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Third Session, Thirty-Eighth Legislature

This version is based on the printed bill that was distributed in the Legislature after First Reading.   It is not the official version.   If accuracy is critical, you can obtain a copy of the printed bill from Statutory Publications.

Bill 21

THE OIL AND GAS AMENDMENT AND OIL AND GAS PRODUCTION TAX AMENDMENT ACT


Explanatory Note

(Assented to                                         )

HER MAJESTY, by and with the advice and consent of the Legislative Assembly of Manitoba, enacts as follows:

PART 1

THE OIL AND GAS ACT

C.C.S.M. c. O34 amended

1           The Oil and Gas Act is amended by this Part.

2           Subsection 1(1) is amended

(a) by repealing the definition "board";

(b) by replacing the definition "disposition" with the following:

"disposition" means a lease, an exploration reservation or a disposition issued by the minister under clause 35(d), respecting Crown oil and gas rights; (« titre d'aliénation »)

(c) by adding the following definitions:

"inquiry panel" means an inquiry panel appointed by the minister under subsection 24(1); (« comité d'enquête »)

"special exploration permit" means a permit issued under subsection 66(2); (« permis de prospection spécial »)

(d) by replacing the definition "oil and gas facility" with the following:

"oil and gas facility" means a battery, flow line, pipeline, drilling or service rig, vehicle, gas plant or other installation or equipment that is used to handle, treat, process, convey or store oil, gas, helium or water, but does not include equipment used in connection with the underground storage of hydrocarbons; (« installation gazière et pétrolière »)

(e) in the definition "operator",

(i) by replacing clause (b) with the following:

(b) with respect to a spacing unit or unit tract, a person who has the right to carry on operations in the spacing unit or unit tract,

(ii) by replacing clause (f) with the following:

(f) a person designated by the minister as an operator of a well, oil and gas facility, spacing unit or unit area for the purpose of this Act;

(f) by replacing the definition "pipeline" with the following:

"pipeline" means a pipe or system of pipes that is designed or used to convey oil and gas, refined petroleum products or other fluids produced by, or in association with, an oil and gas facility, and includes

(a) a pipeline located wholly within the province,

(b) the part of an interprovincial pipeline that is located in the province and that the National Energy Board, established under the National Energy Board Act (Canada), has delegated authority to the government to regulate, and

(c) all real and personal property used for the purpose of, or in connection with or incidental to, the operation of a pipeline, including tanks, surface reservoirs, pumps, racks and storage, loading and other terminal facilities,

but does not include a flow line, transmission line, distribution system or refining, manufacturing or marketing pipeline situated wholly within the property of an industrial plant; (« pipeline »)

(g) in the definition "spacing unit", by adding "drilling for or" after "purpose of".

3           Section 5 is replaced with the following:

General authority of the minister

5           The minister may inquire into a matter relating to the objects and purposes of this Act and may make any orders authorized under this Act that are necessary to carry out its objects and purposes.

4           Section 8 is replaced with the following:

Minister may refer matter

8(1)        The minister may, before making a decision on a matter arising under this Act, refer the matter — including an application under subsection (3) — to an inquiry panel.

Minister may direct that hearing be held

8(2)        The minister may direct that the inquiry panel hold a hearing into the matter in accordance with Part 3.

Application to resolve matter

8(3)        A person may apply to the minister to resolve a matter arising under this Act, including a matter arising from an order or decision of the minister, the director or an inspector.

Content of application

8(4)        An application under subsection (3) must include

(a) a statement of the matter to be resolved, including a description of the remedy, relief or decision sought;

(b) a statement of the facts material to the matter to be resolved;

(c) the address for service for each party to the application;

(d) any other information required by the minister; and

(e) any prescribed application fee.

5           Subsection 14(1) is replaced with the following:

Duties of registrar

14(1)       The registrar shall

(a) register the following documents:

(i) dispositions, transfers of dispositions and orders cancelling dispositions,

(ii) instruments,

(iii) salt water disposal agreements,

(iv) any order of the minister or director made under this Act,

(v) unit agreements; and

(b) maintain the following:

(i) records of Crown oil and gas rights under Part 4,

(ii) any document submitted to the registrar in respect of an inquiry under Part 3,

(iii) the proceedings of a hearing under section 26 including documents, exhibits and reports.

6           Subsection 15(2) is amended by striking out "the board" and substituting "an inquiry panel".

7(1)         Subsection 19(1) is replaced with the following:

Definition

19(1)       In this section and in clause 217(1)(g) (regulations), "direct monetary interest" means an interest in

(a) a disposition;

(b) oil and gas rights in the province including a working interest ownership; or

(c) a company supplying goods and services to an operator in the province;

by which a person derives or could derive a monetary benefit.

