Crown parcels of subsurface petroleum and natural gas (PNG) rights are sold as tenures through the Ministry of Energy, Mines and Low Carbon Innovation (EMLI). A tenure provides exclusive rights to the subsurface resource and the right to apply to the BC Oil and Gas Commission for a well permit. Tenure does not provide the authority to conduct activities, such as drilling on the land.
Two forms of subsurface PNG tenures sold
Drilling Licence:
A drilling licence is a tenure that transfers the exclusive right to a company to explore for PNG resources in a defined area. Exploration may occur where oil or gas production has not yet been established.
The minimum size of a drilling licence request is one gas spacing area (GSA), which equals approximately one square mile (640 acres or 259 hectares). The maximum size of a drilling licence request is 36 GSAs. EMLI generally requires justification from the company posting a request over 15,000 acres or 6000 hectares (~24 GSAs).
Lease:
A lease is a tenure that transfers the exclusive right to a company to produce PNG resources in a specific zone or ecological formation. This is the only PNG tenure that authorizes a company to produce oil or gas. A lease may also provide storage and disposal rights along with the production rights.
The minimum size of a lease request is one GSA. If the lease request is for a petroleum well, a lease may be an oil spacing area, which is a single unit of the PNG grid or a quarter section of the Peace River Block.
The Subsurface Tenure Process
Requesting
To acquire PNG rights from the Crown, a company sends a request to EMLI to post a PNG parcel. It takes approximately three months from the time PNG rights are requested to the time the rights are disposed.
Referral Process
EMLI completes a referral process to gather information and concerns about the proposed parcel before posting it for disposition. The referral process includes First Nations, local government and other provincial government agencies. With the information received through the referral process along with what is currently available, EMLI will either add caveats to the proposed tenure, defer it or cancel a posting.
Posting
A map and a posting description are made available each month on the EMLI website. Before they are posted, all requests are reviewed internally to be sure Crown PNG rights are available. Requests may be withdrawn from a disposition, postponed to a future disposition, or revised by the original requestor.
EMLI publishes a Notice of Public Tender online approximately seven weeks before the disposition date. The notice lists parcels of Crown PNG rights available for disposition, including caveats, terms and conditions. Successful bidders are required to abide by the laws governing exploration and development.
Bidding
As a final step before acquiring PNG rights, a company submits a bid letter for each parcel they wish to acquire. This process is now available as an e-Bidding system. All bids are reviewed by an adjudication panel. EMLI reserves the right to reject any or all bids received.
A more detailed description of the request, referral, posting and bidding process is included in the Guide to Acquiring Petroleum and Natural Gas Tenures through EMLI.
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