Surface Contracts

Table of contents

Overview

Companies require surface access rights to First Nation reserve land for the exploration and development of oil and gas. Indian Oil and Gas Canada (IOGC) assists First Nations in disposing of these rights through the granting of surface contracts, which must be approved by the First Nation's council in the form of a Band Council Resolution ("BCR").

IOGC drafts, issues and administers these contracts and collects ensuing moneys from companies on behalf of First Nations.

IOGC may grant a surface contract pursuant to the Indian Act, Indian Oil and Gas Act, or the Federal Real Property and Federal Immovables Act, but regardless of the legislation it was granted under the surface contract will be subject to the Indian Oil and Gas Regulations, 2019 ("Regulations"), the Impact Assessment Act, and other applicable legislation.

Surface contracts have a 2-letter prefix followed by a 4-digit number, e.g. OS-9999. They may also have an additional 1-2 alphanumeric characters depending upon when the contract was granted, e.g. OS-9999A. The prefix indicates the legislation the contract was originally granted under:

Types of Surface Contracts on Indian Reserve Lands

There are two primary types of surface contracts granted on First Nation reserve lands:

Surface Permit

Where surface access rights are required for a short period of time (e.g. off-lease remediation, temporary workspace adjacent to a right-of-way for an integrity dig), IOGC may issue a Surface Permit; contact the Lease Administration Unit for more information.

Application Process to Obtain a Surface Contract

Pre-Application

The applicant must first obtain permission from the First Nation to conduct surveys and collect environmental field information, including Traditional Ecological Knowledge ("TEK") and resident consultation. Any First Nation concerns, including matters of a cultural or historic nature, must be addressed prior to application.

Application

The applicant submits to IOGC: a Surface Tenure Application form; an Environmental Review form; a legal survey plan prepared by a Canada Lands Surveyor; and the $50 non-refundable application fee, payable to the Receiver General for Canada. If this is the first application made by an applicant, an Address For Service form will also be required.

Survey plan requirements are described in the Survey Plan Requirements section.

Online forms are currently unavailable; contact the Lease Administration Unit to obtain the required forms.

Processing

IOGC's Environment and Lease Administration units undertake a concurrent review of the application. Upon completion of this review:

  • the First Nation and applicant are provided with a draft of the surface contract for review and ratification that includes the environmental protection measures and compensation payable;
  • the applicant will be given direction to proceed with recording the legal survey plan in the Canada Lands Survey Records; and
  • the First Nation will be asked to provide a BCR

The compensation payable for the Surface Lease or Right of Way is typically referenced in an existing subsurface contract. If the compensation is not predetermined, surface rates will be negotiated between the company, First Nation and IOGC.

Issuance

Upon granting the surface contract, IOGC will provide the First Nation and applicant with an original copy and register it in the Indian Lands Registry System (ILRS).

Surface contracts are generally issued with no set term or expiry date, and remain active for as long as they are required for the development of oil and gas on the contract lands.

Amendments to Surface Contracts

After the initial issuance of a surface contract, the contract holder may need to make a change that triggers an amendment to the surface contract. Amendments are required for:

All amendments require a legal survey plan prepared by a Canada Lands Surveyor, however only those that reflect a change to the lands dealt with (i.e. boundary of the contract lands) will require the plan to be recorded in the Canada Lands Survey Records.

Surface Contract Rent Renegotiation

Refer to the Surface Contract Rent Renegotiation section.

Amendments are not required

For clarification, a change in well centre, bottomhole location, wellbore path or intermediate casing point does not require an amendment unless it results in a change to the:

  • lands dealt with on the recorded plan(s) related to the surface contract, or
  • subsurface contract pertaining to the new bottomhole location or wellbore path

Application Process

An application for amendment follows the same process used for issuing a surface contract, excluding the application fee. Refer to the section entitled "Application Process to Obtain a Surface Contract from IOGC".

Payments Due under Surface Contracts

Initial compensation and annual rents are payable to the Receiver General for Canada and are to be submitted to IOGC, which collects the funds on behalf of the First Nation.

A non-refundable $50 application fee, also payable to the Receiver General for Canada, is charged for each surface contract granted.

For matters such as crop damage or fence cuts, moneys are paid directly to the First Nation.

Annual Rents

Contract holders must pay annual rents for Surface Leases. These rents are renegotiated with the First Nation and IOGC every five years in Alberta and British Columbia, and every three years in Saskatchewan and Manitoba. There are typically no annual rents for pipeline Rights of Way.

Land Statement

IOGC provides contract holders with a monthly Statement of Account for surface and subsurface contracts. Interest is charged on late payments and outstanding amounts under the authority of the Interest and Administrative Charges Regulations.

  • The monthly Statement of Account does not include amounts which haven't come due; it is the responsibility of the contract holder to ensure their payments are received at IOGC on or before the due date.

Environmental Requirements Related to Surface Contracts

An environmental review must be submitted upon application, which is reviewed by IOGC in consultation with the First Nation prior to granting approval.

Audits

Environmental audits are required for surface contracts as part of the environmental protection measures of the surface contract.

Reclamation

Reclamation of surface contracts is required before the surface contract can be surrendered.

For more information regarding environmental requirements, refer to the Environment section of the Business Cycle.

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