7(2)        Subsection 19(2) is amended

(a) in clause (a),

(i) by striking out "or of proclamation of this Act, whichever last occurs", and

(ii) in the English version, by striking out "pecuniary" wherever it occurs and substituting "monetary"; and

(b) in clause (b) of the English version, by striking out "pecuniary" and substituting "monetary".

8           Subsection 22(1) of the English version is amended by striking out "pecuniary" wherever it occurs and substituting "monetary".

9           Part 3 is replaced with the following:

PART 3

INQUIRY PANELS

Appointment of inquiry panel

24(1)       The minister may appoint one or more persons as an inquiry panel to inquire into a matter under section 5.  The appointment must be in writing.

Remuneration and reimbursement

24(2)       A person appointed under subsection (1), except a government employee, is entitled to be paid remuneration in the amount the minister determines, and to be reimbursed for reasonable expenses incurred in performing his or her duties on the inquiry panel.

Rules of procedure

24(3)       The minister may establish rules of procedure for the inquiry panel.

Person with interest

24(4)       If a person appointed to an inquiry panel determines that he or she has an interest in the matter referred to the panel, he or she must advise the minister and the minister must revoke the appointment and may appoint another person.

Assistance for the panel

24(5)       The minister may provide the inquiry panel with any administrative, professional, technical or other assistance that the minister considers necessary.

Expert advice

24(6)       An inquiry panel may engage an expert at any time and may authorize the expert to conduct any inspection that the inquiry panel considers advisable.

Expert has powers of inspector

24(7)       When conducting an inspection, an expert may exercise the powers of an inspector.

Inspection in accordance with directions

24(8)       An expert must conduct an inspection in accordance with any directions given by the panel.

Hearing

25(1)       When the minister directs that a hearing be held into a matter, the inquiry panel must hold a hearing in accordance with this Part.

Date of hearing

25(2)       A hearing must begin within 60 days after the date on which the matter is referred to the inquiry panel.

Notice of hearing

25(3)       At least 14 days before the date of the hearing, the inquiry panel must serve a notice of hearing in accordance with the regulations, stating the date, time and place of the hearing and identifying the subject matter in general terms.

Powers under The Manitoba Evidence Act

26(1)       The inquiry panel has all the powers of a commissioner under Part V of The Manitoba Evidence Act when conducting a hearing under this Part.

Right to appear

26(2)       The parties to the matter may appear at a hearing and make representations to the inquiry panel.

Adjournments

26(3)       The inquiry panel may adjourn the hearing from time to time.

Evidence

26(4)       Evidence at a hearing must be presented orally unless

(a) a person is unable to attend the hearing for a reason acceptable to the inquiry panel; and

(b) the inquiry panel agrees to receive the person's evidence by statutory declaration.

Recording of evidence

26(5)       The oral evidence given at a hearing must be given on oath and must be recorded.

Hearing in absence of party

26(6)       Upon proof that the notice of hearing was served on a party who is not present at the start of the hearing, the inquiry panel may

(a) proceed with the hearing in the absence of the party; and

(b) act or report on the matter being heard in the same way as if the party were in attendance.

Submission of report

27(1)       An inquiry panel must submit a written report of its findings and recommendations to the minister,

(a) if a hearing is held, within 30 days after completion of the hearing; or

(b) if a hearing is not held, within 60 days after the matter is referred under subsection 8(1).

Recommendation as to costs

27(2)       In a report made under subsection (1), the inquiry panel may recommend to the minister an award of costs to be paid by a party in favour of another party in respect of the inquiry.

Record of inquiry

28          When the minister has determined a matter under section 29, the inquiry panel must file with the registrar a record of the matter including

(a) a copy of the document making the referral;

(b) if a hearing has been held, a copy of any evidence recorded at the hearing;

(c) a copy or photograph of any exhibit or document provided to the inquiry panel;

(d) a copy of any expert's written report provided to the inquiry panel; and

(e) a copy of a report submitted under subsection 27(1).

Minister's powers

29          Within 30 days after receiving a report under subsection 27(1), the minister may

(a) refer the matter back to the inquiry panel for reconsideration or rehearing, in whole or in part, in accordance with the his or her directions; or

(b) by order, determine the matter as he or she considers fair and just;

and may order a party to the matter to pay the costs of another party in an amount the minister may specify.

Decision filed with registrar

30(1)       The minister must file an order made under section 29 and the reasons for the order, with the registrar.

