Province of Alberta
OIL AND GAS CONSERVATION
AMENDMENT ACT
Revised Statutes of Alberta 2000
Chapter 24 (Supp)
Current as of June 17, 2013
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OIL AND GAS CONSERVATION
AMENDMENT ACT
Chapter 24 (Supp)
HER MAJESTY, by and with the advice and consent of the
Legislative Assembly of Alberta, enacts as follows:
Amends RSA 2000 cO-6
1 The Oil and Gas Conservation Act is amended by this Act.
RSA 1980 c16 (Supp) s1
2 Section 78(d) is amended by adding “or an order under
section 84.1” after “section 79”.
RSA 1980 c16 (Supp) s2
3 Section 84(1)(a) and (2) are amended by adding “or order
under section 84.1” after “unit agreement”.
RSA 1980 c16 (Supp) s3
4 The following is added after section 84:
Unit Operation in Field or Pool
Application for unit operation
84.1(1) If owners in a field or pool or part of a field or pool
cannot agree to consolidate, merge or otherwise combine
their interests for the development, production and recovery
of the oil and gas resources in the field, pool or part of the
field or pool, an owner may apply to the Regulator to have
the field, pool or part operated as a unit.
(2) The Regulator shall hear an application that is made by
owners of over 50% of the working interests calculated on
an area basis, and may, in its discretion, hear an application
made by owners of less than 50% of those interests.
(3) Subject to section 84.2, if the Regulator, on hearing the
application, is of the opinion that the unit operation of the
field, pool or part of the field or pool is desirable in the
Section 4
OIL AND GAS CONSERVATION
AMENDMENT ACT
RSA 2000
Chapter 24 (Supp)
interest of conservation, the Regulator may, with the
approval of the Lieutenant Governor in Council, order that
the field, pool or part of the field or pool be operated as a
unit.
(4) An order under subsection (3) shall set out
(a) the date on which it comes into force,
(b) a description of the unit area,
(c) a description of each unit tract,
(d) a description of the pool or pools or part of the
pool or pools within the unit,
(e) a description of the operations to be conducted,
(f) an allocation, according to a formula or schedule,
to each unit tract of its share of the oil and gas
produced from the unit and not required, consumed
or unavoidably lost in the unit operation,
(g) a provision for charging the capital investments
and the expenses of the unit operation to the unit
tracts, and for determining by whom the
investments and expenses chargeable to a unit tract
shall be paid,
(h) a provision for the establishment of an operators’
committee,
(i) a provision for determining the voting interest of
each member of the operators’ committee,
(j) a provision determining the method of voting on a
motion before the operators’ committee and the
voting interest or percentage required to carry the
motion,
(k) a provision for the appointment of a person as the
unit operator and who shall
(i) be responsible for the management and
conduct of the unit operation, and
(ii) be under the direction and supervision of the
committee,
(l) a provision specifying the manner in which and the
circumstances under which the unit operation shall
terminate, and
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OIL AND GAS CONSERVATION
AMENDMENT ACT
RSA 2000
Chapter 24 (Supp)
(m) any further provisions, terms and conditions that
may be necessary or desirable.
RSA 2000 c24(Supp) s4;2012 cR-17.3 s98
Prerequisites to unit operation
84.2(1) Subject to subsections (3) and (4), the Regulator
shall not make an order under section 84.1(3) unless there
are filed with the Regulator statements in writing agreeing
to the operation of the unit as a unit and signed by
(a) persons having the right to drill for and produce the
oil or gas in 85% or more of the proposed unit area,
or if one person has the right to drill for and produce
oil or gas in 85% or more but not all of the proposed
unit area by that person and one other person having
the right to drill for and produce that oil or gas, and
(b) persons having the head lessor’s royalty interest in
that oil or gas if it is subject to lease, or the
ownership of the oil or gas if it is not subject to lease,
in 85% or more of the proposed unit area, or if one
person has the head lessor’s royalty interest or
ownership in 85% or more
but not all of the proposed unit area by that person and one
other person having a head lessor’s royalty interest or
ownership in that oil or gas.
(2) If the Regulator, in an order made under section 84.1(3)
finds that the statements filed in compliance with subsection
(1) of this section agree to a unit operation on terms and
conditions consistent with those prescribed by the order, the
Regulator may provide that the order shall come into force
at any future time.
(3) If the Regulator, in an order made under section 84.1(3)
finds
(a) that the statements filed in compliance with
subsection (1) of this section agree to a unit
operation on terms and conditions other than those
prescribed by the order, and
(b) that there is no difference in terms and conditions
that is of a substantial nature or that any difference
of a substantial nature affects only the persons
having the right to drill for and produce the oil or
gas in the unit,
3
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OIL AND GAS CONSERVATION
AMENDMENT ACT
RSA 2000
Chapter 24 (Supp)
the Regulator may provide that the order shall come into
force at a time not less than 60 days after the date of the
order unless there are filed with the Regulator sufficient
statements in writing countermanding statements filed in
compliance with subsection (1) to reduce the number of
statements in compliance with subsection (1) at that time
filed with the Regulator to less than the number required by
subsection (1).
(4) If the Regulator, in an order made under section 84.1(3)
finds that the statements filed in compliance with subsection
(1) of this section agree to a unit operation on terms and
conditions other than those prescribed by the order and that
the difference in terms and conditions is of a substantial
nature, the Regulator may
(a) require that statements in writing be filed with the
Regulator, agreeing to the order and the terms and
conditions thereof and signed by the proportion
referred to in subsection (1) of persons having the
right to drill for and produce oil or gas in the unit
area and of persons having a head lessor’s royalty
interest or ownership in oil or gas in the unit area,
and
(b) provide that, if those statements are filed within 60
days of the date of the order, the order shall come
into force at any time after that 60 day period,
but, if those statements are not filed within 60 days of the
date of the order, the Regulator shall revoke the order.
