ARCHIVED - 2013-2014 Call for Bids for Exploration Licences in the Beaufort Sea & Mackenzie Delta
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The management of oil and gas resources north of latitude 60° N in the Northwest Territories, Nunavut and northern offshore is a federal responsibility managed by the Northern Petroleum Resources Directorate (formerly Northern Oil and Gas Branch) of Aboriginal Affairs and Northern Development Canada.
The Minister of Indian Affairs and Northern Development hereby calls for the submission of bids for Exploration Licences in respect of one parcel comprising the following lands located in the area of the Beaufort Sea & Mackenzie Delta:
47,945 hectares, more or less
Issuance Fee: $750
Any submission of a bid in response to a Call for Bids shall be made on the understanding that the terms and conditions as contained herein are accepted and agreed to by the bidder. Such understanding shall include the acceptance of and agreement with the terms and conditions contained within the form of the Exploration Licence and with the Benefits Plan requirements, copies of which are attached.
Canada Petroleum Resources Act, sections 14 and 15
Calls for Bids remain open for at least 120 days following publication in the Canada Gazette.
Sealed bids must be delivered, either by registered mail or in person, to the following address prior to NOON, Mountain Time on February 25, 2014:
Group Leader, Data Management
Operation Business Unit
National Energy Board
444 Seventh Avenue S.W.
CALGARY AB T2P 0X8
Each bid submitted in response to a Call for Bids must be addressed to the Minister of Indian Affairs and Northern Development and be in double sealed envelopes bearing no corporate identification. The outer envelope should be clearly marked with the date and Call name, i.e. 2013-2014 Call for Bids for Exploration Licences - Beaufort Sea & Mackenzie Delta. The inner envelope(s) should be clearly marked with the date, Call name and parcel number, i.e. 2013-2014 Call for Bids for Exploration Licences - Beaufort Sea & Mackenzie Delta – Parcel No.___.
Individuals or companies submitting more than one bid may place all bids in a single outer envelope.
Selection of the successful bid will be made on the basis of a single criterion, namely, the total amount of money that the bidder proposes to spend doing exploratory work on each parcel within Period 1 of the term of the Exploration Licence (Work Proposal Bid).
Canada Petroleum Resources Act, subsections 16(1) and 16(2)
The Minister is not required to issue an interest as a result of a Call for Bids. The Minister may issue an interest to the successful bidder within six (6) months after the closing date specified in the Call for Bids.
Any Exploration Licence which may result from a Call for Bids will be issued pursuant to the Canada Petroleum Resources Act, R.S., 1985, c. 36, 2nd supplement, or legislation made in amendment thereof or in substitution therefor and any regulations made thereunder from time to time. The proposed Exploration Licence for the 2013-2014 Call for Bids for Exploration Licences in the Beaufort Sea & Mackenzie Delta is attached.
The term for Exploration Licences issued from the 2013-2014 Call for Bids for Exploration Licences in the Beaufort Sea & Mackenzie Delta will be nine (9) years.
For those parcel which lie south of Line A on the call map, the term shall comprise of two (2) consecutive periods of five (5) and four (4) years. Subject to the Licence, Period 2 shall follow Period 1.
For those parcels which lie north, or straddle, Line A on the call map, the term shall comprise of two (2) consecutive periods of seven (7) and two (2) years. Subject to the Licence, Period 2 shall follow Period 1.
Each bid must be accompanied by a Bid Deposit for the specific parcel in the amount of fifty thousand dollars ($50,000.00) , in the form of a certified cheque, money order or bank draft payable to the "Receiver General for Canada". Each Bid Deposit must relate to a single parcel.
Bid Deposits will be returned to unsuccessful bidders, without interest, following announcement of the winning bidder(s).
The Bid Deposit will be returned to the winning bidder, without interest, once the Work Deposit is received by the Rights Administrator.
The successful bidder will be required to post 25% of the work proposal bid as security for the performance of work within 15 working days. This period commences the day following the notice of winning bids being posted on the Northern Petroleum Resources Directorate (formerly Northern Oil and Gas Branch) website. This deposit will be referred to as the Work Deposit.
