Indian Oil and Gas Canada Annual Report 2015-2016
Message from the CEO
To our stakeholders
As in recent years, aside from daily operations, there were four ongoing key projects that were priorities for Indian Oil and Gas Canada (IOGC):
- Modern Act, Regulations, and Systems (MARS) – Regulations Development
- Modern Act, Regulations, and Systems (MARS) – Resource Information Management System 2 (RIMS2)
- Organizational Change Management (OCM)
- Royalty Management
The MARS project was initiated in FY2010-2011 to guide the modernization of the Indian Oil and Gas Regulations, 1995 and the implementation of the amendment to the Indian Oil and Gas Act, 2009 and the new regulations. This project remained IOGC’s top priority for FY2015-2016.
To complete the MARS project, various phases were identified. The first phase of the project was completed with the granting of Royal Assent to the amended Indian Oil and Gas Act in May 2009 which resulted in the new Indian Oil and Gas Act, 2009 that will eventually replace the existing Indian Oil and Gas Act, 1974. Subsequent phases of the project include:
- The development of new regulations
- The coming into force of the 2009 Act and new regulations
- Implementation of the new Act and regulations through modernized business practices supported by informatics enhancements
A Joint Technical Committee (JTC) – comprised of First Nation oil and gas technicians, Government of Canada officials from IOGC, Indigenous and Northern Affairs Canada, and Justice Canada – had originally worked on the Indian Oil and Gas Act, 2009; they are currently working on the development of new supporting regulations.
In FY2013-2014, an agreement was reached between the department and First Nations to implement a phased approach for regulatory development; firstly with a new set of core regulations that is compatible with the 2009 Act. The end-result of this process – 2009 Act and core regulations – would then become law with minimal delay.
During Fiscal Year (FY) 2015-2016, IOGC worked on accommodating the recommendations and feedback of all stakeholders – First Nations, industry and the oil and gas producing provinces – on the 2nd Consultation Draft, Phase 1 regulations.
By the end of FY2015-2016, IOGC and the JTC’s work on the Phase I, or core regulations was complete and Justice Canada was on the verge of completing the official Blue-Stamped version of the regulations – the version that undergoes departmental and government approval processes leading to their pre-publication in the Canada Gazette, Part I for public review and commentary. An advanced version of the regulations, the 3rd Consultation Draft and the near-final version to be published in the Gazette, was prepared and shared with First Nations at two symposiums held in Edmonton and Saskatoon in the spring of 2016.
The new Act and regulations will be implemented through modernized business practices supported by informatics enhancements. Two years ago, I reported that IOGC’s request for membership in Petrinex (formerly PETRINEX – PETRoleum INformation EXcellence which itself was formerly the Petroleum Registry of Alberta) was granted in October 2013. Petrinex is the provincial and industry recognized authoritative source for hydrocarbon volume and pricing information. Once fully implemented, Petrinex and IOGC will be able to exchange data that will improve both the accuracy and timelines of IOGC’s royalty assessment process. This also addresses a major source for disagreements between First Nations and their business partners – volume measurement and pricing. By the end of FY2015-2016, IOGC was scheduled to seek both project and expenditure approvals for the informatics project from Treasury Board.
On the operations side, weak natural gas prices since early 2014 continued to be reflected by movement away from dry gas plays to oil plays and liquids-rich gas plays. Consequently, this resulted in fewer wells drilled and decreased gas royalties. In total, IOGC collected $63,004,155 on behalf of First Nations and issued a total of 61 new surface agreements and 17 sub-surface agreements. More details on our operational activities are contained in this report.
IOGC would not be on the threshold of having new regulations approved or beginning new systems development without the contributions made by IOGC staff, our partners, and our clients. Through hard work, strong partnerships, and commitment, we have established a strong foundation that will have IOGC ready to implement and administer the new Act and regulations beginning on the day they both become law.
Executive Director and CEO