NLIS 3 May 4, 2004 (Natural Resources) The following is being distributed at the request of the Canada-Newfoundland Offshore Petroleum Board: Negotiated Licences for Laurentian Sub-basin announced The Canada-Newfoundland Offshore Petroleum Board (C-NOPB) today announced eight new exploration licences (ELs) for the Laurentian Sub-basin. These licences result from negotiated agreements with former federal permit holders to convert the federal permits in the Newfoundland and Labrador portion of the Laurentian Sub-basin into eight new ELs. The negotiated agreements and the terms and conditions of the licences have been approved by the federal and provincial Ministers of Natural Resources. The following are some details of the new ELs:
Each licence is for a maximum of nine years; the Imperial Resources Ventures licence is effective upon execution of the negotiated agreement while the ConocoPhillips Murphy Oil licences are effective July 1, 2004. Since 1997, the ConocoPhillips Murphy Oil consortium has spent over $23 million in the licence areas, mostly on seismic data. The ConocoPhillips Murphy Oil consortium has agreed to additional expenditure commitments of $18 million across their seven licences. Imperial Resources has committed to $1.5 million work expenditure for its licence. The authority to negotiate the conversion of these permits to exploration licences is outlined in the Atlantic Accord Implementation Acts. The Strategic Environmental Assessment (SEA) for the Laurentian Sub-basin was released in January 2004. The SEA provided a broad overview of the existing environment and noted likely environmental effects. The SEA indicated there is a munitions dumpsite located on the southeastern portion of the area now known as EL 1087. As a result, a term has been placed on that licence requiring additional authorization for activities causing physical disturbance within the area of the dumpsite. Before any work is permitted in the offshore area - be it drilling, seismic testing or other petroleum-related activity - a more detailed and location-specific environmental assessment must be submitted to the board for approval. Uncertified abstracts of these new licences will be available on the C-NOPB Web site www.cnopb.nfnet.com once they come into effect. SOURCE: Susan Churchill, Legal Counsel, (709)
778-1408 BACKGROUNDER Traditionally, exploration licences in Newfoundland and Labrador waters are issued following a competitive bidding process as outlined in the Atlantic Accord legislation. In this case however, the area in question was already held under exploration permits issued directly by the federal government in the 1960s and 1970s. The permits were placed under a moratorium during the period of negotiation between Canada and France of the maritime boundary around Saint-Pierre and Miquelon. In 1986, the Accord legislation came into effect; section 130 of the Accord Acts provides that the permit owners enter into negotiations with the board to convert these permits into exploration licences. The arbitrated international maritime boundary around Saint-Pierre and Miquelon took effect on July 26, 1992. However, a demarcation line between Newfoundland and Labrador and Nova Scotia jurisdiction had not been determined so the moratorium on the permits was extended by governments and negotiations on conversion were again deferred. On May 29, 2003 the demarcation line was promulgated into law, allowing negotiation of these permits into licences pursuant to the Accord Implementation Acts. The ConocoPhillips/Murphy Oil consortium and Imperial Resources, who held the 99 permits on the Newfoundland and Labrador side of the demarcation line entered into negotiations with C-NOPB to convert the permits to licences. Agreement has been reached with the both the ConocoPhillips/Murphy Oil consortium and Imperial Oil Resources. The negotiated agreement and the ultimate terms and conditions of the new licences are considered fundamental decisions under the act and required approval of both the federal and provincial governments which has been granted. OVERVIEW The terms and conditions of the eight new exploration licences to be issued in the Laurentian Sub-basin generally contain the same terms and conditions that one would expect to find in any licence in the Newfoundland and Labrador Offshore Area. As these are negotiated licences, the interest owners negotiated the following unique terms and conditions to be incorporated into the licences. A. ConocoPhillips/Murphy - 7 Licences (ELs 1081-1087) (a) Block Size Traditionally, parcels offered in a competitive bid process are a maximum parcel size of 800 sections (eight grid blocks). The resulting licences are between 800 and 900 sections and comprise a total area of approximately 2.25 million hectares. (b) Licence Term The Accord Acts provide that the maximum licence term can be no longer than nine years. If the federal permits had remained in effect, they could have extended over a 12-year maximum term. The following is a synopsis of the unique terms and conditions contained in these licences:
(c) Related Lands The permit conversion process and negotiated agreement are governed by section 130 of the federal Accord Act and 126(3) of the provincial version. Subsection 130(3) affords the board the ability to direct issue from Crown reserve lands if a reasonable case is put forward by a permit holder for such inclusion in the new licences. The related lands are located within the southern portion of EL 1081 and consist of approximately 48,000 hectares or 14% of EL 1081. In consideration for these related lands, the permit holders have agreed to relinquish 467,010 hectares, i.e., the northern parts. (d) Effective Date The board in the normal course issues exploration licences on January 15, 2004. The effective date for these licences will be July 1, 2004. (e) International Agreements These converted licences extend to the boundary with the French Corridor. As a result, these licences will include a term relating to compliance with any international boundary agreement and will put the interest owner on notice that the board and the interest owner must adhere to such an agreement. (f) EL 1087 As noted in the Strategic Environmental Assessment (SEA) for the Laurentian Sub-basin, a munitions dumpsite has been identified on the eastern boundary of this licence. To give effect to the recommendations in the SEA, an additional term for this licence provides the board with the ability to add conditions or restrictions at the time of issuance of any authorization for activity within this licence B. Imperial Licence - EL 1088 (a) Block Size As with a traditional licence, EL 1088 is comprised of less than 800 sections. It has total acreage of 194,800 hectares over 520 sections. (b) Licence Term The term for EL 1088 is divided into two periods consistent with the traditional licences as identified in Call for Bids NF03-1. Each period will have the following unique parameters: Period II (four years)
(c) Related Lands The permit conversion process and negotiated agreement are governed by section 130 of the federal Accord Act and 126(3) of the provincial version. Subsection 130(3) affords the board the ability to direct issue from Crown reserve lands if a reasonable case is put forward by a permit holder for such inclusion in the new licenses. The related lands are located within the southern portion of EL 1088 and consist of approximately 40,989 hectares or 21% of EL 1088. In consideration for these related lands, the permit holder has agreed to relinquish 36,920 hectares. (d) Effective Date The board in the normal course issues exploration licenses on January 15, 2004. This licence will be issued upon approval by the government and the execution of the negotiated agreement. (e) International Agreements This licence extends westward to the boundary of the French Corridor. As a result, this licence will include a term relating to compliance with any international boundary agreement and will put the interest owner on notice that the board and the interest owner must adhere to such an agreement. 2004 05 04 1:00 p.m. |
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