the oil and gas conservation, stabilization and

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The Oil and Gas Conservation,

Stabilization and Development Act, 1973

being

Chapter 72 of the Statutes of Saskatchewan, 1973-74(Assented to December 19, 1973).

NOTE:This consolidation is not official. Amendments have been incorporated for convenience of reference and the original statutes and regulations should be consulted for all purposes of interpretation and application of the law. In order to preserve the integrity of the original statutes and regulations, errors that may have appeared are reproduced in this consolidation.

UNEDITED

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1 Short title

PART I

Mineral Income Tax

2 Interpretation

3 Mineral income tax

4 Calculation and payment of tax by producer and others

5 Exemption of certain owners from tax

6 Allowance for increase in production costs

7 Producer to deduct tax owing by persons not exempt

8 Request by minister to deduct tax

9 Appeal as to right to exemption

10 Lieutenant Governor in Council may exempt

11 Decisions of minister final 12 Section 4 of The Road Allowances Crown Oil Act

amended

13 Exemption where surcharge royalty paid 14 Deduction for certain approved exploration costs

15 Oil and Gas Stabilization and Development Fund

16 Sections 28 to 40 of The Mineral Taxation Act to apply

17 Regulations

18 Regulations in schedule I authorized

PART II

Wholesale Prices

19 Rev. Stat. c.64, section 3 amended

PART III

Wholesale Prices

20 Interpretation

21 Determination of certain prices for refined petroleum products

22 Certain agreements varied on establishment of wholesale price

23 Prohibition respecting charging of price in excess of established price

24 Records

25 Offence and penalty

PART IV

Acquisition of Certain Oil and Gas Rights

26 Interpretation

27 Application of Act, exception

28 Rights vest in Crown

29 Notice of vesting

30 Designation of rights, alteration of title thereto

31 Exclusion from application of Act

32 Act to be treated as grant, etc.

33 Preservation of certain rights

34 Compensation

35 Continuation of production

36 Purchase of minerals

37 Acquisition of lease by minister

PART V

Oil and Gas Conservation Act

38 Rev. Stat. c.360, new section 3

39 Rev. Stat. c.360, new section 17

PART VI

General

40 Acquisition by the Crown by way of purchase, transfer, surrender, etc.

41 Regulations

42 Offences and penalties

43 Non-application of Expropriation Procedure Act, 1968

44 Coming into force

SCHEDULE

Table of Contents

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CHAPTER 72

An Act respecting the Conservation, Stabilization and Development of Oil and Gas in Saskatchewan

[Assented to December 19, 1978]

Short title

1 This Act may be cited as The Oil and Gas Conservation, Stabilization and Development Act, 1973.

1973-74, c.72, s.1.

PART I

Mineral Income TaxInterpretation

2 In this Part:

“basic well-head price”

(a) “basic well-head price” means the price at the wellhead of a barrel of oil produced in Saskatchewan set out in schedule II to this Act;

“fund”

(b) “fund” means the Oil and Gas Stabilization and Development Fund mentioned in section 15;

“international well-head price”

(c) “international well-head price” means the price determined by the minister as the value at the wellhead of a barrel of oil produced in Saskatchewan having regard to:

(i) the price of international oil delivered at Chicago in the United States of America or such other place or places in the United States of America as the minister may decide; and

(ii) the grade of oil and transportation costs;

but the minister may determine the price to be a lesser price for all or any part of the oil produced in Saskatchewan;

“minister”

(d) “minister” means the Minister of Mineral Resources;

“oil”

(e) “oil” means crude petroleum oil and all other hydrocarbons, regardless of gravity, that are produced at a well in liquid form by ordinary production methods;

“oil and gas rights”

(f) “oil and gas rights” means an estate in fee simple in any or all of the minerals set out in subsection (1) of section 27;

“oil and natural gas”

(g) “oil and natural gas” means any or all of the minerals set out in subsection (1) of section 27;

“owner”

(h) “owner” means a person who is registered in a land titles office as the owner of any mineral or minerals whether or not the title thereto is severed from the title to the surface; provided that where:

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OIL AND GAS CONSERVATIONc. 72

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(i) such mineral or minerals have heretofore been or are hereafter sold under bona fide agreement of sale under the terms of which the purchaser became or becomes liable for payment of all taxes rated, assessed or levied upon or in respect of the mineral or minerals, or upon the land within, upon or under which the mineral or minerals are situated, after the date of execution of the agreement or after a date specified in the agreement; and

(ii) the vendor or the purchaser or the successor in interest or assignee of either of them has given to the minister written notice of such agreement of sale and of any assignment thereof;

“owner” shall mean the purchaser under such agreement of sale or the successor in interest or assignee of such purchaser, and such purchaser, successor in interest or assignee shall be deemed to have been the owner on, from and after the date of execution of the agreement or on, from and after such other date as may be specified in the agreement with respect to payment of taxes;

provided further that the foregoing proviso shall not apply where The Director, The Veterans’ Land Act, appointed pursuant to the Veterans’ Land Act (Canada) is the vendor and a veteran qualified to participate in the benefits of the said Act is the purchaser unless the agreement of sale has heretofore been or is hereafter assigned by the purchaser to a person who is not such a veteran, and where the agreement has been or is so assigned the foregoing proviso shall apply except that the assignee shall be deemed to have been the owner only on, from and after the date on which he became liable for payment of the taxes mentioned in clause (i) or any of them;

“premium well-head price”

(i) “premium well-head price” means the price at the well-head of a barrel of oil produced in Saskatchewan set out in schedule III to this Act;

“producer”

(i) “producer” means a person who has a right to drill into an underground reservoir and produce therefrom oil or gas or oil and gas, and to appropriate the oil and gas he produces either to himself or others or to himself and others and operates an oil well drilled under such a right or is entitled to share in the production of a well or wells under a unitization agreement or plan provided for in The Oil and Gas Conservation Act;

“producing tract”

(k) “producing tract” means a producing tract as defined in The Mineral Taxation Act.

