Academic journal article Dalhousie Law Journal

The Land Tenure System in the Newfoundland and Labrador Offshore Regulatory Regime: Review, Analysis and Current Issues

Academic journal article Dalhousie Law Journal

The Land Tenure System in the Newfoundland and Labrador Offshore Regulatory Regime: Review, Analysis and Current Issues

Article excerpt

Introduction

1. Background and history

a. Oil and gas industry in offshore Newfoundland and Labrador

b. Regulatory background

Canada Oil and Gas Operations Act Accord Act

2. Regulatory regime

a. Accord Act

b. Federal legislation

c. Provincial legislation

3. Regulators

I. Review of land tenure regime

1. A note on terms

2. Exploration licence

a. Application process

b. Terms of exploration licence

c. Substantive Rights

3. Significant discovery licence

a. Introduction

b. Application process

Application process-SDD

Oil & gas committee

Application process-SDL

c. Legal test for issuance of SDD

d. Substantive rights

4. Commercial discovery declaration

a. Application process

b. Legal test for issuance

c. Substantive rights

5. Production licence

a. Application process

b. Legal test for issuance

c. Substantive Rights

II. Review of current issues

1. Stratigraphic ownership issues

2. Protection of data Conclusion

Introduction

This paper provides a survey of the oil and gas interest regime in the offshore industry off the coast of Newfoundland and Labrador, concentrating on describing the process and legal tests surrounding the issuance of Exploration Licences, Significant Discovery Licences, Commercial Discovery Licences, and Production Licences. The various approvals and authorizations that are necessary in order to carry on activities in the offshore area are not canvassed in this paper.

The examination which follows is divided into four sections. The introduction provides a background and history of the offshore regulatory environment. Part I describes in detail the application process, legal requirements, and rights that are applicable to each form of land tenure -Exploration Licence, Significant Discovery Licence, Commercial Discovery Declarations, and Production Licence. Part II discusses two current issues with respect to land tenure in the offshore area: stratigraphic ownership and protection of data. Finally, a brief conclusion is offered.

1. Background and history

a. Oil and gas industry in offshore Newfoundland and Labrador

The history of the oil and gas industry in offshore Newfoundland and Labrador dates back over fifty years, when the first wells were drilled in the 1960s. Most of the offshore activity, however, has been concentrated in the past fifteen years, with the first oil being produced in 1997. Interest in Newfoundland and Labrador offshore oil increased dramatically in the 1970s along with increases in oil prices, which led to an increase in exploratory drilling. As the exploration continued and large oil field discoveries were made (such as the Hibernia oil field in 1979), it became apparent that there were opposing views on who controlled the oil off the coast of Newfoundland and Labrador; the federal or provincial government.

The 1980s were marked by conflict and legal battles between the federal and provincial governments, beginning with the Government of Canada introducing its National Energy Program (NEP) in 1980, which outlined a desire to have the Supreme Court of Canada determine the question of offshore oil ownership.1 After a number of years of negotiations between the federal and provincial governments, the Canada-Newfoundland Atlantic Accord {Atlantic Accord) was signed in 1985, establishing a joint management system to be regulated by the Canada-Newfoundland and Labrador Offshore Petroleum Board (the Board).

After the battle between the provincial and federal governments was over, the second half of the 1980s involved deliberations between the provincial government and oil companies. At this time, the price of oil had declined significantly, meaning less profit for oil companies interested in offshore production. An agreement was reached between the provincial and federal governments and the oil companies in 1990, with "the government agree[ing] to give developers $1 billion in grants and $1. …

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