A new licence and lease regime for onshore oil and gas development

Licences to explore will be awarded by auction

As of the day of the budget 2012-2013 speech, all new exploration licences will be awarded by auction.

The Ministère de l'Énergie et des Ressources naturelles (MERN) will announce the auction process at a later date.

Auctions will apply to lands not currently licensed and those that will be returned to the government.

Increasing annual exploration licence fees and lease rentals

The government announces an increase in the annual licence to explore fee.

• The increase will come into effect in 2014 only, taking into account the halting of word requirements as a result of the strategic environmental assessments ordered.
• The fees will be $0.50 per hectare for the first five years of the licence and $1.50 per hectare in subsequent years.
• In addition, fees will be redefined in dollars per square kilometre. They are indexed according to the Financial Administration Act.

The government also announces an increase in the oil and gas lease rate.

• The rental rate will increase from $2.50 per hectare to $3.50 per hectare. The rate will be redefined in dollars per square kilometre. It is indexed according to the Financial Administration Act.

A fee increase for related licences

The government is increasing the fees collected for these related licences as of the day of the budget 2012-2013 speech by way of a regulatory amendment, so as to cover the entire cost associated with the application. These fees will be indexed to reflect changes in the cost of issuing licences, in accordance with the Policy for the Funding of Public Services.

In order to recover their issuance costs, the government is also imposing new fees for obtaining licences to explore, leases to produce and authorizations to close a well.