Failure to post the Work Deposit will result in forfeiture of the Bid Deposit and disqualification of the bid. In that event, the Minister may, if he sees fit, select the second highest bidder as the winner without making another Call for Bids.
The Work Deposit must be submitted in the form of an irrevocable standby letter of credit, certified cheque or other negotiable financial instrument in a form satisfactory to the Minister. A sample irrevocable standby letter of credit may be obtained from the Rights Administrator.
Parties submitting a joint bid may submit separate guarantees representing their proportionate share of the required Work Deposit, within 15 working days, such period shall commence the day following the notice of winning bids being posted on the Northern Petroleum Resources Directorate (formerly Northern Oil and Gas Branch) website. The bid representative as designated on the bid submission form will be responsible for collecting and submitting the parties' share of the Work Deposit.
As expenditures are incurred exploring the Exploration Licence during Period 1 of the term, Work Deposits are refundable in accordance with clause 12 "Allowable Expenditures" below. Since Work Deposits represent 25% of the total amount bid for a parcel, refunds are likewise prorated on the basis of 25% of allowable expenditures incurred. Any Work Deposit balance remaining at the end of Period 1 will be forfeit.
Expenditures incurred in Period 2 of the term will not be credited against the Work Deposit but may be credited against Period 2 rentals (see Clause 11 "Rentals" below).
The interest owner may, at its option, in order to meet the work requirement, extend Period 1 for one year by posting a Drilling Deposit before the end of the last year of Period 1. Where Period 1 is extended by the posting of a Drilling Deposit, Period 2 shall be reduced accordingly.
This Drilling Deposit shall be in the amount of one million dollars ($1,000,000.00) and is to be in the form of an irrevocable standby letter of credit, certified cheque or other negotiable financial instrument in a form satisfactory to the Minister. A sample letter of credit may be obtained from the Rights Administrator.
If a Drilling Deposit is posted, it will be refunded in full if the licence is validated as required to obtain tenure for Period 2 by the drilling of a well. If a validation well is not drilled or has not been commenced within the one year extension, the Drilling Deposit will be forfeited to the Receiver General for Canada upon the termination of the licence at the end of Period 1. If a well has been commenced and drilling operations are being diligently pursued, Period 1 will continue until the well has been completed.
Allowable expenditures cannot be applied against the Drilling Deposit. Successive one-year extensions to Period 1 are possible by the posting of further Drilling Deposits of one million dollars prior to the end of the extended period. This means, in effect, that with application for a successive extension, the previous year's Drilling Deposit is forfeit on the anniversary of the licence.
The Canada Petroleum Resources Act does not permit the overall term of the Exploration Licence to extend beyond nine years. As a result, any extension to Period 1 will result in an associated reduction to Period 2.
For those Licences consisting of two consecutive periods of five (5) and four (4) years: as a result of the extension of Period 1 by the posting of a Drilling Deposit, rentals payable in Period 2 will be applicable at the following rates, for the first year after the extension, at $5.50 per hectare and all subsequent years at $8.00 per hectare.
Rentals are not applicable during Period 1 of the term.
Rentals paid during Period 2 are refundable in accordance with Clause 12 "Allowable Expenditures" below.
Refunds may be made or future rentals may be waived, as the case may be, as expenditures are incurred on the lands subject to the Exploration Licence during Period 2 of the term.
Any rental balance remaining at the end of Period 2 will be forfeit.
In Period 2, rentals will be applicable at the following rates:
For Licences consisting of two consecutive periods of five and four years:
For Licences consisting of two consecutive periods of seven and two years:
1st year of Period 2
1st and 2nd year of Period 2
2nd year of Period 2
3rd and 4th year of Period 2
Rentals will be payable annually, in advance, and are to be submitted in the form of an irrevocable standby letter of credit, certified cheque or other negotiable financial instrument in a form satisfactory to the Minister. A sample irrevocable standby letter of credit may be obtained from the Rights Administrator.
When an Exploration Licence continues in force beyond Period 2 due to the drilling of a well deemed to be pursued diligently in accordance with section 27 of the Canada Petroleum Resources Act, rentals will be payable at the rate of $8.00 per hectare. Such rentals will be payable monthly, in advance, at the rate of one twelfth (1/12) of the applicable annual rates.
