IOGC Quarterly Newsletter - Volume IX, Issue 2
Reporting Period July 1, 2019 to September 30, 2019
1. Important Information for All IOGC Contacts and Clients:
- On July 29, 2019, Indian Oil and Gas Canada (IOGC) changed from reporting to Crown-Indigenous Relations and Northern Affairs Canada (CIRNAC) to reporting to Indigenous Services Canada (ISC). The change in IOGC's reporting relationship has no impact for IOGC's First Nations clients and industry stakeholders.
- IOGC is pleased to announce that the Indian Oil and Gas Act, 2009, and its associated Indian Oil and Gas Regulations, 2019, both came into force and became law on August 1, 2019.
The official text of the 2009 Act and 2019 Regulations can be accessed at:
This important accomplishment and milestone would not be possible without the participation, review, and feedback from IOGC's many contacts and clients.
The new legislative and regulatory regime is intended to strike a balance between: 1) the clarity and certainty required by industry when making their investment decisions; and, 2) the flexibility that First Nations desire so they can customize their business arrangements to fit the needs and aspirations of their communities and community members.
The coming into force of the 2009 Act and its 2019 Regulations marks the completion of the MARS Project. And so, beginning with this issue, this Newsletter will be changing its name from the "IOGC MARS Quarterly Newsletter" to the "IOGC Quarterly Newsletter."
2. Implementation of 2009 Act and 2019 Regulations – Update Days 1 to 60
In the preceding IOGC Quarterly Newsletter, IOGC committed to providing more specific information to its First Nations clients and its industry stakeholders prior to the August 1, 2019 coming into force date for the 2009 Act and the 2019 Regulations. IOGC fulfilled this commitment by sending, via regular mail, printed copies of the "First Nations' and Industry Information Guide" the week prior to August 1, 2019. The Guide was also posted on IOGC's Internet website.
On August 1, 2019, IOGC issued 288 Offset Notices under its new Act and new regulations.
By Day 30 under the new Act and regulations, IOGC had issued letters including:
- 24 letters to industry with no interests on First Nations lands but whose facilities process oil and gas originating from First Nations lands (under the 2009 Act, a 10-year limitation period for maintaining records is established);
- 11 letters internal to the department;
- 3 letters to other federal departments involved in managing information related to oil and gas exploration and development on First Nations lands;
- 2 letters to provincial / industry organizations (i.e., Petrinex; Orphan Well Association);
- 11 oil and gas-producing First Nation advocate organizations; and,
- 6 oil and gas industry advocate organizations.
By Day 90 (October 31, 2019), IOGC had fielded 34 enquiries related to the implementation of the 2009 Act and 2019 Regulations with the following distribution of categories:
- Surface Tenure – 12
- General Information – 4
- Continuance – 3
- Limitation Period – 2
- Assignment – 2
- Co-Management Board – 1
- Record Search – 1
- Well Abandonment – 1
- Compliance and Enforcement – 1
- Acquiring Mineral Rights – 2
- Re-leasing Lands – 1
- Royalty – 2
- Exploration License – 1
- Forms – 1
3. Engagement and Outreach on the Indian Oil and Gas Regulations, 2019
IOGC continues to host engagement and outreach meetings on the Indian Oil and Gas Regulations, 2019. If you would like to meet with IOGC on the regulations, please contact:
Pamela McNeil, Policy Manager
Telephone: (403) 463-1991
Shirley Conrad, Communications Officer
Telephone: (403) 292-5872
4. Information for First Nations Clients – Implementation of 2009 Act and 2019 Regulations
IOGC has entered into an agreement with the Indian Resource Council (IRC) that would assist the IRC in providing Readiness Training to First Nations in preparing for the implementation of the Indian Oil and Gas Act, 2009 and the Indian Oil and Gas Regulations, 2019. Oil and gas-producing First Nations are being contacted by the IRC to schedule these sessions. For more information, please contact David Shade, IRC's JTC-1 Program Manager (firstname.lastname@example.org OR 403-281-8308).
