The basic rights issuance process is laid out in the Canada Petroleum Resources Act and is broadly consistent throughout Canada's frontier lands, but varies in detail between regions.
The process of rights issuance is based on a bidding system. It is an industry-driven process and the bidding system is based on a single criterion; generally the amount of money a company will commit to explore a particular parcel and drill an exploration well in the first five years. The company bidding the greatest amount of money for a parcel is awarded the license.
A generic rights issuance process is as follows:
Call for Nominations
Although not required under the Act, a call for nominations either occurs formally (announcement, closing date, etc.) or is done on an ongoing basis whenever a company wants to submit a nomination. A nomination is simply an expression of interest by a company in a particular portion of land. There is no obligation on the part of the company to commit to any expenditure. A nomination by a company will be received by the regulator, and placed into the next land sale to undergo open bidding. The regulator may reformat the nomination based on size restrictions, overlapping nominations, and geological potential or environmental concerns.
Call for Bids
This is a formal process requiring ministerial approval and is under taken at specific times during the year. The Call is widely posted and is kept open for at least 120 days to allow all interested parties to evaluate the potential of the parcel. The Call for Bids will clearly outline all the obligations including the bid criterion (generally Exploration Licenses), and any conditions such as those regulating the environment, to well commitments or length of term. The regulator announces the wining bid shortly after the closing date. Information on other bidders is kept confidential. This process is fair and allows the bidders to understand exactly what their commitments will be if the win the Bid.
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