Registrar to serve copies of order

30(2)       The registrar must serve a copy of an order, including the reasons for the order, on the parties to the matter.  If the order relates to a matter about which a hearing was held under this Part, the registrar must also serve a copy of the order and reasons on each person who was given notice under subsection 25(3) and participated in the hearing, and to any person who the panel allowed to intervene at the hearing.

Minister's order as to costs filed in Q.B.

30(3)       An order for costs made by the minister under section 29 may be filed in the Court of Queen's Bench.  Once filed it may be enforced in the same manner as a judgment of the court.

Appeal to Queen's Bench

31(1)       An order made by the minister under section 29 may be appealed to the Court of Queen's Bench only on a question of law or jurisdiction.  The appeal must be filed within 30 days after receiving a copy of the order.

Judge may stay enforcement

31(2)       A judge of the Court of Queen's Bench may stay proceedings on, or enforcement of, an order that is appealed under subsection (1) until the appeal is determined.

Minister may extend or abridge time

32          The minister may extend or abridge a time within which an action must be taken under this Part except the time for filing an appeal.

10          Subsection 33(1) is amended by repealing the definition "productive" and substituting the following:

"productive" means, in respect of a spacing unit or quarter section that is the subject of the renewal of a lease under subsection 52(3), or a formation that is the subject of an election under clause 58(2)(b), that it

(a) produced oil and gas,

(b) was part of a unit tract that had oil and gas production allocated to it,

(c) had oil and gas production allocated to it under the regulations, or

(d) contained a well designated capable of gas production,

during the year before the date on which the lease can be renewed or the election made; (« productif »)

11          Section 36 is replaced with the following:

Refusal to issue disposition

36          Without restricting the discretion of the minister under section 35, the minister may refuse to issue a disposition to a person who owes a debt to the Crown under this Act or The Oil and Gas Production Tax Act.

12          Section 38 is replaced with the following:

Form and execution of disposition

38          A disposition, except a disposition issued under clause 35(d), must be in the prescribed form and executed in accordance with the regulations.

13          Subsection 43(1) is replaced with the following:

Effective date of exploration reservation

43(1)       The effective date of an exploration reservation is the date on which the offer to purchase the exploration reservation is accepted.

14          The following is added after section 52:

Application to designate well capable of gas production

52.1(1)     The holder of a lease may apply to the director to have a well within the lease area designated as capable of gas production for the purpose of

(a) renewing the lease under subsection 52(3) at the end of the initial term; or

(b) making an election under clause 58(2)(b).

The application must be made in accordance with the regulations.

Director may designate well capable of gas production

52.1(2)     The director may designate a well as capable of gas production if he or she is satisfied that the well has the potential to produce gas but is not producing due to technical or economic considerations, market conditions or lack of facilities.

Term of designation

52.1(3)     Unless extended under subsection (5), the designation of a well is valid only during the initial term and the first renewal term of the lease.

Designation rescinded

52.1(4)     Despite subsection (3), if the director determines that circumstances warrant the production of gas from a well designated capable of gas production, the director must give notice to the holder of the lease that the designation is rescinded as of the end of the term of the lease.

Minister may extend designation

52.1(5)     Despite subsection (3), if a designation has not been rescinded under subsection (4), the holder of the lease may, in accordance with the regulations, apply to the minister to extend the designation of the well as capable of gas production beyond the first renewal term of the lease. The minister may, by order, approve the extension, subject to any terms and conditions that the minister considers necessary and advisable.

15          Clause 62(b) is amended by adding "or failure to submit a report under this Act" after "through a false statement".

16          The following is added after section 63:

Cancellation or transfer on seizure

63.1        After making an order under subsection 182(1) authorizing the director to seize a well, the minister may

(a) cancel any disposition relating to the lands on which the well to be seized is located without notice to the holder; or

(b) transfer the disposition to another holder, in accordance with the regulations.

17          Sections 66 and 67 are replaced with the following:

Disposal of Crown rights in unsurveyed areas

66(1)       The minister may, in accordance with the regulations, dispose of Crown oil and gas rights situated in unsurveyed parts of the province.

Disposal of Crown rights by special exploration permit

66(2)       The minister may, in accordance with the regulations, dispose of Crown oil and gas rights by issuing a special exploration permit.  The minister may make the permit subject to any terms and conditions that he or she considers necessary and advisable.

Disposition of helium and oil shale rights

67          The minister may by agreement authorize exploration or drilling for, or production of, helium or oil shale in an area where the Crown holds the rights to helium or oil shale.  The authorization may be subject to any terms and conditions that the minister considers appropriate.