1973-74, c.72, s.2.

Mineral income tax

3 A mineral income tax shall be paid as hereinafter required for each month, commencing with the month of January, 1974, by every person having an interest in the oil produced from a well in a producing tract.

1973-74, c.72, s.3.

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OIL AND GAS CONSERVATION c. 72

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Calculation and payment of tax by producer and others

4(1) The tax payable is an amount equal to the difference between the basic well-head price and the international well-head price determined by the minister for each month of the oil produced from the well from which the taxpayer shares the oil subject to the allowance provided for in section 6.

(2) The producer of oil from a well shall not later than on the twentieth day of each month forward a return to the minister on a form approved by the minister showing the production of oil from such well during the immediately preceding month, the well-head price received for the oil produced, the names and addresses of all persons entitled to share in the proceeds of the oil, and the share of each in the production by way of royalty or otherwise, together with the amount payable with respect to each barrel or part of a barrel of his share of the oil.

(3) Every person entitled to share in the production or proceeds of the oil produced from a well shall, unless exempt from payment of the tax payable under subsection (1), make a monthly return to the minister showing his interest in the proceeds of the oil produced from the well and pay to the minister an amount equal to the difference between the basic well-head price and the international well-head price per barrel times the number of barrels he received or with respect to which he received payment.

1973-74, c.72, s.4.

Exemption of certain owners from tax

5 The tax provided for by sections 3 and 4 does not apply to an owner of oil and gas rights in producing tracts where the aggregate area of all producing tracts owned by one person or in respect of which he holds an interest other than a lease does not exceed 1,280 acres after adding to the total:

(a) the acreage held in trust for the person whose acreage is being totalled;

and subtracting from the total:

(b) the acreage held in trust for another person by the person whose acreage is being totalled.

1973-74, c.72, s.5.

Allowance for increase in production costs

6(1) Each producer of oil from a well shall, within twenty days after the first day of July, 1974, and within twenty days after the first days of January and July in each year thereafter, file a return showing the amount of increased costs, if any, of production per barrel of oil produced and extraordinary transportation costs incurred during the preceding six months claimed by him as an allowance mentioned in subsection (1) of section 4.

(2) The minister shall consider each return filed under subsection (1) and determine the amount to be allowed as a deduction.

1973-74, c.72, s.6.

Producer to deduct tax owing by persons not exempt

7 Every producer of oil shall deduct the tax payable by every person entitled to share in the production of each well other than the owner of the oil and gas rights the income from which is subject to taxation under this Part.

1973-74, c.72, s.7.

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Request by minister to deduct tax

8 Notwithstanding section 7, the minister may require a producer of oil from a well to deduct and forward to the minister the amount of the tax and any arrears from moneys payable with respect to the share of an owner of oil and gas rights the income from which is subject to taxation under this Part, and the producer shall make the deductions monthly thereafter until otherwise advised by the minister.

1973-74, c.72, s.8.

Appeal as to right to exemption

9 In the event of a dispute arising as to whether an owner of oil and gas rights the income from which is subject to taxation is exempt from taxation, the owner may appeal to the Saskatchewan Assessment Commission and the provisions of section 27 of The Mineral Taxation Act shall apply mutatis mutandis to such appeal.

1973-74, c.72, s.9.

Lieutenant Fovernor in Council may exempt

10(1) The Lieutenant Governor in Council may by order exempt any owner of oil and gas rights or any class of may exempt persons from payment of the tax payable under sections 3 and 4 and authorize a refund from the fund of any tax paid before the exemption is ordered.

(2) Every order made under subsection (1) shall be published in The Saskatchewan Gazette.

1973-74, c.72, s.10.

Decisions of minister final 11 The determination by the minister of:

(a) the basic well-head price and the premium well-head price of oil as set forth in schedules II and III of this Act that are applicable to a producing tract with respect to whether the oil produced is light, medium or heavy grade;

(b) the international well-head price of oil for each month;

(c) the allowance for increased costs of production from time to time; and

(d) the amount of the costs of exploration or other expenditures to be allowed as deductions under this Part or under the Petroleum and Natural Gas Regulations, 1969;

shall be final and conclusive and shall not be reviewable by any court of law or by any certiorari, mandamus, prohibition, injunction or other proceeding whatever.

1973-74, c.72, s.11.

Section 4 of The Road Allowances Crown Oil Act amended

12 Notwithstanding section 4 of The Road Allowances Crown Oil Act, where the average prevailing well-head price calculated under that section for a month is less than the international well-head price determined by the Minister under this Act for the same month, the international wellhead price shall be substituted for the average prevailing well-head price for the month in arriving at the amount payable to the minister under that section.

1973-74, c.72, s.12.

