. |
|
No concerns. |
| 2 | Amendments 20 (1) Any amendment to a contract or a bitumen recovery project requires the prior approval of the council and the Minister. |
|
No concerns. |
| 3 | Application for Exploration Licence - Submission of documents 29 (5) To obtain the exploration licence, the applicant must, within 90 days after the day on which the reviewed application is received, submit to the Minister three copies of the environmental protection measures letter and three original copies of the application signed by the applicant, along with a written resolution of the council approving the licence. |
One (1) | No concerns. |
| 4 | Public Tender Process - Publication of notice of tender 40 (3) The Minister must submit a copy of the proposed notice of tender to the council before publishing it and, if it is approved, must publish it. |
Nil (0) | No concerns. |
| 5 | Public Tender Process - Council's decision 42 (4) The council may, within 15 days after the day on which the tender closes, notify the Minister by written resolution that it rejects the bid with the highest bonus. If such a notice is received, all bids must be rejected. |
Nil (0) | No concerns. |
| 6 | Negotiation Process – Subsurface Contract - Granting of contract 46 (1) The Minister must grant the contract if he or she receives the following within 90 days after the day on which a copy of the contract has been received by both the applicant and the council:
|
Eleven (11) | No concerns. |
| 7 | Terms and Conditions of Subsurface Contracts - Term exception 50 (1) Despite subsections 48 (1) and (2) and section 49, with the consent of the applicant and the council, the Minister may fix the initial term of a permit or the term of a lease at a number of years that is greater than the number established by those provisions, to a maximum of five years. |
One (1) | No concerns. |
| 8 | Bitumen Recovery Project Approval – Approval 58 (1) The Minister must approve the bitumen recovery project if
|
Nil (0) | No concerns. |
| 9 | Bitumen Recovery Project Approval - Additional lands, wells or facilities 61 Once a bitumen recovery project has been approved, the subsurface contract holder must obtain the approval of the Minister and the council before adding lands, wells or facilities to the project. |
Nil (0) | No concerns. |
| 10 | Continuation of Subsurface Contracts - Continuation requested by council 66 (1) The Minister may continue, for a maximum period of five years, a contract in respect of lands for which continuation was not granted under subsection 65(1) or lands for which continuation was granted under subsection 65(3) if
|
Nil (0) | No concerns. |
| 11 | Surface Rights or Interests - Granting of contract 75 (4) The Minister must grant the contract if he or she receives the following:
|
Eighteen (18) | No concerns. |
| 12 | Surface Rights or Interests - Renegotiation of rent - Amendment of lease 77 (2) The Minister must amend the lease to reflect the rent renegotiated under subsection (1) if
|
Three (3) | No concerns. |
| 13 | Royalties - Payment in kind 81(2) After giving the contract holder notice, and having regard to any obligations that the holder may have in respect of the sale of oil or gas, the Minister may, with the prior approval of the council, direct the holder to pay all or part of the royalty in kind for a specified period or until the Minister directs otherwise. |
Nil (0) | No concerns. |
| 14 | Service wells – Approval 103 (3) The Minister must approve the proposed uses of the service well if
|
One (1) disposal lease | No concerns. |
| 15 | Pooling, Production Allocation and Unit Agreements - Unit agreement 108 (1) The Minister may, with the prior approval of the council, enter into a unit agreement. |
Nil (0) | No concerns. |
Table 2: Consultation summary of instances when council was first consulted first under of oil and gas provisions within Indian Oil and Gas Act, RSC 1985, c I-7 (Act) and the Indian Oil and Gas Regulations, SOR/2019-196 (Regulations).