18          Section 68 is replaced with the following:

Holder may transfer disposition

68          The holder of a disposition may transfer all or an undivided part of its interest in the disposition and must notify the registrar of any transfer, in accordance with the regulations.

19          The following is added after section 70:

Registration of name change or corporate amalgamation

70.1        A holder of a disposition that changes its name or, if it is a corporation, amalgamates with another corporation, must apply to the registrar in accordance with the regulations to register the name change or corporate amalgamation.

20          Part 6 is repealed.

21          The following is added after subsection 91(3):

Production proceeds held in trust

91(3.1)     A licensee who has produced oil and gas from a spacing unit for testing purposes under subsection (3) must hold in trust the proceeds of any sale of the oil and gas relating to the oil and gas rights that the licensee does not hold.

22          The following is added after section 91:

Application where misrepresentation

91.1(1)     A person who alleges that oil and gas rights were acquired as a result of a misrepresentation may apply to the minister under subsection 8(3) to resolve the matter.

Minister may declare agreement invalid

91.1(2)     If the minister determines that oil and gas rights were acquired as a result of a misrepresentation, he or she may declare the agreement under which those oil and gas rights were acquired to be invalid for the purpose of this Act.

23          Sections 92 and 93 are replaced with the following:

Well licence void if licensee without rights

92(1)       A well licence is void

(a) if the director determines that

(i) the licensee did not have the rights required under section 91 at the time the well licence was issued, or

(ii) the licensee lost those rights after the well licence was issued; or

(b) the minister declares the agreement under which those rights were acquired to be invalid under subsection 91.1(2).

Continuing obligation of licensee

92(2)       If a well licence is void under subsection (1), the licensee must abandon the well and rehabilitate the well site in accordance with this Act.

Director must not issue well licence

93(1)       If the director is of the opinion that drilling a well on the site proposed in a licence application may have a significant adverse impact on the environment, he or she must not issue the licence unless the requirements of this section are met.

Applicant to submit environmental plan

93(2)       The applicant proposing to drill a well on the site must submit to the director a plan to protect the environment and to mitigate the adverse impact.

Director to consult on plan

93(3)       The director must review the plan and give a copy of it to a director appointed under The Environment Act for his or her review.

When director can issue licence

93(4)       When both directors are satisfied that the applicant's plan, if followed, will adequately address the potential adverse impact on the environment, the director may issue the well licence under subsection 90(2), subject to compliance with the plan and any other terms and conditions that the director considers necessary or advisable.

24(1)       Subsection 100(2) is replaced with the following:

Transfer by director

100(2)      Subject to subsection (3), the director may transfer a well licence from the licensee to the person who holds both the surface rights for the site of the well and the oil and gas rights in the spacing unit where the well is located, if

(a) the well has been seized under section 182;

(b) the director is unable to locate the licensee; or

(c) the director is satisfied that the licensee is a corporation that is dissolved.

Transfer subject to fee and performance security

100(2.1)    The person to whom the well licence is to be transferred must pay the fee and provide any performance security prescribed in the regulations before the director transfers the licence.

24(2)       Subsection 100(3) is amended

(a) in the section heading, by striking out "Registrar" and substituting "Director"; and

(b) in the subsection, by striking out "the registrar" and substituting "the director".

25          Subsection 105(3) is replaced with the following:

Order where gas or water reduces oil recovery

105(3)      If, in the minister's opinion, a well is producing gas or water in an amount that is reducing or likely to reduce the amount of oil that could otherwise be recovered from the pool in which the well is completed, the minister may by order establish for the well a maximum production rate that he or she believes will not result in such a reduction.

26          Section 107 is repealed.

27          Section 109 is replaced with the following:

Disposal in accordance with permit or order

109(1)      A licensee must dispose of any salt water produced from a well by reinjecting the salt water into an underground formation in accordance with the regulations and

(a) a salt water disposal permit issued under this section; or

(b) an order made under subsection 116(2).

Director may issue permit

109(2)      A licensee may apply to the director for a salt water disposal permit in accordance with the regulations.  The director may issue the permit subject to any terms and conditions that the director considers necessary or advisable.

Disposal of Crown oil and gas rights

109(3)      If the application is in respect of a well in a spacing unit containing Crown oil and gas rights, before the director issues a permit under subsection (2), the licensee must

(a) enter into an agreement with the minister, in the prescribed form, authorizing the use of Crown oil and gas rights for salt water disposal; and

(b) if the Crown oil and gas rights are not the subject of a disposition under this Act, pay the fee and rent prescribed in the regulations.