Rentals may be payable on lands included in a Significant Discovery Licence.
Failure to pay rentals will result in the early termination of the Exploration Licence.
Work Deposits and rentals will be offset on the following basis, subject to further clarification by the Rights Administrator.
Costs related to the following classes of exploratory work undertaken as part of a program authorized by the National Energy Board may be claimed at cost.
Data acquisition: by means of reflection seismic surveys or other geophysical, geo-technical or geological surveys, including costs relating to field acquisition and processing, inspection and clean-up.
Data purchase: from vendors at arm's length for re-processing and/or interpretation, to the extent that the data assists the evaluation of the specific Licence.
Drilling operations: Costs relating to construction of access routes, preparation of drilling sites, transportation to and from well location and staging areas, onsite drilling and evaluation, support vessels, helicopters, site clean-up and restoration. Drilling operations involved in an exploratory or delineation well may entail waiting on weather, logging, well testing and completion. Extended formation flow testing will not be regarded as an allowable expenditure.
Mobilization and demobilization: equipment and supplies, and any incurred stand-by charges deemed reasonable by the Rights Administrator.
Notwithstanding the above, the Minister may agree to costs claimed with respect to classes of work or activity, or the use of innovative technology not contemplated by this schedule.
General and Administrative: Ten percent (10%) of the above allowable expenditures to reflect other costs not specifically itemized above, and including program specific consultations, data interpretation, regional office support, management and pre- and post program costs.
All claims are subject to approval by the Minister and may be subject to a post audit if ordered by the Rights Administrator.
The document Guidance Notes on Claiming Allowable Expenditures describes the classes and scope of expenditures which may be viewed as allowable under the terms of Exploration Licences and certain Significant Discovery Licences issued pursuant to the Canada Petroleum Resources Act in areas under the jurisdiction of the Minister of Indian Affairs and Northern Development, and are intended to assist interest owners to claim refunds from the Northern Petroleum Resources Directorate (formerly Northern Oil and Gas Branch). The Guidance Notes may be amended from time to time.
Upon issuance of an Exploration Licence, the interest owner must pay ESRF levies pursuant to section 81 of the Canada Petroleum Resources Act. The levies are to be paid for the year in which the Exploration Licence is issued and retroactive levies for the two preceding years (less any levies paid in respect of the same lands for the two preceding years by a previous interest owner). ESRF levies are determined by multiplying the number of hectares of land included in the Exploration Licence by the ESRF rate for the applicable region. Where applicable, the ESRF Administrator will send notices to the representative of the Exploration Licence. More information can be found at: www.esrfunds.org.
Operators wishing to carry out activities as a result of this process will be required to comply with all federal environmental requirements defined in the Inuvialuit Final Agreement as well as those stemming from the Canadian Environmental Assessment Act, the Canada Oil and Gas Operations Act, the Territorial Lands Act, the Arctic Waters Pollution Prevention Act, the Migratory Birds Convention Act, the Species at Risk Act, the Fisheries Act, the Canadian Environmental Protection Act and other applicable legislation.
The Petroleum and Environmental Management Tool (PEMT) ranks the southern Beaufort Sea and Mackenzie Delta area in terms of relative environmental and socio-economic sensitivity. This information has been identified by Inuvialuit and wildlife specialists and is intended to alert potential nominators that this area may be subject to additional regulatory terms and conditions. In areas of the Call not covered by the PEMT, please refer to the "Area subject to specific environmental considerations" on the attached map.
The Bering-Beaufort-Chuckchi population of Bowhead whales was designated as a Species of "concern" under the Species at Risk Act (SARA) in January 2008. Bowhead whales use habitats throughout most of the Call area during the spring, summer and fall. The eastern Pacific Grey whale is currently listed as a species of "special concern" under SARA, and has been observed in the southern Beaufort Sea during the open water period with increasing regularity. In addition, the Tarium Niryutait Marine Protected Area has been created. For further information, operators are encouraged to contact the Department of Fisheries and Oceans Canada in Inuvik, Northwest Territories at 867-777-7515.