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Exemption where surcharge royalty paid 13 A person sharing in the production of or proceeds from the oil produced under a disposition granted by the minister is only liable to pay the tax payable by him under sections 3 and 4 to the extent that he has not paid the royalty surcharge imposed by the regulations made under The Mineral Resources Act and authorized by this Part.

1973-74, c.72, s.13.

Deduction for certain approved exploration costs

14(1) A person liable to pay a tax under this Part may from the tax otherwise payable, make deductions from that part of the tax that represents the difference between the tax calculated on the basis of the basic well-head price and the tax calculated on the basis of the premium well-head price, for expenditures made in Saskatchewan with the approval of the minister or under an agreement with the minister for the following:

(a) research into the conservation, development, production and utilization of oil and natural gas in Saskatchewan;

(b) exploration and development of the oil and natural gas resources of Saskatchewan; and

(c) the development of refining, petrochemical and other processing facilities in Saskatchewan;

provided they were made in compliance with any terms and conditions imposed by the minister and the amount of each deduction shall be determined by him;

(2) A person liable to pay a tax under this Part may deduct from the tax otherwise payable such portion of the cost of exploration for oil and natural gas carried out in Saskatchewan and not deducted under subsection (1) as may be agreed upon by the minister but the deduction allowable under this subsection shall not exceed fifty per cent of the cost of exploration for oil and natural gas agreed upon and not claimed under subsection (1) and the minister shall determine the amount to be allowed.

1973-74, c.72, s.14.

Oil and Gas Stabilization and Development Fund

15(1) The proceeds of the tax imposed by this Part and the royalty surcharge Imposed by the regulations made under The Mineral Resources Act shall be paid into a fund to be known as the Oil and Gas Stabilization and Development Fund.

(2) The Lieutenant Governor in Council may, on such terms and conditions as he considers advisable, authorize the minister to make grants from the Oil and Gas Stabilization and Development Fund for the following purposes:

(a) to reduce the wholesale prices of refined petroleum products, as defined in section 20, in Saskatchewan;

(b) to encourage and assist Saskatchewan Oil and Gas Corporation or any person operating jointly or in partnership with such corporation in the exploration and development of the oil and natural gas resources of the province;

(c) to encourage and assist persons to explore and develop the oil and natural gas resources of the province;

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(d) to encourage and assist research into the conservation, development, production and utilization of oil and natural gas;

(e) any other purpose considered conducive to the development of the oil and natural gas resources of the province.

(3) The Lieutenant Governor in Council may make such rebates out of the fund or grant such exemptions from the tax imposed by sections 3 and 4 for such period or periods and on such terms and conditions as may be deemed advisable in order to further any of the purposes set out in subsection (2).

(4) The Treasury Board may order that any moneys in the fund considered by it to be in excess of what may be required for the purposes of the fund be paid to the Minister of Finance for deposit in the consolidated fund.

(5) With the consent of the Investment Board, the minister may invest available funds in any of the securities in which moneys may be invested under section 34 of The Department of Finance Act.

1973-74, c.72, s.15.

Sections 28 to 40 of The Mineral Taxation Act to apply

16 The provisions of sections 28 to 40 of The Mineral Taxation Act shall apply mutatis mutandis to the tax payable under this Part.

1973-74, c.72, s.16.

Regulations

17 The Lieutenant Governor in Council may make such regulations not inconsistent with this Part as the Lieutenant Governor in Council may consider necessary or advisable for the purpose of carrying out the provisions of this Part according to their obvious intent or to meet cases that may arise and for which no express provision is made in this Part, which shall have the same force and effect as if incorporated herein.

1973-74, c.72, s.17.

Regulations in schedule I authorized

18 The Lieutenant Governor in Council is hereby given power to make the amendments to The Petroleum and Natural Gas Regulations, 1969, contained in schedule I to this Act and to amend the same from time to time, and when made they shall have the same force and effect as if incorporated herein.

1973-74, c.72, s.18.

__________________

PART II

Wholesale PricesRev. Stat. c.64, section 3 amended

19 Subsection (1) of section 3 of The Mineral Taxation Act, as enacted by chapter 79 of the Statutes of Saskatchewan, 1972, is amended by striking out the words “twenty cents for every acre and twenty” in the seventh line and substituting the following words:

“fifty cents for every acre and fifty”.1973-74, c.72, s.19.

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PART III

Wholesale PricesInterpretation

20 In this Part:

“consumer”

(a) “consumer” means a person who purchases or acquires refined petroleum products from a retailer for his own use or consumption;

“existing agreement”

(b) “existing agreement” means an agreement between a wholesaler and a retailer for the transfer, sale or delivery of refined petroleum products to a retailer and any other agreement between a wholesaler and a retailer in existence on the date the minister pursuant to this Part establishes a wholesale price;

“minister”

(c) “minister” means the Minister of Mineral Resources;

“refined petroleum product”

(d) “refined petroleum product” means a commodity made from oil and, without limiting the generality of the foregoing, includes motor and tractor gasoline, naphtha gasoline, kerosene, diesel fuel, aviation fuel, turbo fuel, bunker oil and lubrication products;

“retailer”

(e) “retailer” means a person who in the course of his business regularly sells refined petroleum products to a consumer;

“wholesaler”

(f) “wholesaler” means a person who transfers, sells or delivers refined petroleum products to a retailer or to a wholesaler or where he is a wholesaler to another wholesaler and includes a retailer who is also a wholesaler;

“wholesale price”

(g) “wholesale price” means the consideration for a transfer, sale or delivery by a wholesaler to a retailer or to another wholesaler and includes the consideration in a transfer, sale or delivery to a consumer by a wholesaler who is also a retailer.

