ERCBGovernment of Alberta

Oil Sands Tenure Agreement Authorization

Oil Sands Lease Agreement Based on the Oil Sands Tenure Regulation Alberta Energy (the department) issues an oil sands lease agreement to the highest bidder to drill for, win, work, recover and remove oil sands for a 15 year term. Upon expiry, the lessee may continue the oil sands lease if they meet the minimum level of evaluation required for each section within the lease.
Oil Sands Permit Agreement Based on the Oil Sands Tenure Regulation the department issues an oil sands permit agreement to the highest bidder to drill for, win, work, recover and remove oil sands for a 5 year term. Upon expiry, the lessee may apply for a lease selection if they meet the minimum level of evaluation required for each section. .
Agency Responsible Alberta Energy
Purpose of Authorization
  • Authorizes disposition oil sands leases and permits, which grant the right to drill for and recover the oil sands.
  • The intent is orderly development of the province’s oil sands, essential to the viability of the non-renewable resource industries and the provincial economy.
Hyperlinks:
Description of Authorization Process High-level Overview of Authorization Process:
  • Sales of oil sands rights are initiated by posting requests submitted by industry.
  • The department posts available rights in a public offering notice eight weeks in advance of the sale and then issues an agreement (lease or permit) to the highest bidder of each parcel.
  • If there is activity (i.e., drill, recover, or remove authorized substances), industry can apply for continuation or lease selection. If rejected the lands are returned to the land bank.
  • At expiry, if no application is processed or if no application was received and there was no action on the land, the department cancels the agreement. The rights are returned to the land bank and the cycle starts again.
  • Leases and permits have similar obligations with 2 exceptions:
    1. Leases have a 15 year term; Permits however, are considered exploratory and have a 5 year term.
    2. Historical activities may be considered for evaluation of leases; though, only activities within the 5 year term are considered for evaluation of permits.
  • Leases and permits must attain the minimum level of evaluation at expiry in order to be granted continuation or lease selection.
Application Process / Authorization Requirements Details:
  • Refer to specific information on Alberta Energy's website under:
Hyperlinks:
  • Click here to access forms page. Documentation includes: Electronic Transfer System (ETS) Set Up/Change Form, Direct Purchase information, Electronic Funds Transfer (EFT) Authorization Forms, and Tenure Administration forms.  
Oil Sands Sales:
As the result of exploration and development, industry submits requests to the department for parcels of land to be included in the public offering process. Public offerings (or sales) of oil sands rights are held every two weeks. After each sale, Crown oil sands rights are issued in the form of permits or leases to the highest bidder on each parcel. If very specific requirements are met, clients may also apply for a direct purchase, also known as a private sale, of oil sands rights.

When industry reviews posted lands, an addendum may be used to identify surface access restrictions on Crown land. The addenda are: no surface access; restricted surface access or no restrictions. Industry can decide whether they want to bid on the parcel based on the restriction, or adjust their bid accordingly. Surface access restrictions reflect broad government policy/planning level decisions, no on-the-ground operational conditions. Based on the nature of the access restrictions, industry can decide whether they want to bid on the parcel, or adjust their bid value accordingly.

Restrictions are only listed for Crown owned surface.

Oil Sands Leases and Permits:

There are two types of agreements for oil sands:
  1. Leases
  2. Permits
Oil Sands Lease:

Based on the Oil Sands Tenure Regulation, the department issues an oil sands agreement to the highest bidder to drill for, recover and remove oil sands within the location of the agreement. Upon expiry, the lessee may apply for continuation of all or part of the lease subject to the minimum level of evaluation (MLE) attained.
  • Continued leases have an indefinite term.
  • If the lease is producing at the minimum requirements then continuation with a producing status is granted.
  • If continuation with a non producing status is granted, the lease is subject to escalating rent.
Oil Sands Permit:
  • Based on the Oil Sands Tenure Regulation, the department issues an oil sands permit to the highest bidder to drill for, recover and remove oil sands for a term of five years. Upon expiry, the lessee may apply for lease selection on all or part of the oil sands permit.
  • If the lease selection is granted, then one or more 15 year term oil sands lease(s) are issued. 
Linkages to other processes Not Applicable
Triggers
  • Desire to acquire Crown mineral rights to explore and develop.
  • Industry submits posting requests because they may have geological information..
Stakeholder Engagement
  • Public engagement occurs through other processes (e.g., SRD, ERCB)
  • Stakeholder engagement applies to surface activities relating to development of oil sands. Because of the nature of the public offering process, the developer or lessee is not known until the agreement is issued
Contact Information Contacts are specific to the business area.
Oil Sands Tenure Contact

Figure: Life Cycle of Oil Sands Rights
Life Cycle of Oil Sands Rights

Alberta Energy publishes an Information Letter. These Information Letters can be found here

 

The Posting Cycle
The posting cycle for public offering normally takes 17 weeks.

Figure: The Tenure Sale Process

The Tenure Sale Process