Environment Canada, Canadian Wildlife Service (EC-CWS) manages several Migratory Bird Sanctuaries and has identified a number of Key Migratory Bird Habitat Sites in the Northwest Territories that are essential to the welfare of various migratory bird species in Canada, and also advises on current regulation related to migratory birds and the latest Species at Risk information. Proponents are encouraged to contact the EC-CWS office in Yellowknife at 867-669-4763 for further information on reducing impacts to migratory birds and their habitat.
Based on the July 2006 photocensus, the territorial Department of Environment and Natural Resources concluded that there are significant declines in the Cape Bathurst and Bluenose-West caribou herds. The 2009 photocensus estimates indicate the herds have stabilized at low numbers. Operators should be aware that oil and gas activity in the range of both the Cape Bathurst and the Bluenose West herds may be subject to restrictions when caribou migrate into the project area.
The entire offshore and coastal area of the Call area is potential Polar Bear habitat. The Committee on the Status of Endangered Wildlife in Canada has recommended that Polar Bears be listed as "special concern" under SARA. Additional mitigative measures may be required at the activity stage.In addition, the entire onshore of the Call area is Grizzly Bear habitat. The Committee on the Status of Endangered Wildlife in Canada has recommended that Grizzly Bears be listed as "special concern" under SARA. Additional mitigative measures may be required at the activity stage. Other Species at Risk in the Call area include Wolverine and Peregrine Falcons. Additional mitigative measures may be required at the activity stage for these species.
For more information on wildlife and suggested monitoring and mitigation measures potential operators should contact the Department of Environment and Natural Resources in Inuvik, Northwest Territories (Manager, Wildlife Management) at 867-678-6670.
Canada Petroleum Resources Act, section 21
Canada Oil and Gas Operations Act, section 5.2
A Benefits Plan is a statutory requirement under the Canada Oil and Gas Operations Act. An operator engaged in the exploration and drilling for and the production and transportation of oil and gas in the Northwest Territories, Nunavut and the Arctic offshore areas is required to submit a Benefits Plan to the Minister of Aboriginal Affairs and Northern Development Canada for approval.
A Benefits Plan represents a documented commitment by an operator to provide employment to Canadians and full and fair opportunity to Canadian businesses. A Benefits Plan should include a detailed description of the proposed project as well as the major components, activities and milestones of the project, supporting maps, tables and figures, expected timeframes and finish date. A Benefits Plan may vary in comprehensiveness and complexity depending on the scale and scope of the proposed oil or gas work or activity. An operator is encouraged to notify and submit a Benefits Plan to the Department well in advance of the anticipated start date of a proposed oil and gas work or activity to allow the Department a sufficient period of time for review of the Benefits Plan.
To assist an operator to develop a Benefits Plan, the Department has established the Benefits Plan Guidelines for the North. The Guidelines are intended to streamline the administrative process as well as offer greater clarity on what a company should consider during the development of and reporting on a Benefits Plan.
Where the Minister has reason to believe that an interest owner or holder is failing or has failed to meet any requirement of or under the Canada Petroleum Resources Act or the Canada Oil and Gas Operations Act or any regulation made under either Act, the Minister may give notice to that interest owner or holder requiring compliance with the requirement within ninety days after the date of the notice or within such longer period as the Minister considers appropriate.
Notwithstanding anything in the Canada Petroleum Resources Act, where an interest owner or holder fails to comply with a notice within the period specified in the notice and the Minister considers that the failure to comply warrants cancellation of the interest of the interest owner or holder or any share in the interest held by the holder with respect to a portion only of the frontier lands subject to the interest, the Minister may, by order, cancel that interest or share, and where the interest or share is so cancelled, the frontier lands thereunder become Crown reserve lands.
For more information on this Call, the rights issuance process or the resource management regime, please contact:
Northern Petroleum Resources Directorate
Northern Petroleum and Mineral Resources Branch
Aboriginal Affairs and Northern Development Canada
Gatineau, Quebec Postal Address:
OTTAWA ON K1A 0H4