Update on the Modernization of the Act, Regulations and Systems (MARS)

Indian Oil and Gas Canada (IOGC) Quarterly Newsletter, volume VIII, issue 3

Reporting Period October 1, 2018 to December 31, 2018

Phase I Regulations – Project Update:

a) General Information for All IOGC Clients and Stakeholders

In the preceding issue of this newsletter, IOGC reported that the 90-day public comment period for the pre-publication of the Draft Phase I regulations (the Proposed Indian Oil and Gas Regulations) in the Canada Gazette, Part I and the First Nations Gazette closed on August 17, 2018.

IOGC's approach to consultation and engagement yielded a total of 130 comments, feedback, and questions, mostly on the implementation of the new legislative and regulatory regime. Four oil and gas companies and one industry organization submitted feedback. Appropriate changes are being made before the Final Phase I regulations are published in the Canada Gazette, Part II (projected to occur mid- 2019).

IOGC continues to host engagement and outreach meetings on the proposed regulations. If you would like to meet with IOGC on the proposed regulations, please contact:

Pamela McNeil, Policy Manager
Telephone: (403) 292-5654
Email: Pamela.McNeil@Canada.ca

or

Shirley Conrad, Communications Officer
Telephone: (403) 292-5872
Email: Shirley.Conrad@Canada.ca

b) Information for First Nations Clients

IOGC has entered into an agreement with the Indian Resource Council (IRC) that would see the IRC providing Readiness Training to First Nations that will assist them in preparing for the implementation of the 2009 Act and the Phase I regulations. Oil and Gas First Nations can expect to be contacted by the IRC in the upcoming months.

c) Information for Industry Stakeholders

IOGC hosted Industry Engagement Information Sessions on November 7 & 8, 2018 for all industry partners that operate on First Nations' reserve lands and petroleum associations. The two half-day sessions were held in meeting spaces that were kindly made available to IOGC by the National Energy Board in downtown Calgary. Based upon the feedback received at these sessions, IOGC is preparing a list of Frequently-Asked Questions (FAQs) for industry which will be posted on IOGC's Internet website in the near future.

An article regarding IOGC's new Act and regulations is expected to be published early in 2019 (likely February) in an issue of the "Negotiator" magazine published by the Canadian Association of Petroleum Landmen (CAPL).

2. Implementation of 2009 Act and Phase I regulations – Readiness Update:

IOGC's focus over the coming months will continue to be on internal processes, through its MARS Portfolio Steering Committee, to ensure the organization is ready to begin to implement, administer, and enforce the Indian Oil and Gas Act, 2009 and its Phase I regulations beginning on the day they both become law. As noted in the preceding issue of this newsletter, service standards will be lengthened to allow for focus on this important and exciting milestone.

3. RIMS2 Project Update:

Please note that RIMS2 systems development is independent of the "Implementation of the 2009 Act and Phase I regulations." The new RIMS2 system functionality is projected to come on-line after the 2009 Act and Phase I regulations have both become law.

The coming FY2019-2020 will be a challenging yet exciting time for the RIMS2 Project as systems development is scheduled to be completed. New components will progressively be implemented as they are readied.

The Sierra project team has completed the task of developing the royalty calculation mechanisms needed for active leases in Saskatchewan. Ten major types have been identified; all have completed acceptance testing. Work has now shifted to the major types identified in Alberta. At the same time the development team is reviewing the design of the interfaces for the exchange of data between Petrinex and IOGC as well as internal interfaces within our systems (RIMS and RIMS2). Test data has been shared by Petrinex for our use in developing the interface, unpacking the data and providing it to the calculation engine. Work is progressing for a Q4 Go Live within the Saskatchewan royalty reporting scope.

The Petrinex Industry Readiness Team has begun preparations to communicate and train companies in Saskatchewan to submit the data as designed. Each company is required to provide a Change Leader to manage their conversion.

Design work on the Gas Cost Allowance Module within Petrinex was completed with development activity underway for Q4 FY2018-2019 possible ‘Go Live'.

Finally, as noted earlier, two of the four projected major components of the MARS Strategic Communications Framework required to support the RIMS2 Project have been completed. The partially-completed framework is currently undergoing review and approvals processes by INAC-HQ Communications.

4. Phase II Regulations – Project Update

Please note that the Phase II regulations are out of scope of the "Implementation of the 2009 Act and Phase I regulations." Phase II regulations will continue to be developed and brought into force, as they are readied, once the 2009 Act and Phase I regulations are published in Part II of the Canada Gazette. At which time the existing Indian Oil and Gas Regulations, 1995 will be entirely replaced by new, modern regulations.

With the 2009 Act and its Phase I regulations so close to becoming law, the IRC and the Joint Technical Committee (JTC) has decided to focus their efforts in ensuring First Nations are ready for the new legislative and regulatory regime. Therefore, work on the Phase II regulations will be postponed until FY2019-2020. Currently, joint work between the JTC and IOGC is not projected to take place during Q1 or Q2. In its place, the JTC will focus on developing a strategic approach for the Royalty Management regulations module that would reflect both the position of the JTC / IRC but also of their respective individual First Nations. The results of this work is expected to be presented to IOGC in Q3 of FY2019-2020 when IOGC will be expected to re-engage the JTC on the development of regulatory drafting instructions.

5. Organizational Change Management (OCM) Update:

OCM will continue to meet with business units to support change management through communications, coaching and training as IOGC prepares for the implementation of the 2009 Act and Phase I regulations and the RIMS2 Project. OCM has worked with the RIMS2 project authority to develop a stakeholder register for the Business Process Re-engineering Project and continues to provide support through the verification of assessment factor process.

6. Other News

IOGC officials will be attending the IRC's Annual General Meeting (AGM) on January 17, 2019 at the Tsuut'ina Nation's Grey Eagle Resort and Casino. At this event, our Executive Director and CEO's annual address will be presented and senior IOGC officials will be available to address any questions or concerns regarding the new Act and regulations or to respond to any other operational issues. In addition, due to delays in the electronic publication of IOGC's Annual Report for FY2017-2018 on our Internet website, limited printed copies will be available to IRC AGM attendees.

On December 2, 2018, the Government of Alberta announced a temporary curtailment of crude bitumen and crude oil production that will start on January 1, 2019. Production curtailment requirements are to be assigned at the operator level and will be allotted by the provincial regulator to each operator. In response to concerns raised by First Nations Clients, IOGC has prepared a statement (IOGC Statement: Alberta Curtailment of Oil Production and the Price Differential) which is enclosed with this newsletter and which will soon be posted on IOGC's Internet website.

For further information on IOGC or the MARS Portfolio of projects, please contact IOGC at:

Indian Oil and Gas Canada
100 – 9911 boul. Chiila Blvd.
Tsuu T'ina AB  T2W 6H6
Phone / Téléphone: (403) 292-5625
Fax / Télécopieur: (403) 292-5618
Email: aadnc.contactiogc.aandc@canada.ca

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