Bill 58 - An Act to Amend the Oil and Natural Gas Act

BILL 58

An Act to Amend the Oil and Natural Gas Act

Her Majesty, by and with the advice and consent of the Legislative Assembly of New Brunswick, enacts as follows:

1 Section 1 of the Oil and Natural Gas Act, chapter O-2.1 of the Acts of New Brunswick, 1976, is amended

(a) by repealing the definition “lease” and substituting the following:

“lease” means (bail)

(a) when used as a noun, a lease granted for oil and natural gas rights under section 27 or 27.1, and includes a consolidated lease granted under section 32.1, and

(b) when used as a verb, to transfer an interest in Crown Lands;

(b) in the definition “well licence” by striking out “granted pursuant to the regulations” and substituting “granted under section 16.2”.

2 The Act is amended by adding after section 16 the following:

On-shore well licence

16.1 Sections 16.2 to 16.8 apply to on-shore well licences.

Granting of well licence

16.2(1) The Minister may grant a well licence to an applicant if the Minister is satisfied with the drilling program proposed by the applicant and the applicant has complied with the other requirements of section 16.3.

16.2(2) The Minister may impose the terms and conditions on a well licence that the Minister considers appropriate.

Application for well licence

16.3 An application for a well licence shall be on a form provided by the Minister and shall be accompanied by the following:

(a) the fee prescribed by regulation;

(b) the security deposit prescribed by regulation;

(d) any information prescribed by regulation.

Amendment of well licence

16.4(1) A well licensee may apply to the Minister for an amendment to the well licence or for an amendment to any term or condition imposed on the licence.

16.4(2) An application under subsection (1) shall be on a form provided by the Minister.

16.4(3) An application to amend a well licence with respect to either of the following matters shall be accompanied by the fee prescribed by regulation:

(a) changing the name of the well licensee; or

(b) changing the name of the well.

Transfer of well licence

16.5(1) A well licence is not transferable without the written approval of the Minister.

16.5(2) An application to obtain the approval of the Minister to transfer a well licence shall be on a form provided by the Minister and shall be accompanied by the following:

(a) the fee prescribed by regulation; and

(b) the security deposit prescribed by regulation.

Cancellation of well licence

16.6(1) If a well licensee violates or fails to comply with a provision of this Act or the regulations or with a term or condition imposed on the licence, the Minister may give written notice to the well licensee specifying the violation or non-compliance and setting out a schedule for compliance.

16.6(2) Unless the well licensee remedies the violation or non-compliance to the satisfaction of the Minister in accordance with the schedule for compliance, the Minister may cancel the well licence.

16.6(3) When the Minister cancels a well licence, the well licensee continues to be liable for any obligation for which the licensee was liable under this Act or the regulations immediately before the cancellation.

Return of security deposit

16.7 If a well licensee transfers a well licence or abandons a well to the satisfaction of the Minister, the security deposit shall be returned to that well licensee.

Prior approvals, well licences, fees and security deposits

16.8(1) A well licence or an approval concerning a well granted before the commencement of this section by the Minister or his or her predecessors shall be deemed to have been validly granted and is confirmed and ratified.

16.8(2) A fee or a security deposit collected by the Minister or his or her predecessors with respect to a well licence or an approval concerning a well that was granted before the commencement of this section shall be deemed to have been validly collected and is confirmed and ratified.

16.8(3) Any act or thing done by the Minister of Finance before the commencement of this section with respect to a security deposit to defray the cost of, or the cost incidental to, the work of control, completion, suspension or abandonment of the well to the satisfaction of the Minister shall be deemed to have been validly done and is confirmed and ratified.

16.8(4) No action or other proceeding to question or in which is questioned the validity of the well licences, approvals, fees and security deposits referred to in subsections (1) and (2), or the authority of the Minister to grant those well licences and approvals or collect those fees and security deposits, shall lie or be instituted against the Crown in right of the Province, the Minister or a person designated to act on behalf of the Minister, if the Minister acted in good faith.

16.8(5) No action or other proceeding to question or in which is questioned the validity of the actions or things done by the Minister of Finance under subsection (3) shall lie or be instituted against the Crown in right of the Province, the Minister of Finance or a person designated to act on behalf of the Minister of Finance, if the Minister of Finance acted in good faith.

