Tenure – Overview

Introduction

The tenure system facilitates the leasing of Alberta’s pore space and petroleum and natural gas (PNG) rights. These rights enable companies to explore for and develop geothermal and PNG for the benefit of Albertans.

Tenure in Alberta provides a history of Crown mineral rights and the administration of Alberta's petroleum and natural gas mineral agreements.

PNG sales

PNG agreements are acquired in 2 ways:

1. Public offerings (or sales)
   Sale of petroleum and natural gas rights are held and results are reported approximately every two weeks. The contents of the sale are determined by industry client requests. After each sale, Crown petroleum and natural gas rights are issued in the form of licences or leases to the highest bidder on each parcel.
2. Direct purchase
   ​There are 3 types of direct purchase:

• portions of land
• single substance
• complementing rights in an oil sands area

Geothermal agreements

Alberta Energy is now accepting applications for geothermal leases from companies interested in exploring for and developing geothermal resources. These applications are necessary for any stand-alone geothermal operations that would occur below the base of groundwater protection. For more information, see Submitting a tenure application.

Crown agreement management

Agreement administration

The Crown attaches several expectations to the licences and leases issued:

Annual rent – annual rent of $3.50 per hectare must be paid for each hectare contained within a PNG lease or licence and a geothermal lease.

The interest in an agreement can be transferred to a registered corporation or to an individual over the age of 18 years completely, partially or a change in the Designated Representative can be made.

Encumbrances or liens – these may be registered against a mineral agreement as follows:

A Prompt Payment and Construction Lien* must be submitted using the Electronic Transfer System (ETS). The lien may be registered against Crown agreements pursuant to the Prompt Payment and Construction Lien Act. The lien will expire within 180 days from the date of registration unless legal action is commenced and a Certificate of Lis Pendens is filed in respect of the lien. A Certificate of Lis Pendens indicates that proceedings have commenced in Court in relation to the Prompt Payment and Construction Lien, this also must be submitted in the ETS. More information can be found under registration of encumbrances in ETS support and online learning.

Security Notices* must be submitted using the Electronic Transfer System (ETS), financial institutions or individuals may register security notices against Crown agreements. The agreement is used as collateral for the debt owing.

*Alberta Energy receives court orders manually directing the ministry to register a transfer and discharge a Prompt Payment and Construction Lien or a Security Notice.

Activities which may occur any time in the life of the Crown mineral agreement include: 

• Surrender – The holder of an agreement may surrender all or part of an agreement upon request to Alberta Energy. Surrendered rights are returned to the land bank for future sale.
• Reinstatement – Reinstatement of an agreement that is no longer active, may be requested within 60 days from the date of cancellation.
• Indebtedness – Alberta Energy serves a notice if the holder of an agreement does not pay royalties or annual rental. If payment is not made the agreement may be cancelled and the rights returned to the land bank for future sale.

Continuation and validation

Licence validation and agreement continuation is required in order to continue to hold mineral rights within the Province of Alberta. There are 3 key components:

• Validation of initial term licence – A petroleum and natural gas licence has an initial term of 2, 4, or 5 years, depending on the region of the province in which the agreement is located. Rights in an initial term licence are validated by drilling a well on the licence or by using sections earned by other validating wells on licences that meet established criteria. The area and sections earned depends on depth drilled and geological zones evaluated. Once validated, rights are continued into a 5 year intermediate term.
• Continuation of intermediate term licence or lease – An agreement holder must prove the petroleum and natural gas in the agreement to be productive to continue the mineral rights indefinitely after the 5 year term of a primary lease or intermediate licence expires.
• Notice of Non-Productivity – Alberta Energy routinely monitors agreements continued indefinitely to ensure mineral rights remain productive. If there is no longer a valid basis for continuation, Alberta Energy may serve a notice requiring the lessee to prove the rights productive.

Geothermal continuation

An intermediate or continued term is required to hold geothermal rights within the Province of Alberta. There are 3 key components:

• Initial to Intermediate Term – An agreement holder must prove potential productivity for the geothermal lease to enter into a 5 year intermediate term.
• Continuation of intermediate term – An agreement holder must prove the geothermal lease productive to continue the lease indefinitely.
• Notice of Non-Productivity – Alberta Energy routinely monitors agreements continued indefinitely to ensure the geothermal rights remain productive. If there is no longer a valid basis for continuation, Alberta Energy may serve a one year non-productivity notice requiring the lessee to prove the rights productive.

Amended Agreements

Alberta Energy analyzes zone issues that may arise in petroleum and natural gas agreements and geothermal leases to ensure the rights held by either the lessee or the Crown are correctly recorded. When a change is needed, and agreement is amended to ensure accurate zone identification which is critical to Tenure business such as the posting, sale and continuation of Crown rights, linking wells, serving offsets and identifying trespass. An incorrect zone description can also cause errors in royalty and freehold mineral tax collection.

Agreement Management, PNG Continuation and Geothermal sections within the ETS Support and Online Learning Portal will assist your company to complete and submit applications or requests via the ETS, amend an application, respond to an offer or notice, and to retrieve final documents. These sections also provide information on other frequent activities such as how to use the ETS to provide authorizations, submit PNG Third Party Requests for non-productivity reviews or request an agreement reinstatement.

Crown equity

Alberta Energy ensures all wells licensed by the Alberta Energy Regulator and/or put on production have the corresponding petroleum and natural gas or oil sands rights and ties these wells to the correct agreement to enable the accurate collection of royalty. In addition, Alberta Energy ensures correlating rights are held for geothermal and carbon capture and sequestration wells that are licensed and/or placed on active statuses. Alberta Energy also grants authorization to a company for the purpose of re-entering an existing wellbore and the appropriate use of undisposed Crown lands.

Crown Mineral Activity and Wells is a section in online learning and Crown Mineral Activity is one of the business forms in the ETS.

Alberta Energy negotiates a variety of unit-type agreements, which includes Commercial Gas Storage Unit Agreements to ensure the Crown and the freeholder receive their fair share of royalty. 

Unit agreements and trespass is a section in online learning and Unit Agreement Exhibit A is one of the business forms in the ETS.

Alberta Energy monitors any unauthorized activities within undisposed Crown rights and rights within road allowances. Trespass on Crown minerals is a serious offence which may result in a penalty of $50,000.

Offsets is a section in online learning and one of the business forms in the ETS.

Alberta Energy ensures Crown lands are not being drained by freehold wells without compensation, the department also bills and collects the compensation payments.

Contact

Connect with the Petroleum and Natural Gas Tenure division:

Hours: 8:15 am to 4:30 pm (open Monday to Friday, closed statutory holidays)
Phone: 780-644-2300
Toll free: 310-0000 before the phone number (in Alberta)

Email:
Energy – Bidding – [email protected]
Energy – Crown land data – [email protected]
Energy – Gas royalty – [email protected]
Energy – Oil royalty – [email protected]
Energy – PNG continuations – [email protected]
Energy – Geothermal – [email protected]
Energy – Postings – [email protected]
Energy – Rentals – [email protected]
Energy – Transfers – [email protected]
Energy – Unit agreements – [email protected]
Energy – Well administration – [email protected]
Energy – Crown Mineral Activity – [email protected]
Environment and Protected Areas – GLIMPS – [email protected]

Address:
Alberta Energy
Petroleum and Natural Gas Tenure
North Petroleum Plaza
9945 108 Street*
Edmonton, Alberta  T5K 2G6

*Couriers report to the 2nd floor.