5. Information for First Nations Clients – Due Diligence and Asset Acquisition
First Nations may be approached, by oil and gas companies, and asked if they would consider acquiring assets that the companies no longer require. Occasionally, IOGC is contacted by First Nations and asked to provide technical and financial advice on such proposed asset acquisitions. Due to IOGC's trust-like responsibilities and its role as the on-reserve oil and gas regulator, IOGC cannot provide specific business acquisition advice to First Nations as it would be perceived as a conflict of interest. IOGC strongly recommends that First Nations, and First Nation-owned businesses, conduct their own due diligence including, but not limited to, engaging qualified independent experts to assess potential economic benefits as well as total liabilities.
6. Implementation of 2009 Act and Phase I regulations – Readiness Update:
Project tracking meetings were held with managers and groups of related managers to facilitate collaboration throughout Q1 and Q2. Prior to the coming into force date of August 1, 2019, IOGC held a series of dry-runs that were focused on cross-functional areas experiencing the greatest change (drainage and compensatory royalty, First Nations audit, continuances, and administrative monetary penalties for finance). Weekly leadership stand up meetings were held in July and August and continue to be held biweekly with the aim of identifying any roadblocks. Meetings with managers were carried out post-implementation to update and track implementation deliverables that were identified as Day 30 and beyond.
7. RIMS2 Project Update:
The 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.
A major project milestone was reached during the past reporting period as new Gas Cost Allowance (GCA) capability was developed and deployed. IOGC's contacts and clients will be using this new feature for the next period for their GCA reporting and the new tools and processes are expected to facilitate and streamline reporting.
The Sierra project team, with IOGC has completed over 90% of the task of developing the royalty calculation mechanisms needed for active leases in Saskatchewan. Ten major types have been identified; Development of the systems to process the data and to provide an assessment is continuing.
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).
The RIMS2 Communications Plan, required for project gating approvals processes, is being updated and is undergoing internal review and approvals.
8. Phase II Regulations – Project Update
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. By the end of this process, the former Indian Oil and Gas Regulations, 1995 will have been entirely replaced by new, modern regulations.
With the 2009 Act and its 2019 Regulations now law, the IRC and the Joint Technical Committee (JTC) have decided to focus their efforts in ensuring First Nations are ready for the new legislative and regulatory regime. Work on the Phase II regulations will be postponed until Q3 of FY2019-2020. Currently, joint work between the JTC and IOGC is not projected to take place during Q1 or Q2 of FY2019-2020. In its place, the JTC will focus on developing a strategic approach for the Royalty Management and Environment regulation modules 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.
9. Organizational Change Management (OCM) Update:
OCM has focused on staff engagement prior to the Coming into Force of the Act and Regulations. This involved working with business units and their cross-functional partners to plan, execute and collaborate on a series of dry-runs in areas experiencing the greatest change. These activities allowed for active staff engagement prior to the Coming into Force of the Act and Regulations. In addition, IOGC staff participated in ADKAR assessments which allowed them to self-evaluate their readiness. The results of both the dry-runs and the assessments are being used to address gaps and improve processes for Phase II. OCM is also tracking and evaluating the lessons learned on Day 1 and the activities leading up to Day 1.
For the RIMS2 project, OCM has been involved as IOGC engaged with Sierra on project governance and establishing a better defined process for working together.
10. Other News
- The final version of IOGC's Annual Report for FY2017-2018 is now available on IOGC's Internet website
- IOGC officials attended the Global Petroleum Show June 11 to 13 held at Calgary's BMO Centre. IOGC officials were available to address any questions or concerns regarding the new Act and regulations.
- Please note, effective June 17, 2019 – Canada Post has changed IOGC's Postal Code to T3T 0E1.
For further information on IOGC or the IOGC Quarterly Newsletter, please contact IOGC at:
Indian Oil and Gas Canada
100 – 9911 Chiila Blvd.
Tsuut'ina AB T3T 0E1
Phone: (403) 292-5625
Fax: (403) 292-5618