ARCHIVED - Update on the Modernization of the Act, Regulations, and Systems (MARS) - Volume 1, Issue 2

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IOGC Quarterly Newsletter

Reporting Period – January 1st to March 31st, 2012

Since our last report in February for the quarter ending December 31st, 2012, several milestones have been achieved. Work on the regulations continues at a swift pace and we are still on target to complete all regulatory Drafting Instructions toward the end of the 2012 calendar year. Certainly after that objective is met, work will continue with First Nations and the Joint Technical Committee to ensure the policy basis for the proposed regulations is shared with First Nations and that they have every opportunity to provide input. Our vision for the new regulations continues to guide us as we work to lay the foundation for increased industry investment and greater First Nation economic development opportunities through increased transparency, clear rules, and harmonization with competing provincial regimes.

The drafting instructions for the Drainage and Compensatory Royalty Module have been completed and formal regulations drafting has resumed. This module will see regulations developed to align with existing processes in other regimes by introducing the obligation for lessees to disprove that drainage is occurring. Detailed rules and formulae relating to compensatory royalty will also be developed for inclusion in the regulations.

The drafting instructions for the Exploration Module have been completed and shared with the Department of Justice (DOJ), and are waiting to be tabled with JTC. This module focuses on putting current practices directly into regulation, while at the same time clarifying IOGC’s role in regulating field operations related to geophysical activity.

The drafting instructions for the Conservation Module has also been completed, shared with DOJ and the JTC and will be further refined as discussions with provincial governments progress.

Drafting instructions for the Surface Tenure Module are nearly complete and work continues in earnest on the Sub-Surface Tenure Module. Although the basic approach to surface administration will not be subject to major change, there are some notable shifts, including elimination of the rental review process through annual rental increases, movement of contractual terms and conditions directly into regulations and heightened enforcement provisions for non-compliance. The policy considerations that precede drafting instructions have been completed for five out of the seven environmental sub-modules, and work is ongoing to finalize the drafting instructions. Through this module IOGC is developing a comprehensive environmental protection regime that will see us take on a modern and direct role in the areas of reclamation, remediation, audits and the formalization of traditional environmental knowledge.

Work on the remaining modules is ongoing and further updates will be provided as milestones are met:

Last quarter we worked closely with the Indian Resource Council to conduct face-to-face meetings with 10 First Nation Chiefs and Councils or their Tribal Administrations. We also held our oil and gas royalty formula symposium for Alberta First Nations. More than 80 participants from over 25 First Nations attended the symposium to discuss IOGC’s vision regarding on-reserve royalty regime. We are planning to hold our next symposium for Saskatchewan First Nations in June, and will be considering the feedback collected at both sessions in the design of the Royalty Module.

The MARS project also includes change to our internal business operations to ensure we can implement the legislative and regulatory changes being proposed. A key aspect of this is mapping our day-to-day business operations processes. This work is ongoing and will be at the forefront of our activities once greater progress is made on the statutory rule set. Modernized systems are also crucial to our overall goals as we continue to operate with an IT infrastructure well past its "best before" date. There are many internal government procedures that must occur first, including submissions to Treasury Board. We are on schedule to submit to Treasury Board towards the end of calendar year 2012 and expecting approval towards the end of the fourth quarter in calendar 2013.

A chart summarizing progress on the three project work streams is enclosed.

For further information, please contact IOGC at:

Indian Oil and Gas Canada
100 - 9911 Chiila Blvd.
Tsuu T'ina AB T2W 6H6
Phone: (403) 292-5625
Fax: (403) 292-5618

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