Indian Oil and Gas Canada (IOGC) Annual Report 2018-2019
Press Release
Message from the CEO
To our First Nations’ clients and industry stakeholders
In addition to Indian Oil and Gas Canada’s (IOGC) ongoing day-to-day operations, the Modern Act, Regulations and Systems (MARS) project was a key activity and organizational priority in Fiscal Year 2018-2019 (FY2018-19). The MARS project is comprised of three inter-related sub-projects with the following milestones targeted for completion during this reporting period:
- Completing the gazetting and approvals processes for the Phase I or “Core” regulations, then bringing both the Indian Oil and Gas Act, 2009 (IOGA, 2009) and the Phase I regulations into force, and finally implementing and administering both the IOGA, 2009 and the Phase I regulations beginning on the day both become law;
- Continuing the Resource Information Management System 2 (RIMS2) systems development project, having secured both project and expenditure approvals in May 2016; and,
- Continuing the development of the Phase II regulations in consultation with First Nations, industry, and provinces.
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 2009 Act and its new regulations. The first milestone enabling the MARS project was achieved once amendments to the Indian Oil and Gas Act received Royal Assent in May 2009. This resulted in a new Indian Oil and Gas Act, 2009 that will eventually replace the existing Indian Oil and Gas Act, 1974. Yet the 2009 Act could not be brought into force until new regulations, enabled under that statute, had been completed so as to provide a complete framework for regulating oil and gas activity on First Nations lands.
A Joint Technical Committee (JTC) – comprised of First Nation oil and gas technicians, Government of Canada officials from IOGC, Crown-Indigenous Relations and Northern Affairs Canada, and Justice Canada – worked on both the Indian Oil and Gas Act, 2009 and have since focused on the development of its supporting regulations. The Indian Resource Council (IRC) – an Indigenous organization that advocates on behalf of some 189 member First Nations with oil and gas, or the potential for such resources – provides oversight and direction for First Nation participants of the JTC. The IRC and JTC assists IOGC by facilitating First Nations’ awareness of the changes and the impacts to how future oil and gas operations will be conducted on First Nations lands.
An agreement reached in 2014 between the department and oil and gas-producing First Nations established a phased, or staggered, approach for regulatory development. First, the 2009 Act plus a set of Phase I, or Core, regulations would become law. Next, regulations would continue to be developed and implemented until the existing Indian Oil and Gas Regulations, 1995 have been entirely replaced by new, modern regulations. IOGC’s new legislative and regulatory regime will be implemented by modernized business practices, supported by new or enhanced information systems.
During FY2018-2019, two significant milestones were reached on the MARS project. Firstly, official, or Blue-Stamped, Draft Phase I regulations were approved by Treasury Board and pre-published in the Canada Gazette, Part I, and simultaneously in the First Nations Gazette, on May 18, 2018 for a 90-day public review and comment period that ended August 17, 2018. Commitments made to oil and gas-producing First Nations, as well as public feedback, were considered and evaluated and included in the Final Phase I regulations, where appropriate. By the end of FY2018-2019, the official, or Blue-Stamped, Final Phase I regulations were almost completed by Justice Canada. It is projected that these Final Phase I regulations will undergo the required departmental approvals processes leading to their consideration by Treasury Board for publication in the Canada Gazette, Part II early in FY2019-2020. At the same time, and on a parallel course, an Order-in-Council will be prepared so as to bring into force the 2009 Act on the same day as the Final Phase I regulations.
A second significant milestone was achieved on the Royalty Management component of the RIMS2 Project when functionality for managing Gas Cost Allowance was deployed and implemented in February 2019. Gas Cost Allowance calculation is one important component of Royalty Management. The RIMS2 project is composed of three major components: 1) Petrinex data exchange with IOGC; 2) new Royalty Management functionality; and, 3) the introduction or piloting of Case Management at IOGC. Once fully implemented, the RIMS2 project will provide two important benefits:1) avoiding potential disagreements between First Nations and their industry partners, namely in volume measurement and pricing; and, 2) improving both the accuracy and timeliness of IOGC’s royalty assessment process.
On the operations side, world oil prices have steadied but persistent, weak natural gas prices (natural gas prices are stronger during colder months) in Canada have resulted in: 1) a movement away from the development of dry gas playsasterisk* to oil plays and liquids-rich gas plays; 2) fewer wells being drilled; and, 3) a reduction of the number of drilling rigs and service rigs operating in Western Canada. A significant number of rigs have been migrated to the United States where drilling, production, and infrastructure development have increased. In FY2018-2019, IOGC collected $55,045,200 on behalf of First Nations while a total of 33 new surface agreements and 3 subsurface agreements were issued. In addition, $61.9 million was invested by industry to drill and complete 26 wells on First Nations lands. Greater details on IOGC’s operational activities are contained within this report.