1973-74, c.72, s.20.

Determination of certain prices for refined petroleum products

21(1) The minister, with the approval of the Lieutenant Governor in Council, may determine, establish or set the wholesale price, the maximum wholesale price or the minimum wholesale price at which refined petroleum products may be transferred, sold or delivered in Saskatchewan by a wholesaler to a retailer for use in Saskatchewan.

(2) Without limiting the generality of the foregoing, the minister may:

(a) establish different wholesale prices for different parts of Saskatchewan;

(b) establish different wholesale prices for different wholesalers;

(c) establish different wholesale prices for different qualities, quantities, standards, grades, kinds and classifications of use of refined petroleum products.

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(3) Where a wholesaler is also a retailer, the minister, with the approval of the Lieutenant Governor in Council, may establish such different wholesale prices as he considers appropriate.

1973-74, c.72, s.21.

Certain agreements varied on establishment of wholesale price

22(1) When the minister establishes a wholesale price, every existing agreement shall be varied so as to not exceed the wholesale price established by the minister and may be further varied by the minister, with the approval of the Lieutenant Governor in Council, in any other term or condition, directly or indirectly, obligates a retailer to pay a wholesaler more than the wholesale price established by the minister.

(2) Except as varied by subsection (1), every existing agreement shall in all respects remain in full force and effect.

1973-74, c.72, s.22.

Prohibition respecting charging of price in excess of established price

23 Where the minister has established a wholesale price or has varied such price, no wholesaler shall agree to transfer, sell or deliver a refined petroleum product to a retailer at a wholesale price greater than that established by the minister or the price as varied and any such agreement shall be invalid to the extent, and insofar as, the agreed wholesale price exceeds the wholesale price established by the minister or the price as so varied.

1973-74, c.72, s.23.

Records

24(1) The minister may require wholesalers to keep in a prescribed form, records of all purchases, transfers, sales or deliveries of refined petroleum products and to forward to the minister such records or extracts therefrom at such times and in such manner as he considers appropriate.

(2) The minister or his appointee may audit or cause to be audited the books and records of any wholesaler and each wholesaler shall make available in Saskatchewan his books and records for the purpose of the audit or shall make such other arrangements in respect of his books and records as may be satisfactory to the minister.

(3) Every wholesaler who fails or refuses:

(a) to keep records as required under subsection (1);

(b) to forward to the minister records or abstracts therefrom as required under subsection (1); or

(c) to make available his books and records for an audit under subsection (2) or to make any other arrangements required under that subsection;

is guilty of an offence and liable on summary conviction to a fine not exceeding $200.

1973-74, c.72, s.24.

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Offence and penalty

25(1) Every person who contravenes section 23, is guilty of an offence and liable on summary conviction to a fine not exceeding $5,000 and in the case of a continuing offence to a further fine of not more than $1,000 for each day during which the offence continues.

(2) No information may be laid under this section without the written permission of the minister being first obtained.

1973-74, c.72, s.25.

___________________

PART IV

Acquisition of Certain Oil and Gas RightsInterpretation

26 In this Part:

“lease”

(a) “lease” includes a profit-a-prendre or agreement giving the right to take any of the acquired oil or gas rights with respect to which a caveat has been filed or any interest in such a lease, profit-a-prendre or agreement with respect to which a caveat has been filed;

“minister”

(b) “minister” means the Minister of Mineral Resources;

“oil and gas rights”

(c) “oil and gas rights” includes any share or interest therein;

“owner”

(d) “owner” means a person who has an estate in fee simple in oil and gas rights as defined in section 27 or any of them;

“producing tract”

(e) “producing tract” means producing tract as defined in The Mineral Taxation Act;

“registered” or “filed”

(f) “registered” or “filed” means registered or filed, as the case may be, in the appropriate land titles office.

1973-74, c.72, s.26.

Application of Act, exception

27(1) Except as provided in subsection (2), this Part applies to all petroleum, natural gas, all other hydrocarbons, except coal and valuable stone, all other gases and minerals and substances, whether liquid or solid and whether hydrocarbon or not, occurring in association with any of the foregoing and the spaces or formations occupied or formerly occupied thereby in all producing tracts in Saskatchewan down to and including the producing zones including but not limited to the properties belonging to the corporations whose names are set out in schedule IV to this Act, hereinafter called “oil and gas rights”.

(2) This Part does not apply to the oil and gas rights in producing tracts where the aggregate area of all producing tracts owned by one person or in respect of which he holds an interest other than a lease does not exceed 1,280 acres after adding to the total:

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(a) the acreage held in trust for the person whose acreage is being totalled;

and subtracting from the total:

(b) the acreage held in trust for another person by the person whose acreage is being totalled.

(3) The oil and gas rights referred to in clause (b) of subsection (2) shall be designated and identified by the owner in a statement delivered to the minister not later than the thirty-first day of March, 1974.

1973-74, c.72, s.27.