3 Section 20 of the Act is amended

(a) by repealing subsection (1) and substituting the following:

20(1) An on-shore licence to search is valid for a term of three years and may be renewed for a maximum of two consecutive one year periods, with each renewal subject to the Minister’s approval, as provided for in the regulations, and subject to the terms and conditions that the Minister imposes on the granting of each renewal.

(b) by adding after subsection (1) the following:

20(1.1) An application under subsection (1) for the renewal of an on-shore licence to search shall be made to the Minister at least thirty days prior to the expiry date of the licence to search or of the renewed licence to search.

4 Subsection 21(1) of the Act is repealed and the following is substituted:

21(1) During the initial term and renewal periods of a licence to search, the licensee shall do or cause to be done on the area for which the licence to search was granted, exploratory work to the satisfaction of the Minister in an amount prescribed by regulation.

5 The Act is amended by adding after section 21 the following:

REDISTRIBUTION OF WORK REQUIREMENTS

Redistribution of work requirements

21.01(1) In accordance with the regulations and on payment of the prescribed fee, a licensee may apply to the Minister for a redistribution of the expenditures required for exploratory work among one or more on-shore licences to search if

(a) the on-shore licences to search are held by the same licensee,

(b) the on-shore licences to search have the same date of issuance and expiry, and

(c) the licensee has done or caused to be done exploratory work under each on-shore licence to search that meets or exceeds the minimum expenditures required for exploratory work prescribed by regulation for the term of that licence to search.

21.01(2) On application, the Minister may redistribute the portion of the expenditures incurred by the licensee that exceed the minimum expenditure required for exploratory work prescribed by regulation among one or more on-shore licences to search held by the licensee.

6 Section 31 of the Act is amended

(a) by renumbering the section as subsection 31(1);

(b) by adding after subsection (1) the following:

31(2) A lessee may not make an application under subsection (1) with respect to a consolidated lease.

7 The Act is amended by adding after section 32 the following:

CONSOLIDATED LEASES

Consolidated leases

32.1(1) A lessee may apply to the Minister in writing for a consolidated lease by which the lease areas included in more than one lease will be grouped as a single lease area.

32.1(2) The Minister may grant a lessee a consolidated lease if

(a) the leases proposed to be consolidated are held by the same lessee, and

(b) the lease areas are contiguous.

32.1(3) Before the Minister grants a consolidated lease, the Minister shall require the lessee to do the following:

(a) deposit with the Minister of Finance an amount at least equivalent to the work requirement prescribed by regulation for the first year of the term of the consolidated lease; and

(b) pay to the Minister of Finance the annual rent prescribed by regulation for the first year of the term of the consolidated lease, less any annual rent previously paid for that period, or a portion of that period, with respect to a lease area grouped under the consolidated lease.

8 Section 58 of the Act is amended by striking out “A fee collected” and substituting “A fee or administrative penalty imposed”.

9 The Act is amended by adding after section 58 the following:

ADMINISTRATIVE PENALTIES

Definitions of “Director” and “Minister”

58.1 The following definitions apply in sections 58.2 to 58.7.

“Director” means the Director of Administrative Penalties designated by the Minister to manage administrative penalties under this Act. (directeur)

“Minister” means the Minister of Natural Resources and does not include a person designated by the Minister to act on the Minister’s behalf. (ministre)

Administrative penalty and offence

58.2(1) A person subject to an administrative penalty shall not be charged with an offence in respect of the same incident that gave rise to the administrative penalty.

58.2(2) A person charged with an offence shall not be subject to an administrative penalty in respect of the same incident that gave rise to the charge.

Notice of administrative penalty

58.3(1) If the Director believes, on reasonable and probable grounds, that a person has violated or failed to comply with a provision of this Act or the regulations that is prescribed by regulation or a term or condition of a licence to search, lease, geophysical licence, geophysical permit or well licence, the Director may issue a notice of administrative penalty requiring the person to pay an administrative penalty.