28          Section 111 is replaced with the following:

No construction or operation of battery without permit

111(1)      No person shall begin construction of or operate a battery without a battery operating permit.

Application for battery operating permit

111(2)      A person may apply to the director for a battery operating permit in accordance with the regulations.

Notice of application

111(3)      Upon receiving an application under subsection (2), the director must give public notice of the application in accordance with the regulations.

Powers of director on application

111(4)      The director may issue a battery operating permit only after considering any representations and recommendations received as a result of giving public notice of the application.  The permit must be issued in accordance with the regulations and may be subject to any terms and conditions that the director considers necessary or advisable.

Single well battery exempt

111(5)      A single well producing directly to a tank or tanks on the wellsite is exempt from the provisions of this section.

Inspector to approve modification to battery

111(6)      The holder of a battery operating permit must not make a modification to the battery without the approval of an inspector. The application for approval must be made in accordance with the regulations.

29          Section 112 is repealed.

30          Section 114 is replaced with the following:

Operator to limit discharge of pollutants

114(1)      The operator of a well or oil and gas facility must

(a) operate it in accordance with the regulations; and

(b) make every reasonable effort to operate it with the least possible discharge of pollutants as defined in The Environment Act.

Director's power re pollutants

114(2)      The director may require the operator of a well or oil and gas facility that is discharging pollutants to take any steps the director considers necessary or advisable to stop or reduce the discharge of pollutants, if the director believes that the discharge of pollutants

(a) is hazardous to public health;

(b) is having or might have a significant adverse effect on the environment; or

(c) contravenes the regulations.

31          Section 117 is amended by renumbering it as subsection 117(1) and adding the following as subsection 117(2):

Minister may order enhanced recovery

117(2)      If, after considering the report of the operator under subsection (1), the minister is satisfied that enhanced recovery is necessary or advisable to prevent waste, the minister may, by order,

(a) require the operator to implement enhanced recovery in a pool or part of a pool; and

(b) suspend or restrict production from all or part of the pool until the operator implements enhanced recovery or takes other action to prevent waste that is satisfactory to the minister.

32          Section 118 is repealed.

33          Subsection 126(6) is replaced with the following:

Penalty to be prescribed

126(6)      A penalty under subsection (5) is payable by the working interest owner to the operator of the spacing unit in respect of the well.  The penalty must not exceed the prescribed amount.

34          Section 132 is amended

(a) by striking out "spacing unit" and substituting "unit track"; and

(b) by striking out "in accordance with the regulations".

35          Section 138 is amended by striking out "spacing unit" and substituting "unit tract"

(a) in clause (1)(c); and

(b) in subsection (4), in the section heading and in the subsection.

36          Subsection 149(2) is amended by adding "fee and" after "prescribed".

37(1)       Subsection 152(3) of the English version is amended by striking out "pipeline operating permit" and substituting "pipeline operating licence".

37(2)       Subsection 152(5) is replaced with the following:

Licensee to provide notice

152(5)      A licensee shall advise the director in writing before doing any of the following:

(a) transferring or selling all or part of a pipeline;

(b) suspending the operation of all or part of the pipeline, except in an emergency, for repairs or maintenance, or in the ordinary course of operating the pipeline;

(c) resuming operation of the pipeline after advising the director of a suspension;

(d) abandoning all or part of the pipeline.

38          Subsection 170(1) is replaced with the following:

Disposition of performance deposit refund

170(1)      If a performance deposit is refundable under this Part, the director must pay the amount of the performance deposit

(a) first, to satisfy any debt owing to the Crown under this Act by the holder of the licence or permit for which the performance deposit was required;

(b) second, in accordance with any court order against the holder of the licence or permit that is served on the minister or on the director; and

(c) third, to the person from whom it was received, unless that person provides other directions in writing.

39(1)       The following is added after subsection 172(3):

Interest on performance deposit

172(3.1)    Where the applicant for a licence or permit has provided a performance deposit under this Part in the form of cash, interest earned on the amount of the performance deposit shall be deposited into the Abandonment Fund Reserve Account.

Portion of royalty designated for the account

172(3.2)    The Lieutenant Governor in Council may, by order, designate the portion of the Crown royalty collected under this Act that must be deposited into the Abandonment Fund Reserve Account.  The portion designated must not exceed 3% of the royalty collected.

39(2)       Subsection 172(4) is replaced with the following:

Authority to pay

172(4)      The minister may authorize the director to do one or both of the following:

(a) enter into agreements on behalf of the government for the purpose of subsection 182(1)(seizure);

(b) make expenditures from the Abandonment Fund Reserve Account

(i) for the purpose of subsection 184(4) (cost of seizure);

(ii) to rehabilitate the site of a spill, or an abandoned well or oil and gas facility, and

(iii) to defray costs arising from any adverse impact on property or the environment that results from or that, in the opinion of the minister, might result from a well, oil and gas facility or geophysical operation.

