ARCHIVED - Additional Lands in 1996 Central Mackenzie Valley Call for Nominations
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Volume 3, Number 3
The 1996 Mackenzie Valley Call for Nominations will open at 9 a.m. on September 16 and close at 4 p.m. (Eastern Time) on November 15, 1996. Posting requests will be included in a Call for Bids which should be launched on November 30, 1996. This Call is the third in a series of annual calls for this region of the Northwest Territories. The first call in 1994 resulted in the issuance of two exploration licences while the second, in 1995, saw the issuance of five additional licences.
The new Mackenzie Valley Call includes for the first time Crown subsurface lands in the northern K'áhsho Got'ine district of the Sahtu Settlement Region where surface ownership rests with the Sahtu. These lands, amounting to approximately 1. 1 million hectares, are included in the Call with the support of the communities of Colville Lake and Fort Good Hope.
New acreage open for posting includes areas with high potential for oil and gas underlying the Mackenzie Plain 40 km downstream from Norman Wells. Wells drilled in this area penetrated middle Devonian reef carbonates of the Carcajou reef complex. Tnese rocks are of the same type and age as the producing reef at Norman Wells. Oil and gas shows were recorded in several wells. The richly organic Canol Shale drapes the reef complex acting as both top and lateral seal for potential hydrocarbon traps and also as a source rock for oil in intimate proximity to potential reservoir.
Also open for nomination in this call are large areas south and northeast of the community of Colville Lake. Three gas discoveries and one strong gas show out of 12 exploratory wells drilled in the Colville Hills in the mid-seventies to the mid-eighties are estimated to contain a combined recoverable volume of 11.4 billion cubic metres (400 bcf). These discoveries were made in the basal sandstone of Cambrian age (Mount Clarke Sandstone), a reservoir rock of regional extent which underlies a thick sequence of younger carbonates and evaporates. Source rock studies of the Cambrian section suggest that oils of this age are also likely to be present.
New Terms and Conditions
In an effort to standardize terms and conditions throughout the Central Mackenzie Valley the following modifications have been made to the terms and conditions of the Call for Nominations and the Call for Bids.
Call for Nominations
Standardized term of 8 years; maximum block size of 6 grids
A term of eight years for exploration licences will apply throughout the Call area, as will a maximum block size of six grids (approximately 132,000 ha). Term and block size in previous calls used to differ between exploration zone B (south of Fort Good Hope and close to the Mackenzie River) and zone A (north of Fort Good Hope and remote from the river).
Call for Bids
Pre-approved negotiable financial instruments such as letters of credit or Promissory notes accompanied by a bank letter of guarantee may now be used as a work deposit, as may bank drafts, money orders and certified cheques.
Issuance fees must now be submitted together with the bid by separate cheque.
In the first four years of the licence, exploration expenditures are used to offset the work deposit of licence holders. Since only 25% of the bid is secured by a work deposit, exploration activities are credited at the same rate ($4 spent reduces the work deposit by $1). In period 2 of the licence, the next four years, exploration reduces the applicable rentals on a dollar-for-dollar basis.
Rates for exploration activities are listed as 'Allowable Expenditures' in the Call document. They are intended to reflect a realistic rate for operations. Although they are unlikely to match the real rate paid by the company, they are intended as a practical yardstick for the preparation of bids by companies, and to facilitate the evaluation of bids by government and by local communities with respect to future work. Rates are reviewed periodically, with reference to actual expenditures for previous years, and with input from industry through polling of its members by the Canadian Association of Petroleum Producers.
This year, explorers should note that rates for 2D seismic acquisition have been increased on the basis of advice received from CAPP. In addition, provisions have been made for participation surveys and group shoots as they relate specifically to the evaluation of a licence.
Northern Benefits Requirements
Northern benefits requirements are associated with both the tenure and regulatory regimes. In the case of the tenure regime, the Benefits Statement of Principles found in the Call for Bids document constitutes an obligation which is contracted upon submission of a winning bid. The obligation rests with the holders of the exploration licence who, in turn, are committed to ensuring that their contractors follow the Principles with respect to all subcontracting opportunities.
In the case of the regulatory regime, a Benefits Plan is required for each work or activity pursuant to Section 5.2 of the Canada Oil and Gas Operations Act which is also referred to in Section 21 of the Canada Petroleum Resources Act. The requirement for a Benefits Plan may be waived, and this has generally been the case for operations of a transitory nature or short duration. However, explorers should note that for operations involving access over Sahtu or Gwich'in Surface Lands, a Benefits Plan will be required for all significant operations.
Enquiries as to the scope of benefits plans should be addressed to Walter Isotalo, Industry Relations Officer, at (819)994-0348.
Benefits Statement of Prindples
Companies engaged in exploration activities on frontier lands in the Central Mackenzie Valley are expected to follow the principles outlined below.
It is recognized that the nature and duration of work programs must be considered in determining the extent to which companies are able to implement the benefits principles.
The company is committed to obtaining its goods and services on a fair and competitive basis. The company will support and encourage the development of regional businesses by considering potential suppliers for work associated with the program on the basis of best value, competitiveness and benefits to the regional communities and by providing relevant information to the supply community. Within the context of its general procurement policy, the company will conduct its operations so as to optimize the short and long-term benefits accruing to the North by providing opportunities for involving northern businesses on a full, fair and competitive basis.
The company is committed to work with regional communities and government agencies to identify potential business development opportunities.
The company is committed to ensuring that its contractors follow the above with respect to all subcontracting opportunities.
Employment and Training
The company is committed to the principles of fair and equal employment and training opportunities consistent with the Canadian Charter of Rights and Freedoms. This commitment will promote fairness in employment opportunities and avoid employment practices which result in employment barriers. The company will give first consideration to qualified individuals resident in the regional communities.
The company is committed to work with regional communities and government agencies to identify potential employment and training opportunities.
The company is committed to ensuring that its contractors follow the above with respect to all employment and training opportunities.
The company is committed to providing appropriate information concerning its exploration programs to concerned individuals, groups and communities in the region. Exchanging relevant information in a timely fashion will enable the company to assess the potential local economic and employment opportunities.
The company will provide fair and equitable compensation, consistent with applicable territorial policies, to individuals involved in hunting, trapping and fishing in the event of adverse impacts demonstrated to result from project-related activities.
Annual Reporting Requirement
The company will submit an annual report within six months of the completion date of its seasonal work program.
The report should contain the following information:
- a brief work program description;
- total program costs (total value of purchased goods and services, total direct wages and total direct work months);
- total direct wages by northern community of residence;
- total direct work months by community of residence;
- number of northern community residents employed for each program component (e.g. seismic, drilling, support and construction);
- total value of purchased goods and services from each northern community, including a brief description of the goods and services purchased from each conununity;
- listing of consultations undertaken;
- a brief description of any programs that may be undertaken in the next work season.
Annual reports are to be sent to:
Director, Northern Oil and Gas Directorate,
Department of Indian Affairs and Northern Development,
Ottawa ON K1A 0H4.
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