Rights vest in Crown

28(1) As from the first day of January 1974 the oil and gas rights referred to in subsection (1) of section 27, subject to the exemptions referred to in subsection (2) of that section, are deemed to be transferred to and vested in Her Majesty the Queen in right of the Province of Saskatchewan without further act, conveyance or other deed, subject to any lease affecting the same that may exist immediately preceding the tenth day of December, 1973, and subject only to such encumbrances as are registered against the relevant title prior to the tenth day of December 1973.

(2) Notwithstanding any thing in The Land Titles Act where any transfer of oil and gas rights other than those exempted under subsection (2) of section 27 is submitted for registration at any time after 2:00 o’clock in the afternoon of Monday, the tenth day of December, 1973, it shall be null and void and of no effect unless the consent in writing of the minister has been obtained thereto prior to the first day of January, 1974.

(3) Notwithstanding subsection (2), where an instrument affecting oil and gas rights other than those exempted under subsection (2) of section 27 has been submitted to the appropriate land titles office for registration or filing, as the case may be, prior to 2:00 p.m. of Monday the 10th day of December, 1973, and registration or filing has not been completed on or before the 31st day of December, 1973, but the instrument has been examined by the registrar and found to be complete and in proper form and fit for registration or filing, such condition to be certified by the registrar, registration or filing of the instrument shall be deemed complete and effective as and on the 31st day of December, 1973.

(4) Immediately after the day this Act comes into force the registrar of any land titles office affected shall cancel the certificate of title and the duplicate thereof of the transferee named in any transfer referred to in subsection (2) and shall cancel the registration of any other instrument registered or filed in respect of the oil and gas rights contained in the transfer registered without the consent of the minister and shall enter all necessary memoranda against any certificate of title necessary to register the vesting of said oil and gas rights in the Crown.

(5) A registrar may require any transferee named in a transfer referred to in subsection (3) to surrender the relevant duplicate certificate of title either for endorsement or cancellation. Any such person who fails to surrender the duplicate certificate of title within twenty-one days after notice is sent to him by the registrar requiring such surrender is guilty of an offence under this Act and liable on summary conviction to a fine as for the offence set out under subsection (3) of section 30.

1973-74, c.72, s.28.

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Notice of vesting

29(1) Forthwith after this Act comes into force, the minister shall file a notice with the registrar of each land titles office affected that the oil and gas rights referred to in subsection (1) of section 27 have been acquired by the Crown subject to certain exceptions and the registrar shall place that notice on the general register in each registry affected, and from the date of the filing of such notice until the notice is removed, no transfer shall be registered against any title to minerals within the area of a producing tract without the consent in writing of the minister.

(2) The minister may at any time in his discretion withdraw the notice referred to in subsection (1) as to all or any of the oil and gas rights by filing with the registrar of land titles notice in a form acceptable to the registrar.

1973-74, c.72, s.29.

Designation of rights, alteration of title thereto

30(1) Notwithstanding anything in The Land Titles Act, the Lieutenant Governor in Council shall as soon as practicable after the day on which this Act comes into force by order designate the oil and gas rights acquired by the Crown under this Act.

(2) The minister shall forthwith file the order made under subsection (1) with the registrar of the appropriate land titles office who shall thereupon endorse upon the appropriate certificates of title memoranda that the said oil and gas rights are vested in the Crown pursuant to this Act or cancel the certificates of title and issue new certificates of title as the circumstances require.

(3) A registrar may require any former owner of oil and gas rights acquired by the Crown under this Act to surrender the relevant duplicate certificate of title either for endorsement or cancellation and any such owner who fails to surrender the duplicate certificate of title within twenty-one days after notice is sent to him by the registrar requiring such surrender is guilty of an offence against this Act and liable on summary conviction to a fine of not more than $50 for each offence.

(4) The registrar shall at the request of the minister issue a certificate of title in the name of the Crown in respect of any oil and gas rights acquired by the Crown under this Act.

1973-74, c.72, s.30.

Exclusion from application of Act

31 Notwithstanding anything in The Land Titles Act, the Lieutenant Governor in Council may from time to time, by order, designate oil and gas rights to be excluded from the application of this Act, and upon the filing of such order with the registrar of the appropriate land titles office, the said oil and gas rights shall be divested from Her Majesty the Queen in right of Saskatchewan and ownership of them shall revert to the owner or beneficial owner, as the case may require, of the oil and gas rights immediately preceding the tenth day of December, 1973, or his successors or assigns.

1973-74, c.72, s.31.

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Act to be treated as grant, etc.

32 This Act shall be and in all respects be treated, for the purposes of every land titles office and of the officers administering them, as a legal and valid grant, conveyance and transfer to Her Majesty the Queen in right of the Province of Saskatchewan of the oil and gas rights mentioned in subsection (1) of section 27 with the exception therefrom of the oil and gas rights referred to in subsection (2) of that section.

1973-74, c.72, s.32.

Preservation of certain rights

33(1) All oil and gas rights acquired by the Crown under this Part are held in fee simple from the first day of January, 1974, and subject to such encumbrances, liens, estates, or interests as were endorsed on the certificate of title thereto under The Land Titles Act on the 10th day of December, 1973, absolutely free from all other encumbrances, liens, estates, or interests whatever and the lesse or other person having an interest shall continue to enjoy the benefits thereof subject to:

(a) the fulfillment of any terms or conditions attached thereto;

(b) the payment of royalties in kind when requested by the minister;

(c) compliance with all regulations applicable to such interests heretofore or hereafter enacted under The Oil and Gas Conservation Act or The Road Allowances Crown Oil Act; and

(d) the payment of all taxes and other charges applicable or that may be hereafter imposed.