40(1)       Subsection 182(1) is amended

(a) in the part before clause (a), by striking out "Where the operator of a well or oil and gas facility fails to comply with a shut down order," and substituting "If the operator of a well or oil and gas facility fails to comply with a shut down order under section 176 or an abandonment notice under section 123 within the time specified in the order or notice,";

(b) in clause (a) of the French version, by striking out "ou à l'arrêté";

(c) in clause (b), by adding "produce and" before "dispose"; and

(d) in clause (c), by striking out ", in accordance with the regulations".

40(2)       Subsection 182(3) is replaced with the following:

Payment of royalty

182(3)      Despite a subsisting agreement with respect to the oil and gas rights, the director's only obligation when disposing of oil and gas under clause (1)(b) is to pay a royalty to the royalty owner in accordance with the regulations.

41          Subsection 185(1) is replaced with the following:

Application for review of seizure order

185(1)      The operator of a well or oil and gas facility affected by a seizure order under section 182 may apply to the minister for a review of the order.  The operator must apply before the notice period set by the director under that section expires.

42          Subsection 187(1) is amended by striking out "within 30 days from the day the order is made" and substituting "within 15 days after being advised of the decision made by the minister under subsection 185(3)".

43          Section 191 is amended

(a) in the section heading, by striking out "Minister" and substituting "Director"; and

(b) in the section, by striking out "minister" wherever it occurs and substituting "director".

44(1)       Subsection 193(1) is amended by adding "under The Financial Administration Act" after "prescribed".

44(2)       Subsection 193(2) is amended

(a) by striking out "Where the minister" and substituting "When the director or registrar"; and

(b) by striking out "charge the minister" and substituting "charge, the director".

45(1)       Subsection 196(1) is amended

(a) in the English version, by striking out "and" in the section heading and substituting "or"; and

(b) in the French version, by striking out everything before "renseignements" and substituting "L'exploitant ou le titulaire d'une licence ou d'un permis délivré en vertu de la présente loi prend des échantillons, fait des tests, tient des dossiers et conserve des rapports, des plans, des cartes, des déclarations et d'autres".

45(2)       Subsection 196(2) is replaced with the following:

Operator or holder to provide data

196(2)      An operator or the holder of a licence or permit issued under this Act must provide the director with samples or data obtained by the operator or holder in respect of a well, pool or oil and gas facility in accordance with the regulations.

46(1)       Subsection 198(2) is replaced with the following:

Information with application

198(2)      Subject to subsection (2.1), information that is provided in support of an application under this Act is public information unless the director orders otherwise.

Agreements are confidential

198(2.1)    An agreement or lease submitted in support of an application under this Act is confidential.

46(2)       Subsection 198(3) is amended by striking out "subsection (1)" and substituting "subsections (1) and (2.1)".

47          Section 208 is replaced with the following:

Applicant to provide address for service

208         The following persons must provide the registrar with an address for service:

(a) a person who applies for a licence, permit or disposition, or for a transfer of any of them,

(b) when requested by the registrar, a person who holds a licence, permit or disposition under this Act.

A person who is not a resident of Manitoba must also provide the name and address of an agent who is a resident of Manitoba and who is willing to accept service on his or her behalf.

48          Section 211 is repealed.

49          The following is added after subsection 214(8):

Money to be paid into Consolidated Fund

214(9)      If title to, or interest in, oil and gas rights reverts to the Crown under subsection (8), the Minister of Finance shall pay any money held in trust under subsection (3) into the Consolidated Fund.

50          Section 216 is replaced with the following:

Protection from liability

216         No action or proceeding may be brought against the director, an officer or any other person acting under the authority of this Act or the regulations for anything done or not done, or for any neglect,

(a) in the performance or intended performance of a duty under this Act or the regulations; or

(b) in the exercise or intended exercise of a power under this Act or the regulations;

unless the person was acting in bad faith.