| Instance | Regulation | Occurrences | Concerns |
|---|---|---|---|
| 1 | Contract area boundaries - Unsurveyed lands 12 (2) If the lands in a contract area are surveyed during the term of the contract, the Minister must, after consulting with the holder and the council, amend the contract so that the description of the contract area complies with subsection (1). |
Nil (0) | No concerns. |
| 2 | Grants of Subsurface Rights or Interests - Fair value 38 In determining the fair value of the rights or interests to be granted under a subsurface contract, the Minister must, in consultation with the council, consider the bonuses paid for grants of oil and gas rights or interests in other lands, which may be adjusted to take into account the following factors:
|
Fourteen (14) | No concerns. |
| 3 | Public Tender Process - Minister's duties 40 (1) When oil and gas rights or interests are to be granted by way of public tender, the Minister must, after consulting with the council, prepare a notice of tender. |
Nil (0) | No concerns. |
| 4 | Schedule 5 Royalties – Actual Selling Price - Factors to consider 2 (2) In determining the fair value of oil or gas, the Minister, in consultation with the council, must take into account the following factors:
|
Fourteen (14) | No concerns. |
Table 3: Consultation summary of when prior notice is given to the council under oil and gas provisions within Indian Oil and Gas Act, RSC 1985, c I-7 (Act) and the Indian Oil and Gas Regulations, SOR/2019-196 (Regulations)
| Instance | Regulation | Occurrences | Concerns |
|---|---|---|---|
| 1 | Public Tender Process - Publication of notice of tender 40 (3) The Minister must submit a copy of the proposed notice of tender to the council before publishing it and, if it is approved, must publish it |
Nil (0) | No concerns. |
Table 4: Status of Phase roman numeral 2 Regulations and associated modules as per the Act Section 28.1(b) "…Any proposed regulation to be made under subsection 6(1.1); and…"
| Provision | Module | Status |
|---|---|---|
| Phase roman numeral 2 Regulations | Environment | Seven (7) reviews completed with Committee |
| Surface | Two (3) reviews completed with Committee | |
| Exploration (seismic) | Two (2) reviews completed with Committee | |
| Royalty | Not yet proposed | |
| Conservation | Not yet proposed | |
| Moneys management | Not yet proposed | |
| Enforcement | Not yet proposed | |
Table 4 notes: The Department completed all the regulatory drafting instructions by the end of March 2013. The volume of material produced (more than 6,600 pages of drafting instructions and provincial rules to be replicated) had two important implications:
The decision was made to separate the drafting instructions into smaller, more manageable modules. The Act would then be brought into force with a set of core regulations, known as Phase roman numeral 1. The remaining modules, included in the table above, are collectively known as Phase roman numeral 2. In subsequent phases, new regulations (Phase roman numeral 2) will be brought into force as they are readied to replace existing provisions that were carried forward into the Regulations from the 1995 Regulations. Below is a summary of the outreach activities that have taken place and those that are planned for 2023-2025: Environment
Surface
Exploration
Overall
|
||
Table 5: Comparison of oil and gas provisions within Indian Oil and Gas Act, RSC 1985, c I-7 (Act) and the Indian Oil and Gas Regulations, SOR/2019-196 (Regulations) in relation to provincial and territorial variations as per the Act Section 28.1(c) "…Any regulations made under this Act and describe any variations in the regulations from province to province."
Note: Provinces and territories with active or historical oil and gas development on First Nations lands include British Columbia, Alberta, Saskatchewan, Manitoba, Ontario and Northwest Territories.
| Instance | Regulations Provision | Description/Variations from province to province |
|---|---|---|
| 1 | Section 78 Abandonment, remediation and reclamation |
|
| 2 | Schedule 3 Zones – Intermediate Term | In some cases, the zones are defined differently throughout the provinces and by industry. In the provinces, the zones are identified by the geological surveyors of that province, and not laid out in provincial regulation. Example: Alberta Geologic Table of Formations. |
| 3 | Schedule 4 Zones – Continuation | In some cases, the zones are defined differently throughout the provinces and by industry). In the provinces, the zones are identified by the geological surveyors of that province, and not laid out in provincial regulation. Example: Alberta Geologic Table of Formations. |
Closing
As the federal regulator of oil and gas exploration and development on First Nation lands, Indian Oil and Gas Canada fulfills the Crown's fiduciary and statutory obligations to First Nations regarding their oil and gas resources. Indian Oil and Gas Canada has identified oil and gas resources may be present on approximately 300 First Nation lands in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario and Northwest Territories. There are currently 33 First Nations with active oil and gas exploration or production, mainly in Alberta and Saskatchewan, with an additional 17 that have non- producing or historical oil and gas infrastructure. In the fiscal year 2022-23, $165 million in oil and gas royalties, bonuses and rentals was collected by Indian Oil and Gas Canada.
The Government of Canada has committed to support stronger First Nations communities, economic development, appropriate regulatory oversight, and credible environmental reviews through the implementation of the modernized Act and its associated regulations. Indian Oil and Gas Canada will continue to work with First Nations, industry, and other stakeholders to support a modern oil and gas regulatory regime on First Nation lands with sound development of these resources, while addressing the specific needs and contexts of First Nation communities. This Act and Regulations have:
- provided clear authorities and powers for the Government of Canada;
- removed barriers to investment on First Nation lands through a closer alignment with provincial rules and practices; and,
- reduced reliance on rules embedded in contracts so that the Government of Canada has the proper tools, equivalent to provincial regulators, to encourage industry compliance and to respond appropriately to address non-compliance.
Work on Phase roman numeral 2 regulatory modules, to replace existing provisions that were carried forward into the Regulations from the 1995 Regulations, began upon enactment of the Act and Regulations in August 2019. Prioritization of the Environment Module has occurred over the Surface and Exploration Modules. An Environment consultation draft is expected to be completed early in the 2024 calendar year. Consultation and engagement will begin soon after the consultation draft is received.