(2) Any person having a lease of the oil and gas rights or any of them shall be subject to section 63 of The Petroleum and Natural Gas Regulations, 1969, when enacted pursuant to section 18 and shall be liable to pay the royalty surcharge provided for therein from the first day of January, 1974, as if the lease came within subsection (1) of section 63.

1973-74, c.72, s.33.

Compensation

34(1) The owner of oil and gas rights acquired by the Crown under this Act who has leased the oil and gas rights to another person shall be entitled to compensation as hereinafter set forth:

(a) compensation payable under this Act shall be based on the owner’s royalty interest in the oil and gas rights as set out in any lease or disposition of the oil and gas rights expressed as his share of the remaining proven recoverable reserves based on determinations made by the minister;

(b) the compensation payable hereunder shall be an amount:

(i) in the case of oil rights, calculated by applying the appropriate value per unit set out in schedule III to this Act to his share of the proven recoverable reserves; or

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(ii) in the case of gas rights, calculated by applying the well-head price in effect on the tenth day of December, 1973, or where no well-head price was established, on the average of well-head prices in the pool in which the producing tract is located or if the producing tract is not located in a pool, in the nearest producing pool of similar characteristics on the said date to his share of the remaining proven recoverable reserves determined in accordance with clause (a);

(c) payment of compensation shall be made in the following manner at the option of the person entitled to compensation under this Act:

(i) by the issue of a royalty trust certificate providing the owner with a royalty for the remaining producing life of the proven recoverable reserves in the relevant producing tract. The royalty shall be determined on the production taken from the producing tract and at the royalty established in the lease and at the appropriate unit value used to determine the compensation payable in clause (b); or

(ii) by a lump sum payment based on the amount of compensation determined in accordance with clause (b) discounted by a factor equivalent to the Bank of Canada prime lending rate as at the tenth day of December, 1973, applied to a period determined by the minister.

(2) The owner of oil and gas rights acquired by the crown under this Act who has not leased the oil and gas rights to another person shall be entitled to compensation as hereinafter set forth:

(a) payment of compensation shall be made in the following manner at the option of the person entitled to compensation under this Act:

(i) by the issue of a royalty trust certificate providing the owner with a royalty for the remaining producing life of the proven recoverable reserves in the relevant producing tracts. The royalty shall be determined on the production taken from the producing tract and at the appropriate royalty rate established under provisions of the Petroleum and Natural Gas Regulations, 1969, as amended from time to time and:

(A) in the case of oil rights at the appropriate unit value of remaining recoverable reserves set out in schedule III of this Act; or

(B) in the case of gas rights at the well-head price in effect on the tenth day of December, 1973, or where no well-head price was established, on the average of well-head prices in the pool in which the producing tract was located or if the producing tract is not located in a pool in the nearest producing pool of similar characteristics on the said date;

(ii) by a lump sum payment where the minister shall determine the share of the remaining proven recoverable reserves on which compensation is to be made and shall determine the value thereof in the same manner as set out in clause (b) of subsection (1) and discounted in the same manner as set out in subclause (ii) of clause (c) of subsection (1).

(3) There shall be deducted from the compensation payable any taxes owing and any amount outstanding with respect to any encumbrance registered against the title to the oil and gas rights on the tenth day of December, 1973, or protected by a caveat filed on or before the said date.

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(4) The determination by the minister of:

(a) the remaining proven recoverable reserves of oil and gas under clause (a) of subsection (1) of section 34; and

(b) the period to be determined under subclause (ii) of clause (c) of subsection (1) of section 34;

shall be final and conclusive and shall not be reviewable by any court of law or by any certiorari, mandamus, prohibition, injunction or other proceeding whatever.

1973-74, c.72, s.34.

Continuation of production

35 Where no lease exists in respect of oil and gas rights acquired by the Crown under this Act, the Minister shall issue to the owner a lease under The Petroleum and Natural Gas Regulations, 1969, as amended from time to time, allowing continuation of production.

1973-74, c.72, s.35.

Purchase of minerals

36 The minister may purchase any or all minerals, as defined in The Mineral Taxation Act, not acquired under the provisions of this Part and may also purchase the interest of anyone in such minerals.

1973-74, c.72, s.36.

Acquisition of lease by minister

37 The minister may acquire by way of purchase or surrender any lease affecting oil and gas rights acquired by the Crown under this Act on such terms as may be agreed upon.

1973-74, c.72, s.37.

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PART V

Oil and Gas Conservation ActRev. Stat. c.360, new section 3

38 Section 3 of The Oil and Gas Conservation Act is repealed and the following substituted therefor:

Purposes of Act

“3 The purposes of this Act are:

(a) to prevent waste;

(b) to regulate all operations for the production of oil and gas in such manner that the greatest possible ultimate recovery thereof by prudent and proper operations and practices may be realized;

(c) to protect the correlative rights of each owner;

(d) to enable each owner to obtain his just and equitable share of the allowable production of any pool; and

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(e) to develop, process, utilize, protect and conserve the oil and gas resources of Saskatchewan for use in the province by the people of Saskatchewan.

1973-74, c.72, s.38.