51          Subsection 217(1) is amended

(a) in the English version of clause (g), by striking out "direct pecuniary interests" and substituting "direct monetary interests";

(b) by repealing clause (m);

(c) in clause (n), by striking out "and exploration reservations" and substituting ", exploration reservations, and dispositions issued under clause 35(d)";

(d) by adding the following after clause (n):

(n.1) respecting the designation of wells as capable of gas production under section 52.1;

(e) in the English version of clause (o), by striking out "(northern Manitoba)";

(f) in clause (p), by striking out "relating to helium and oil shale under section 67"; and

(g) by adding the following after clause (uu):

(uu.1) respecting the transfer of a disposition under clause 63.1(b);

52          Section 223 is repealed.

53          Section 224 is replaced with the following:

Lapse of registration under Real Property Act and Registry Act

224(1)      An instrument that is registered under The Real Property Act or The Registry Act against oil and gas rights held by the Crown has no force or effect.

District registrar and assurance fund not liable

224(2)      Neither the district registrar appointed under The Real Property Act or the assurance fund established under that Act is liable to pay compensation to any person for any loss caused by the operation or the effect of subsection (1).

Transitional re salt water disposal permits

54(1)       A licensee who, on the day before section 27 of this Act comes into force, holds a salt water disposal permit in respect of a well in a spacing unit containing Crown oil and gas rights, must comply with subsection (2).

54(2)       Within six months after section 27 comes into force, the licensee must

(a) enter into an agreement with the minister, in the prescribed form, authorizing the use of Crown oil and gas rights for salt water disposal; and

(b) if the Crown oil and gas rights are not the subject of a disposition under this Act, pay the fee and rent prescribed in the regulations.

PART 2

THE OIL AND GAS PRODUCTION TAX ACT

C.C.S.M. c. O37 amended

55          The Oil and Gas Production Tax Act is amended by this Part.

56(1)       Subsection 1(1) is amended

(a) by replacing the definitions "operator", "taxpayer" and "working interest" with the following:

"operator" means

(a) with respect to a spacing unit, a person who has the right to carry on operations in the spacing unit, and

(b) with respect to a unit tract, the unit operator appointed under the unit agreement or unit order; (« exploitant »)

"taxpayer" means a person who pays tax under this Act; (« contribuable »)

"working interest" means an interest in a spacing unit or unit tract or in any oil or gas produced, and includes the share of a royalty owner in any proceeds from the sale of the oil or gas. (« intérêt économique direct »)

(b) by adding the following definition:

"produced" means

(a) produced from a well,

(b) allocated to a unit tract under a unit order or a unit agreement, or

(c) allocated to a spacing unit under the regulations; (« extrait »)

(c) by repealing the definition "special operator".

56(2)       Subsection 1(2) is replaced with the following:

Application of definitions in Oil and Gas Act

1(2)        In this Act, each of the following terms has the meaning given to it in subsection 1(1) of The Oil and Gas Act: "Crown", "director", "gas", "oil", "person", "registrar", "royalty owner", "spacing unit", "unit agreement", "unit operator", "unit order", "unit tract", "well".

57          The following is added after section 1:

Application of section 144 of Oil and Gas Act

1.1         Section 144 of The Oil and Gas Act (allocated production deemed from unit tract) applies to this Act.

58          The centred heading "LIABILITY FOR TAX" is added before section 2.

59          Subsection 2(2) is amended by striking out everything after "oil or gas produced".

60          Section 3 is replaced with the following:

Holder of working interest liable for tax

3           A person who holds a working interest in a spacing unit or unit tract is liable for the proportion of the tax payable on any oil or gas produced that his or her interest is of all the working interests in the spacing unit or unit tract and the liability continues until the person pays that tax to the Crown, or it is paid by the operator under section 4.

61          Section 4 is replaced with the following:

PAYMENT OF TAX

Operator paying tax for holder of working interest

4(1)        The operator of a spacing unit or unit tract in respect of which a holder of a working interest is liable to pay tax

(a) may pay the tax to the Crown on the holder's behalf; and

(b) upon receipt of a notice under subsection 8(2), must pay the tax, and any penalty imposed on the holder under that subsection, to the Crown on the holder's behalf.

Indemnity

4(2)        An operator who pays an amount under subsection (1) is entitled to be indemnified by the holder and to set that amount off against any amount owing by the operator to the holder.

62          Section 5 is repealed.

63          Section 7 is replaced with the following:

RECORDS AND INFORMATION

Taxpayer to keep records

7(1)        A taxpayer must maintain records and books in respect of the payment of tax, in accordance with accounting principles that are generally accepted in the petroleum industry.

How long records must be kept

7(2)        The taxpayer must retain the records and books for not less than four years after the end of the year to which the information contained in them relates. But if the director considers it is necessary for the administration of this Act, he or she may, by order served on the taxpayer, require the taxpayer to retain the records for a longer period of time specified in the order.

