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 In Alberta, the Crown owns 81 percent of the province's mineral rights. The remaining 19 percent are 'freehold' mineral rights owned by the federal government on behalf of First Nations or in National Parks, and by individuals and companies. Tenure is the process by which companies are granted the right to explore for and develop petroleum and natural gas (P&NG) resources, in exchange for the value to Albertans, as owners of the resource, that flows from development in the form of royalties, bonus bid payments and rents. The Department of Energy administers petroleum and natural gas rights owned by the Province of Alberta in the form of licences or leases acquired through a competitive bid auction held about every two weeks, with the highest bidder winning the parcel. On a yearly basis, the province holds an average of 24 land auctions and issues approximately 9,000 petroleum and natural gas agreements.
As of April 2006 Alberta Energy administers 97,456 P&NG agreements.
e-Tenure, a three phased project, stream-lines business processes for both Alberta Energy and the energy industry. e-Transfers encompasses the electronic creation, submission and approval of a transfer of registered interest in Crown agreements. e-Postings includes the electronic creation and submission of posting requests and applications for the direct purchase of P&NG and oil sands rights and e-Bidding takes care of all transactions and processes required for bidding on P&NG and oil sands rights.
Companies obtaining the right to explore for and develop Crown resources are subject to several expectations attached to the licences and leases issued:
- Annual rent of $3.50 per hectare must be paid for each hectare covered by the agreement
- Tenure holders must meet all regulatory requirements
- Lands in a P&NG licence are earned by the drilling of a well
- A lease is proven productive at the end of its five-year term by drilling, producing, mapping, being part of a unit agreement or by paying offset compensation
- If a lease is proven productive, it will continue indefinitely beyond the end of the term.
- The tenure ends when an agreement holder can no longer prove his agreement is capable of producing oil or gas in paying quantities or is lost through rental or royalty payment default or by voluntary surrender.
Last reviewed: June 28, 2006
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