Rev. Stat. c.360, new section 17

39 Section 17 of The Oil and Gas Conservation Act is repealed and the following substituted therefor:

Power of minister

“17 Without restricting the generality of section 6, the minister may by order:

(a) regulate and make provision for, in respect of any field, pool or zone:

(i) the spacing of wells, the formation of drainage units and the location of target areas;

(ii) the maximum rate at which a well or wells may be permitted to produce;

(iii) the drilling, plugging and bringing into production of wells and all other operations for the production of oil or gas;

(iv) operations to increase ultimate recovery, including the cycling of gas, the maintenance of pressure and the introduction of gas, water or other substances into producing formations;

(v) the shooting, chemical treatment and fracturing of wells;

(vi) the taking of cores and the making of special logs and the submission of core analyses to the department;

(vii) the disposal of water, brine, sediment and other oil field wastes;

(b) regulate, limit and allocate the production of oil and gas and the decision of the minister to so regulate, limit and allocate production shall be in his absolute discretion and he may in arriving at his decision consider any or all of the following:

(i) the public interest;

(ii) whether there are sufficient proven reserves of oil or gas, as the case may be, to provide for the needs of the people of Saskatchewan for such number of years as he may consider advisable from time to time;

(iii) whether the oil or gas is to be used in Saskatchewan;

(iv) the extent to which the oil or gas is to be used in Saskatchewan to produce petroleum products for use in Saskatchewan;

(v) any geological, engineering, technological or economic factors;

(vi) any other matter that the minister may deem relevant;

(c) classify wells as oil or gas wells if considered necessary for the application or enforcement of this Act;

(d) prescribe the conditions under which drilling operations may be carried out in water-covered areas, and any special measures to be taken in such operations;

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(e) limit the amount of gas or water that may be produced with oil from any well or wells and limit the production of oil from any well or wells that produce gas or water in excess of the amount of gas or water so limited;

(f) designate and identify any specified area as a pool or field”.1973-74, c.72, s.39.

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PART VI

GeneralAcquisition by the Crown by way of purchase, transfer, surrender, etc.

40 Notwithstanding anything contained in this Act or The Mineral Taxation Act, the minister may acquire:

(a) by way of purchase any mineral from the owner of such mineral;

(b) by way of transfer or surrender to the Crown title to any mineral.1973-74, c.72, s.40.

Regulations

41 For the purpose of carrying into effect the provisions of this Act according to their true intent or of supplying any deficiency therein, the Lieutenant Governor in Council may make such regulations not inconsistent with the spirit of this Act as are considered necessary or advisable and such regulations shall have the same force and effect as if incorporated herein.

1973-74, c.72, s.41.

Offences and penalties

42 Where on or after the tenth day of December, 1973, any person having an interest in respect to the oil and gas rights acquired by the Crown under this Act:

(a) causes production to be stopped without the consent of the minister therefor, other than temporarily where necessary in order to make repairs, that may cause damage or loss, present or future, to the proven recoverable reserves, is guilty of an offence and liable on summary conviction to a fine of $1,000 for each day during which the offence continues;

(b) removes equipment for production, storage, treating or transportation without the prior consent therefor of the minister is guilty of an offence and liable on summary conviction to a fine of not less than $1,000 nor more than $10,000.

1973-74, c.72, s.42.

Non-application of Expropriation Procedure Act, 196843 The Expropriation Procedure Act, 1968, does not apply to or in respect of any Act or thing done under this Act.

1973-74, c.72, s.43.

Coming into force

44(1) Parts I and II come into force on the first day of January, 1974.

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(2) Part III comes into force on a day to be fixed by proclamation of the Lieutenant Governor.

(3) Parts IV, V and VI come into force on the day of assent.1973-74, c.72, s.44.

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SCHEDULE I

Amendments to The Petroleum and Natural Gas Regulations, 1969

1 Section 57 is amended by adding thereto the following:

“international well-head price”

“(f) ‘international well-head price’ means the price determined by the minister as the value at the well head of a barrel of oil produced in Saskatchewan having regard to:

(i) the price of international oil delivered at Chicago in the United States of America or such other place in the United States of America as the minister may decide; and

(ii) the grade of oil and transportation costs;

but the minister may determine the price to be a lesser price for or any part of the oil produced in Saskatchewan;

“basic well-head price”

“(g) ‘basic well-head price’ means the price at the well-head of a barrel of oil produced in Saskatchewan as set out in schedule II to The Oil and Gas Conservation, Stabilization and Development Act, 1973;

“premium well-head price”

“(h) ‘premium well-head price’ means the price at the well-head of a barrel of oil produced in Saskatchewan set out in schedule III to The Oil and Gas Conservation, Stabilization and Development Act, 1973”.

2 Section 63 is repealed and the following substituted therefor:

Royalty surcharge on oil

“63(1) Oil produced or deemed to be produced from Crown lands acquired under these regulations or under any former Petroleum and Natural Gas Regulations or under any lease or special agreement authorized or approved by an order of the Lieutenant Governor in Council shall, for each calendar month, be subject to payment of a royalty surcharge calculated as follows:

(oil produced less Crown royalty oil less Road Allowance Crown levy) times (international well-head price less basic well-head price);

“(2) The proceeds of the royalty surcharge imposed by subsection (1) shall be paid into the Oil and Gas Stabilization and Development Fund established under The Oil and Gas Conservation, Stabilization and Development Act, 1973.