64          Subsection 8(2) is replaced with the following:

Penalty for failure to file return or pay tax

8(2)        If an operator or the holder of a working interest fails to file a return or pay any tax by the date it is due, the director, after giving at least 10 days' notice to the operator and the holder of the working interest, may impose a penalty of not more than $50. for each day during which the failure continues.

65          Section 9 is replaced with the following:

Director may require information

9(1)        The director may serve notice on a taxpayer requiring the taxpayer to provide information, including a record or other document in the possession or control of the taxpayer, and the taxpayer must provide the information to the director within the time period specified in the notice.

Penalty for failure to provide information

9(2)        A taxpayer who fails to comply with a notice under subsection (1) is liable to a penalty imposed by the director of not more than $50. for each day during which the failure continues.

66(1)       Subsection 10(1) is amended

(a) in the part before clause (a), by striking out "an operator or special operator" wherever it occurs and substituting "a taxpayer"; and

(b) in clause (a), by striking out "the operator or special operator" and substituting "the taxpayer".

66(2)       Subsection 10(2) is amended by striking out "An operator or special operator that" and substituting "A taxpayer who".

67          Section 11 is amended by striking out "subsection 198(1)" and substituting "section 198".

68          The centred heading "ADMINISTRATION AND ENFORCEMENT" is added before section 12.

69(1)       Subsection 13(1) is replaced with the following:

Director may serve notice of non-compliance

13(1)       If the director has reasonable grounds to believe that an operator or the holder of a working interest is not in compliance with this Act or the regulations in respect of a spacing unit or unit tract, the director may serve notice of the non-compliance on the operator and each holder of a working interest in the spacing unit or unit tract and may in the notice require that the non-compliance be remedied within a period of time specified in the notice.

69(2)        Subsection 13(2) is amended by striking out "182 to 185" and substituting "182 to 187".

70          Section 14 is replaced with the following:

Director may recalculate tax

14(1)       The director may recalculate a tax and any interest payable in respect of the tax if, in his or her opinion, the tax is incorrect because of an error

(a) in calculation or in applying this Act; or

(b) in any information required under this Act for determining the tax;

and the Crown is entitled to tax in the amount calculated by the director.

Appeal to minister

14(2)       A taxpayer may appeal either or both of the following to the minister within 30 days after payment is made:

(a) the amount of the tax recalculated under subsection (1);

(b) the imposition and amount of the penalty under subsection 8(2) or 9(2).

Minister may refer matter

14(3)       Before deciding an appeal under subsection (2), the minister may refer the matter to an inquiry panel under subsection 8(1) of The Oil and Gas Act.

71          The following is added after section 14:

Appeal to Queen's Bench

14.1        A decision of the minister under this Act may be appealed to the Court of Queen's Bench on a question of law or jurisdiction.

72          The centred heading "OFFENCES AND PENALTIES" is added before section 15.

73          The centred heading "GENERAL PROVISIONS" is added before section 17.

74          The following is added after section 17:

Address for service

17.1(1)     A taxpayer who is not required to do so under section 208 of The Oil and Gas Act must provide the registrar with an address for service.  A taxpayer who is not a resident of Manitoba must also provide the name and address of an agent who is a resident of Manitoba and who will accept service on his or her behalf.

Change in address for service

17.1(2)     The taxpayer must advise the registrar of any change to the address for service or to the name or address of the agent.

75          Clause 19(1)(c) is repealed.

76          Section 20 is repealed.

PART 3

COMING INTO FORCE

Coming into force

77          This Act comes into force on a day to be fixed by proclamation.

Explanatory Note

This Bill contains amendments to two Acts that govern the oil and gas industry in Manitoba.

The key amendments to The Oil and Gas Act include the following:

  • The Oil and Gas Conservation Board is replaced with an inquiry panel that will consider matters referred to it by the minister.
  • The requirement that all oil and gas leases be negotiated by a registered lease agent is repealed.  People wishing to acquire oil and gas rights will be able to negotiate an agreement directly or engage someone else to do so.
  • New mechanisms are introduced to encourage development of oil and gas resources owned by the government, where development under a lease might not be commercially viable.
  • The provisions of the Act are strengthened to minimize the environmental impact of oil and gas exploration and production.

The key amendments to The Oil and Gas Production Tax Act include the following:

  • The operator of an oil and gas facility is relieved of the obligation to pay tax on the oil and gas produced on behalf of the owner of the oil and gas rights, unless the owner does not pay the tax by the due date.  In that case, the operator must pay the tax but may recover the money from the owner.
  • The power to designate a "special operator", which has never been used, is repealed.
  • Additional amendments are made because of the amendments made to The Oil and Gas Act in Part 1 of the Bill.