The project milestones and operational successes over the past year would not have been possible without the dedication and contributions of IOGC’s staff, our First Nation clients, and our partners. Through hard work, effective partnerships, and perseverance, IOGC continues to build a strong foundation for continuing to be a modern regulator of oil and gas activity on First Nations lands.
Sincerely,
Strater Crowfoot
Executive Director and CEO
Return to asterisk* referrer A play is a region with oil and gas exploration or development prospects.
Overview
History of Indian Oil and Gas Canada and the Legal Authorities Under Which It Operates
The Government of Canada has a broad mandate for First Nation issues, which arises from existing legislation and from legal obligations contained in section 91(24) of the Constitution Act, 1867. Crown-Indigenous Relations and Northern Affairs Canada (CIRNAC)Footnote1is entrusted with fulfilling various obligations of the federal government to Indigenous people as outlined in the Constitution, treaties, the Indian Act, and other legislation. Included in this obligation is the management of natural resources on First Nations lands, including oil and gas.
Oil and gas development on First Nations lands has been legislated since 1974 under the Indian Oil and Gas Act, 1974. Prior to that, oil and gas activities were administered under the Indian Act. In 1977, the Indian Oil and Gas Regulations were promulgated and brought under the Indian Oil and Gas Act, 1974. Those regulations were last revised in 1995.
In 1987, Indian Oil and Gas Canada (IOGC) was established and replaced Indian Minerals West within the Department of Indian Affairs and Northern DevelopmentFootnote1. IOGC’s mandates are to manage oil and gas development on First Nations lands and to further First Nation initiatives to manage and control their resources. In 1993, IOGC became a Special Operating Agency to increase its client focus. IOGC reports to CIRNAC via the Assistant Deputy Minister of Lands and Economic Development.
Statutory Authorities
IOGC operates in accordance with provisions of the Indian Oil and Gas Act, 1974 and the Indian Oil and Gas Regulations, 1995.
IOGC also operates in accordance with other federal legislation including provisions of the Indian Act, the Canadian Environmental Assessment Act, 2012Footnote2, and the Financial Administration Act.
IOGC Co-Management Board
IOGC operates under the direction of an Executive Director and Chief Executive Officer (CEO) who participates as a member of the IOGC Co-Management Board. The Board was established in 1996 by the signing of a Memorandum of Understanding between the Minister of Indian Affairs and Northern Development and the Indian Resource Council (IRC – an Indigenous organization that advocates on behalf of approximately 189 member First Nations with oil and gas or the potential for such resources). The Board focuses on areas of common interest.
There are nine members on the IOGC Co-Management Board. The Board is comprised of the IRC Chair and five other members nominated by the IRC. Two positions are named government official positions: the Assistant Deputy Minister of Lands and Economic Development; and, the Executive Director and CEO of IOGC. One position is appointed by the Minister from the oil and gas industry.
Roles and Responsibilities
IOGC is a Special Operating Agency and separate employer within Crown-Indigenous Relations and Northern Affairs Canada with responsibility for managing and regulating oil and gas resources on designatedFootnote3First Nations lands across Canada.
Over 500 reserves have lands designated, pursuant to the Indian Act, for oil and gas development. At present, 194 companies have active oil and gas agreements on First Nations lands. IOGC currently manages the oil and gas resources of 57 First Nations (108 reserves) with active oil and gas agreements. All funds collected on behalf of First Nations are placed in their trust accounts.
IOGC works closely with First Nation Chiefs and Councils through the negotiation and approval processes. All agreements require Chief and Council approval through a band council resolution (BCR). For those First Nations who have designated their lands for oil and gas activities; IOGC’s main functions are to:
- Facilitate the negotiation and granting, and the ongoing administration of contracts among First Nations and oil and gas companies;
- Conduct environmental reviews and issue environmental protection measures;
- Monitor and verify oil and gas production and sales prices;
- Verify / assess and collect moneys such as bonuses, royalties, and rents;
- Lifecycle management, including well, pipeline and facility compliance monitoring throughout all phases as well as abandonments, remediation and reclamation; and,
- Ensure legislative and contract requirements are satisfied.
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