58.3(2) The Director shall serve a notice of administrative penalty on the person to whom it is directed in the manner in which personal service may be made under the Rules of Court.

58.3(3) The notice of administrative penalty shall include the following information:

(a) the name of the person required to pay the administrative penalty;

(b) the provision of this Act or the regulations, the term or the condition that the person violated or failed to comply with and the date on which the violation or failure to comply occurred;

(d) when and how the administrative penalty must be paid; and

(e) information with respect to the person’s right to request a review of the Director’s decision under section 58.4.

58.3(4) A notice of administrative penalty shall not be issued more than one year after the Director first had knowledge of the violation or failure to comply.

Review of administrative penalty

58.4(1) A person who receives a notice of administrative penalty may request that the Minister review the Director’s decision to issue the notice by applying to the Minister within 15 days after being served with the notice.

58.4(2) The Minister shall conduct the review requested under subsection (1) in accordance with the regulations.

58.4(3) Following the review of the Director’s decision, the Minister may confirm, vary or revoke the Director’s decision.

58.4(4) A decision of the Minister under this section is final.

Payment of administrative penalty

58.5(1) If a person who receives a notice of administrative penalty does not apply for a review under section 58.4, the person shall pay the administrative penalty set out in the notice within 30 days after the day the notice is served.

58.5(2) If a person who receives a notice of administrative penalty applies for a review under section 58.4, and the Minister confirms or varies the Director’s decision, the person shall pay the administrative penalty set out in the Minister’s decision within 30 days after the Minister makes the decision.

58.5(3) For the purposes of this Act only, a person who pays an administrative penalty shall be deemed to have violated or failed to comply with the provision of this Act or the regulations, the term or the condition in respect of which the payment was made.

Maximum administrative penalty

58.6 The amount of the administrative penalty required under section 58.3 to be paid shall be determined in accordance with the regulations and shall not exceed $1,000,000.

Failure to pay administrative penalty

58.7 If a person who is required to pay an administrative penalty under subsection 58.5(1) or (2) fails to do so,

(a) the notice of administrative penalty or the Minister’s decision, as the case may be, may be filed in The Court of Queen’s Bench of New Brunswick and, when filed, becomes a judgment of the Court and may be enforced as a judgment obtained in the Court by the Crown against the person named in the notice or the decision for a debt of the amount specified in the notice or decision,

(b) the Minister may suspend any licence to search, lease, geophysical licence, geophysical permit or well licence held by the person until the administrative penalty is paid or enforced as a judgment obtained in the Court by the Crown, and

(c) the Minister may refuse to grant to the person a licence to search, lease, geophysical licence, geophysical permit or well licence until the administrative penalty is paid or enforced as a judgment obtained in the Court by the Crown.

10 Section 59 of the Act is amended

(a) by adding after paragraph (b) the following:

(b.1) respecting an application under section 21.01;

(b.2) prescribing fees for the purposes of section 21.01;

(b.3) prescribing the expiry date of a consolidated lease;

(b.4) prescribing when the annual rental fee is due and payable with respect to a consolidated lease;

(b.5) establishing the reporting requirements under a consolidated lease;

(b.6) prescribing the amount of a deposit required under paragraph 32.1(3)(a) and when the deposit is due and payable;

(b.7) establishing the penalties to be imposed on a lessee under a consolidated lease for failing to meet the prescribed work commitments, including providing for a monetary penalty and the release to the Crown of portions of the lease area;

(b.8) providing for the accounting of shortfalls and credits of expenditures under a consolidated lease;

(b) by adding after paragraph (g.1) the following:

(g.2) prescribing the provisions of this Act and the regulations in respect of which administrative penalties may be imposed;

(g.3) prescribing the amounts of administrative penalties that may be imposed;

(g.4) respecting the conducting of a review by the Minister in respect of an administrative penalty;

(d) by repealing paragraph (jj) and substituting the following:

(jj) establishing a tariff of fees for the granting and amendment of a well licence and the approval of a transfer of a well licence;

(e) by adding after paragraph (jj) the following:

(jj.1) prescribing information to accompany an application for a well licence;

11 This Act or any provision of it comes into force on a day or days to be fixed by proclamation.