Improvements to the Land Tenure System
For Immediate Release
December 19, 2013
The Canada-Newfoundland and Labrador Offshore Petroleum Board
(C-NLOPB) is announcing the implementation of a new scheduled land tenure system, proposed changes to the terms of exploration licences and the 2013 Call for Nominations.
A scheduled land tenure system has been developed by the C-NLOPB to improve transparency, predictability and input. The system provides additional time for exploration companies to conduct geoscientific assessments of the hydrocarbon prospectivity in the lesser explored basins of the Newfoundland and Labrador offshore area. Companies may then nominate Areas of Interest, which may be included in a Call for Bids. The system will now operate in four year, two year and one year cycles and is designed to take into account variances in the volume of data collection in basins and geoscientific knowledge.
Under the new system, the Newfoundland and Labrador Offshore Area will be subdivided into three categories based on level of oil and gas activity. Low Activity regions generally have few exploratory wells and limited seismic data acquisition. High Activity regions typically have elevated activity levels including 2D and 3D seismic data acquisition and exploration drilling. A Mature region would have substantial 2D and 3D seismic data coverage, in addition to extensive exploration/delineation drilling and production activities.
The different time cycles and the schedules are as follows:
- The four-year cycle will be implemented for all regions that fall within the Low Activity category. In this cycle, a Call for Nominations (Areas of Interest) will be announced in the fall of the year and the Call for Bids (Parcels) will close in the fall, four years later. This cycle will be announced every two years and will provide interested parties with as much as 48 months to explore and assess the region.
- The two-year cycle is designed for regions classified as High Activity. In this cycle, a Call for Nominations (Areas on Interest) will be announced in the fall of the year and the Call for Bids (Parcels) will close in the fall, two years later. This cycle will be announced every year and will provide interested parties with as much as 24 months to explore and assess the location defined in the call.
- The one-year cycle will be maintained for the Mature region. As has been the case in the past, a Call for Nominations (Areas of Interest) in the Mature region (e.g. the Jeanne d’Arc Basin) may go out every year in the fall, the Call for Bids (Parcels) will be announced in the spring of the following year, and the Call for Bids (Parcels) will close in the fall of the same year. This cycle will proceed annually based on nominations from interested parties and assessment by the C-NLOPB.
- The one-year cycle will also be maintained for any lands not publically announced in the scheduled system. Any Call for Nominations (Areas of Interest) and Call for Bids (Parcels) will proceed annually based on industry nominations and assessments by the C-NLOPB. This model will mirror the schedule discussed for the Mature region.
Effective immediately, for licences under the new system, “allowable expenditures” are defined as those respecting an exploration licence incurred from the initial announcement of the Call for Nominations (Areas of Interest) for that scheduled round, up to and including the effective date of an exploration licence issued from that round. This is in addition to the traditional allowable expenditure terms and conditions which can be found in the sample exploration licences offered in the Calls for Bids 2013 on the C-NLOPB website.
The following changes to the terms and conditions of licences will take effect pending Ministerial ratification:
- An increase of the minimum bid to $10 million, for all offshore regions.
- All exploration licences will now have a consistent and uniform Period I, which shall be of 6 years followed by Period II. Period I can be extended by payment of a drilling deposit and upon validation of the licence; Period II will be the remainder of the exploration licence. The full length of the licence term remains at 9 years.
- Exploration licence terms will provide for escalating drilling deposits to extend Period I. If a drilling deposit is posted, it will be refunded in full if the well commitment is met during the respective extension period. Otherwise, the drilling deposit will be forfeited to the Receiver General upon termination of that period extension. The escalating drilling deposits for Period I extensions are as follows:
- Period I A (Year 6 to Year 7): 1 year extension -
- Period I B (Year 7 to Year 8): 1 year extension -
$10 million, forfeiture of $5 million deposit paid in the year previous.
- Period I C (Year 8 to Year 9): 1 year extension -
$15 million, forfeiture of the $10 million paid in the year previous.
The 2013 Call for Nominations (Areas of Interest) include the Labrador South Region (NL 13-01LS - 4 year cycle) and Eastern Newfoundland Region (NL 13-01EN - 2 year cycle). Further details regarding the Call for Nominations (Areas of Interest) process are available in the Scheduled Land Tenure document. Interested parties are advised that work is underway to prepare the Eastern Newfoundland Strategic Environmental Assessment report.
There will be no call for nominations regarding non-scheduled regions at this time.
Sean Kelly M.A., APR, FCPRS
Manager of Public Relations
(709) 778-1418 - office
(709) 689-0713 - cellular