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“(3) The minister on behalf of the Crown may elect to receive in kind all or any portion of the royalty surcharge to which the Crown may be entitled hereunder and, where he so elects, such royalty surcharge in kind shall be delivered by the royalty surcharge payor at the time and place and in the manner specified from time to time by the minister. Where the royalty surcharge in kind is required to be delivered to a place other than at the place of production, the minister may allow from the quantity to be so delivered a deduction thereof as he considers reasonable to compensate for the expense of delivery.

“(4) The royalty surcharge payable under subsection (1) together with one copy of the statement on an approved form, shall be sent to and be in the office of the department in Regina, Saskatchewan, by the twentieth day of the month next following the month for which the royalty surcharge was calculated.

“(5) A person liable to pay a royalty surcharge under :these regulations may from the royalty surcharge otherwise payable, make deductions from that part of the royalty surcharge that represents the difference between the royalty surcharge calculated on the basis of the basic well-head price and the royalty surcharge calculated on the basis of the premium well-head price, for expenditures made in Saskatchewan with the approval of the minister or under an agreement with the minister for the following:

(a) research into ‘the conservation, development, production and utilization of oil and natural gas in Saskatchewan;

(b) exploration and development of the oil and natural gas resources of Saskatchewan; and

(c) the development of refining, petrochemical and other processing facilities in Saskatchewan;

provided they were made in compliance with any terms and conditions imposed by the minister and the amount of each deduction shall be determined by him.

“(6) A person liable to pay a royalty surcharge under these regulations may deduct from the royalty surcharge otherwise payable such portion of the cost of exploration for oil and gas carried out in Saskatchewan and not deducted under subsection (5) as may be agreed upon by the minister but the deduction allowable under this subsection shall not exceed fifty per cent of the cost of exploration for oil and gas agreed upon and not claimed under subsection (5) and the minister shall determine the amount to be allowed.

“(7) A person liable to pay a royalty surcharge under these regulations shall within twenty days from the first day of July 1974 and within twenty days after the first days of January and July in each year thereafter, file a return showing the amount of increased costs, if any, of production per barrel of oil produced and extraordinary transportation costs incurred during the preceding six months claimed by him as an allowance and the minister shall consider each return and determine the amount to be allowed as a deduction from the surcharge royalty”.

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SCHEDULE II

BASIC WELL-HEAD PRICE

Lloydminster area $2.36 per barrel of heavy crude oil

Kindersley-Kerrobert area $2.57 per barrel of heavy crude oil $3.39 per barrel of light crude oil

Swift Current area $2.89 per barrel of medium crude oil

Weyburn-Estevan area $3.14 per barrel of medium crude oil $3.47 per barrel of light crude oil

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SCHEDULE III

PREMIUM WELL-HEAD PRICE

Lloydminster area $2.65 per barrel of heavy crude oil

Kindersley-Kerrobert area $2.92 per barrel of heavy crude oil $3.71 per barrel of light crude oil

Swift Current area $3.21 per barrel of medium crude oil

Weyburn-Estevan area $3.46 per barrel of medium crude oil $3.80 per barrel of light crude oil

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SCHEDULE IV

CORPORATIONS

Ashland Oil Canada Limited. Canadian Williston Minerais Ltd. Whitehall Canadian Oils Ltd.

Burden Investors Service Inc.

Bison Petroleum & Minerals Limited. Minerals Exchange & Sales Limited.

Canadian Northern Railway Company.Grand Trunk Pacific Branch Lines Co. Grand Trunk Pacific Development Company Limited.

The Canada Permanent Trust Company (Calgary, Regina, Winnipeg). Eastern & Chartered Trust Company. Chartered Trust.

Canadian National & Canadian Pacific & Grand Trunk R/W Section 198 R/W Act.

CNW Oil Limited. The Canada North-West Land Company Limited.

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Canadian Reserve Oil & Gas Ltd. Fargo Oils Limited.

CEGO Minerals Ltd. Canadian Export Oil & Gas Ltd.

Francana Enterprises Limited. Francana Oil & Gas Ltd.

Guaranty Trust Company of Canada. The Prudential Trust Company Limited.

The Governor and Company of Adventurers of England Trading Into Hudson’s Bay. Siebens Oil and Gas Ltd. Hudson’s Bay Oil and Gas Company Limited.

Husky Oil Operations Ltd. Husky Oil Canada Ltd. Canadian Husky Oil Limited.

Burke Land and Development Company Limited.

Murphy Oil Company Ltd.

Minerals Ltd.Montreal Trust Company. Sorjak Minerals Ltd. Northern Trusts Company.

Northern American Royalties Inc.

Canadian Pacific Railway Company. PanCanadian Petroleum Limited. The Manitoba South Western Colonization Railway Company. Central Leduc Oils Limited.

Petrofina Canada Limited. Canadian Fina Oil Limited. Pearmac Limited.

Ridgefield Development Limited.

Scurry-Rainbow Oil (Sask.) Ltd. Aden Oil Limited. Brown Oils Limited. Freeholders Oil Company Limited. Land Owners Mutual Minerals Ltd. Midwest Farmers Oil Limited. Farmers Mutual Petroleum Limited.

Scurry-Rainbow Oil Limited.

Regina, SaskatchewanPrinted by the authority of

THE QUEEN’S PRINTER

the oil and gas conservation, stabilization and

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