2. Legislative and Regulatory Framework

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A. Common Oil and Gas Legislative Regime

• The Legislation
• YOGA Applies to Oil and Gas operations
• Adoption of Laws by Reference
• Integrated Management

B. Regulations

• Oil and Gas Transfer Regulations
• Oil and Gas Disposition Regulations
• Oil and Gas Licence Administration Regulations
• Oil and Gas Geoscience Exploration Regulations
• Oil and Gas Drilling and Production Regulations
• Draft Oil and Gas Royalty RegulationsContact

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A. Common Oil and Gas Legislative Regime

Since 1997 the Yukon government and Yukon First Nations have worked together through a working group to coordinate the development of an oil and gas regime in the Yukon.

The objective of the common oil and gas regime is to provide a consistent regulatory process throughout the Yukon. This cooperative effort has many advantages:

• It clearly defines the rules, thereby creating more certainty for industry
• Common conservation rules make it easier to deal with deposits that straddle boundaries
• Common management of data makes it easier and quicker to learn about the Yukon’s oil and gas resources
• Adoption of Yukon legislation and regulations by First Nations is a cost-effective method of developing their respective oil and gas regimes
• Common administration of oil and gas activity is more efficient and less costly, and
• Adoption of a common regime avoids legal disputes

The following outlines the key features of the Yukon oil and gas legislative framework.

 

The Legislation

The Yukon Oil and Gas Act (YOGA), which consists of five parts, is the nucleus of the regime and addresses:

• Part 1: administration
• Part 2: oil and gas rights
• Part 3: operations
• Part 4: general matters such as audits, offences and penalties, and evidence, and
• Part 5: transitional and commencement matters

 

YOGA Applies to Oil and Gas Operations

 

YOGA was structured and written to apply to all oil and gas operations in the territory. For example, Part 3 of the Act, dealing with oil and gas operations, applies throughout Yukon. It is a law of general application under which approved operations can relate to both Yukon First Nation and Yukon oil and gas lands. If the operations relate to Yukon First Nation lands, an agreement may be concluded with the relevant Yukon First Nation respecting the coordinated management and regulation of oil and gas activities, and the recovery of oil or gas from a field or pool.

 

Adoption of Laws by Reference

 

To ensure that the same rules apply throughout Yukon, Yukon First Nations have the option of incorporating by reference the Yukon Oil and Gas Act or parts of it relating to the disposition and management of oil and gas rights. At this time, Yukon First Nations have not passed any legislation relating to oil and gas.

 

Integrated Management

 

The Act allows for the possibility that Yukon First Nation oil and gas interests form part of an overall, integrated management approach. Three examples of such provisions are:

• Grouping of Yukon government and Yukon First Nation permits
• Negotiating joint benefits agreements that pertain to both Yukon lands and Yukon First Nation settlement lands between the Yukon government, affected Yukon First Nations and the licensee, and
• Potential for pooling and unitization which could involve both Yukon government and Yukon First Nation settlement lands

B. Regulations

 

To date the Government of Yukon has enacted five regulations under YOGA. In addition, Royalty Regulations are under development. Other regulations being planned deal with pipelines and gas processing.

 

REGULATION	ENACTED/DRAFTED
Oil and Gas Transfer Regulations	November 1998
Oil and Gas Disposition Regulations	August 1999
Oil and Gas Drilling and Production Regulations	July 2004
Oil and Gas Geoscience Exploration Regulations	July 2004
Oil and Gas License Administration Regulations	July 2004
Oil and Gas Royalty Regulations (Draft)	Drafted October 1999

 

Copies of the regulations can be found on line at Yukon Oil and Gas. The following is a synopsis of what the regulations contain.

 

Oil and Gas Transfer Regulations

 

The Oil and Gas Transfer Regulations establish the rules regarding the administration and management of oil and gas rights that were issued by the federal government prior to devolution ("former federal disposition"). They outline:

• The methods and rules for land division and surveying
• How former federal disposition of oil and gas rights in the territory are administered
• The management of those dispositions (grouping, conversion, amendment, cancellation, surrender)
• The requirements for permits and leases, fees and rentals
• The confidentiality reaquirements, and
• The process for registering transfers and security notices of former federal oil and gas dispositions

Oil and Gas Disposition Regulations

 

The Oil and Gas Disposition Regulations establish the rules regarding the issuance and management of oil and gas rights in the Yukon. They outline:

• The methods and rules for land division and surveying
• How oil and gas rights in the territory can be issued
• The management of dispositions (grouping, conversion, amendment, cancellation, surrender)
• The requirements for permits and leases, fees and rentals
• The reporting requirements and confidentiality
• The process for registering transfers and security notices of Yukon oil and gas dispositions, and
• Under what circumstance and to what extent a disposition holder may be compensated when their rights are cancelled

Oil and Gas Licence Administration Regulations

 

The Oil and Gas License Administration Regulations establish the rules for obtaining licences to conduct oil and gas operations in the Yukon. They outline:

• Administrative procedures for the licensing of oil and gas activity in the territory
• The levels of liability and financial responsibility
• Application fees for oil and gas licences
• The rules for hearings before the Chief Operations Officer related to oil and gas conservation
• The rules for appeals to the Minister with respect to oil and gas activity on First Nation Category A Settlement Lands
• The rules for surveying and survey monuments
• The threshold level for benefits agreements, and
• The rules for gas export licences that must be in place before gas can be removed from the territory

Oil and Gas Geoscience Exploration Regulations

 

The Oil and Gas Geoscience Exploration Regulations regulate petroleum exploration activities throughout the territory. Geoscience involves all aspects of preliminary surface and near-surface exploration such as geological field studies, aerial magnetic and gravity surveys, seismic activity and shallow test-hole drilling. The regulations describe licensing and reporting requirements, penalties, geophysical and geological operations, safety and health as well as environmental safeguards.

 

Oil and Gas Drilling and Production Regulations

 

The Oil and Gas Drilling and Production Regulations regulate drilling operations, well operations, field facility construction and operations, and production and conservation activities in the Yukon. They cover well licensing and well operations approval processes, information requirements, safety, environmental protection, inspection and investigations, required tests, samples and surveys, and well evaluation and abandonment requirements.

 

Draft Oil and Gas Royalty Regulations

 

The draft Oil and Gas Royalty Regulations regulate the payment of royalties. Royalty revenues are the principal fiscal means by which the resource owner is compensated for the extraction of its oil and gas resources.

 

The royalty rate structures will have a significant and a direct impact on the economics driving oil and gas exploration and development in the territory. These regulations will play a pivotal role in creating a competitive fiscal environment necessary to attract new investment and activity. It is important that the royalty regime reflects the high costs and risks associated with exploring and developing oil and gas in a frontier region.

 

An ad valorem royalty is proposed with a base rate of 10 per cent. The royalty regime is intended to be both competitive and administratively simple.

 

Contact Information

 

For more information, or to submit comments and suggestions on this section, contact:

 

John Masterson – Director
(867) 667-5026 E-mail: john.masterson@gov.yk.ca

Anne Marie McColman – Solicitor

(867) 393-7107 E-mail: anne-marie.mccolman@gov.yk.ca

Back to Table of Contents, back to previous section (Roles and Responsibilities) or on to next section (Oil and Gas Rights).

 

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