ARCHIVED - Update on the Modernization of the Act, Regulations, and Systems (MARS) - Volume III, Issue 3

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IOGC Quarterly Newsletter

Reporting Period – October 1st to December 31st, 2013

In previous newsletters, we informed you that the department was considering a new approach for the coming into force of the Indian Oil and Gas Act, 2009 (IOGA, 2009). Rather than waiting until a complete set of new regulations are ready before bringing the Act and regulations into force, a phased approach will have the IOGA, 2009, plus a set of new core regulations, both come into force towards the end of calendar year 2014. This new approach would allow First Nations to benefit sooner from the IOGA, 2009 which gives new powers for IOGC: 1) to audit companies working on First Nation lands; 2) to set longer periods for industry to maintain records for auditing purposes; 3) to deal more effectively with surface and sub-surface trespass; 4) to protect First Nation sites of cultural importance; 5) to order companies to take remedial action under certain circumstances; and, 6) to issue fines and penalties for offences under the Act or regulations.

IOGC met its planning objective for completing all regulatory drafting instructions by the end of March 2013. Yet given the volume of drafting instructions produced (more than 6,600 pages), plus the complex and technical subject matter, it became clear that a complete set of new regulations could take a number of years.

To address this risk, as well as to ensure First Nations could benefit sooner rather than later from the IOGA, 2009, it has been proposed to have the IOGA, 2009 and a set of core regulations both come into force around the end of 2014. This phased approach would include amendments to the Indian Oil and Gas Regulations, 1995 to make them compatible with the IOGA, 2009 plus new regulations in the areas of: 1) Drainage and Compensatory Royalty; 2) Sub-surface Tenure; 3) First Nations' Audit (considered a component of Royalty Management); and, 4) reporting requirements to facilitate royalty verification. The remaining regulatory modules will be developed in a sequence that has yet to be finalized.

The Minister sent a letter dated December 3, 2013 to the Indian Resource Council (IRC) asking for their support for this approach. The IRC had previously expressed concerns that: 1) Canada could cease regulatory development once the core regulations were completed; and, 2) oil and gas First Nations' viewpoints on proposed regulations would not be taken into account. The Minister provided the IRC with assurances that: 1) once the IOGA, 2009 and core regulations have come into force, Canada would continue developing regulations until the Indian Oil and Gas Regulations, 1995 have been entirely replaced by new, modern regulations; 2) oil and gas First Nations, via their advocates the IRC and the Joint Technical Committee, would be involved throughout the process; and, 3) in accordance with the appropriate policy requirements, the department would be prepared to enter into a multi-year funding arrangement with the IRC that would bring certainty to both their core and project-based funding until the end of regulations development. The department is currently awaiting a formal response from IRC, expected before the end of January 2014.

Consultation with the oil and gas producing provinces and with industry continues. The department is in the process of appointing a Minister's Special Representative to assist IOGC with provincial consultation as well as with regulatory development. Now that the regulations project has reached an important point, the department has decided to begin providing monthly progress reports on the status of regulations development to Chief and Council of First Nations with oil and gas resources, or the potential for such resources.

The IRC, the Joint Technical Committee, the National Energy Business Centre of Excellence in Calgary, and the Saskatchewan First Nations Natural Resources Centre of Excellence in Saskatoon will be assisting IOGC with symposiums early in 2014. The phased approach will be explained to oil and gas First Nations as well as the content of the core regulations. IOGC continues to meet with Chiefs and Councils from individual First Nations when requested.

Informatics enhancements to support changes as a result of MARS activities continues as planned. In October 2013, Petrinex, – the provincial and industry-recognized authoritative source for hydrocarbon volume and pricing data – formally agreed to IOGC membership. IOGC membership in Petrinex would allow for: 1) more efficient royalty management – due to industry reporting and balancing; 2) improved analytical capacity – due to the centralized data; and, 3) less time and costs incurred correcting errors. Other Petrinex members include industry, Alberta and Saskatchewan, with Manitoba and Statistics Canada both in the process of joining. Work is now progressing on getting Treasury Board approval to complete the work required for IOGC membership and data exchange with Petrinex. If approved, and following procurement activities, requirements definition and systems construction could begin as early as in September 2014 for the: 1) Resource Information Management System 2 (RIMS2) Royalty Management Components; 2) data use, sharing, and exchange with Petrinex; and, 3) a case management system to track critical issues.

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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