RSA 2000 c24(Supp) s4;2012 cR-17.3 s98
Effect of order under section 84
84.3 On and after the date on which an order comes into
force pursuant to section 84.2 and while the order remains in
force, the order and the terms and conditions thereof are
binding on each owner of an interest in oil or gas in the
field, pool or part of the field or pool subject to the order
and on anyone entitled to a contractual benefit through an
owner.
Payment of expenses
84.4(1) An order made under section 84.1 may provide
that, if the person responsible for the paying of the expenses
chargeable to a unit tract fails to do so, the unit operator
(a) may appropriate and sell the share of production of
oil and gas allocated to the unit tract to which the
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OIL AND GAS CONSERVATION
AMENDMENT ACT
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Chapter 24 (Supp)
person failing to pay the expenses is entitled
exclusive of,
(i) in the case of oil or gas rights owned by the
Crown, any royalty payable to the Crown, and
(ii) in the case of freehold oil or gas rights when
the owner has granted a lease thereof, the
royalty specified in the lease,
to the extent necessary to recover those expenses,
and
(b) shall have a first lien on the interest of the owner of
the unit tract in the equipment belonging to the unit
to secure the payment of the amount of expenses
charged to that unit tract.
(2) When
(a) the unit operator is authorized under this section to
appropriate and sell the share of production of oil
and gas allocated to a unit tract, and
(b) the person failing to pay the expenses chargeable to
the unit tract is entitled under a contract to sell oil
or gas, whereby the person could sell the share of
production allocated to the unit tract,
the unit operator, on the giving of notice by the unit operator
to the purchaser under the contract, is subrogated with
respect to the contract to the person failing to pay the
expenses chargeable to the unit tract, so that the unit
operator may sell the share of production allocated to the
unit tract in accordance with the contract.
(3) Notwithstanding subsection (1), if an owner fails to pay
the owner’s unit tract’s share of expenses and the owner had
not signed a statement in compliance with section 84.2(1),
the unit operator may recover those expenses only from the
part of production of oil and gas allocated to the tract which
the unit operator may appropriate and sell under subsection
(1).
Ownership
84.5(1) All property acquired by the unit operator of a unit
area established pursuant to section 84.1 shall be held by the
unit operator as trustee and agent for and on behalf of the
owners of the tracts who are responsible for paying their
respective tract’s share of the operating expenses of a unit.
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AMENDMENT ACT
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Chapter 24 (Supp)
(2) The order providing for unit operation shall be
construed as an operating arrangement and shall not be
construed as affecting or transferring title to the unit
operator or entitling an owner of a separately owned tract to
an undivided interest in all tracts included in the unit area.
Unit operator
84.6(1) The unit operator of a unit area established
pursuant to section 84.1 shall exercise generally all the
powers incidental to the proper conduct and management of
the unit operation.
(2) The unit operator may contract and may sue and be sued
in the unit operator’s own name with respect to the duties,
functions and powers imposed or conferred on the unit
operator by or pursuant to this Act.
Rehearing of unit operation order
84.7(1) An order under section 84.1 may provide for a
rehearing by the Regulator on the application of any
interested person or after a future date specified in the order.
(2) When an order has been made under section 84.1 and
whether or not the order provides for a rehearing, the
Regulator, on its own motion, may hold a rehearing when in
its opinion the circumstances so warrant.
(3) Following the rehearing, the Regulator may, with the
approval of the Lieutenant Governor in Council, amend or
revise a unit operation order in order to vary the unit area, to
supply any deficiency in the order or to meet changing
conditions, and may alter or revoke any provision which is
considered to be unfair or inequitable, and section 84.2
applies to the amending or revising order.
(4) When a unit operation order is amended or revised
under subsection (3) to enlarge the unit area, the Regulator,
in providing for allocation of production from the enlarged
unit area, shall first treat the unit area established under the
original order as a single tract, and the portion of the
production allocated to the unit area established under the
original order then shall be allocated among the tracts in the
unit area in the same proportion as specified in the original
order.
RSA 2000 c24(Supp) s4;2012 cR-17.3 s98
Unit area previously established
84.8(1) An order under section 84.1 may provide that a unit
area established by it include a unit area established by a
previous order.
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RSA 2000
Chapter 24 (Supp)
OIL AND GAS CONSERVATION
AMENDMENT ACT
(2) The order, in providing for allocation of production
from the new unit area, shall first treat the previously
established area as a single tract, and the portion of the
production allocated to the previously established unit area
then shall be allocated among the tracts included in the
previously established unit area in the same proportion as
specified in the previous order.
Operation of unit area
84.9 On and after the date on which a unit operation order
pursuant to section 84.1 comes into force and while the
order remains in force, no person shall carry on any
operations within the unit area for the purpose of drilling for
or producing oil or gas, except in accordance with the
provisions of the order.
RSA 1980 c16 (Supp) s4
5 The Mines and Minerals Act is amended by repealing
section 1(1)(ff) and substituting the following:
(ff) “unit operation order” means
(i) an order under section 84.1 of the Oil and Gas
Conservation Act, or
(ii) an order under the Turner Valley Unit Operations
Act.
1983 c36 s43
6 This Act comes into force on Proclamation.
RSA 1980 c16 (Supp) s5
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