Yukon government looks to change oil and gas regulations

The Yukon government is looking to make changes to the territory’s Oil and Gas Act, to encourage more exploration while giving itself more control over “bad apples.”

The Yukon government is looking to make changes to the territory’s Oil and Gas Act, to encourage more exploration while giving itself more control over “bad apples.”

One of the changes would allow the government to cancel a well licence if an operator is out of compliance. Under the current legislation, the government can impose fines and other penalties, but cannot cancel a licence.

“We are of the view that that is an essential part of the toolbox,” said Ron Sumanik, director of oil and gas resources with the Department of Energy, Mines and Resources. “If there are bad apples consistently operating outside the laws, maybe they shouldn’t be doing business here in the Yukon.”

Sumanik said he was surprised that licence cancellations and a number of other proposed changes were not part of the original 1998 legislation.

For instance, one of the amendments would allow names of the owners of oil and gas leases to be released to the public, which is standard practice in all other Canadian jurisdictions. Under the current Yukon legislation, that is not allowed.

“I can’t explain that,” Sumanik said. “We don’t understand how that ever entered into our legislation. It’s Yukoners’ resource and they deserve to know who the holder of a lease is.”

Another change would ensure that licence owners are still liable for a well even after the licence is cancelled. Currently, an operator can drill a well, seal it off and abandon it, as long as it meets the environmental and safety standards of the day. But if those standards change and the well needs more work to bring it back into compliance, the operator is no longer on the hook for that work.

These amendments would change that. Sumanik said the idea is to make sure oil and gas exploration functions on a “polluter pays” principle.

But other proposed amendments are designed to make oil and gas exploration easier and more affordable. According to a government discussion document, there have been only 76 oil and gas wells drilled in the Yukon, compared to tens of thousands in Alberta and British Columbia.

To encourage exploration in the Yukon, the government is suggesting that exploration permits be extended to 12 years, up from the standard 10-year permits currently in place.

Because the Yukon is so isolated, Sumanik said, it makes sense to have longer permits.

“We don’t have an oil and gas service industry in the Yukon,” he said. If an oil rig breaks down, he added, the closest service company might be thousands of kilometres away.

Another amendment proposes a change to the rent collected by the Yukon government during the second half of a permit’s life. That rent is supposed to encourage operators to do exploration work instead of just sitting on a permit.

The change would allow operators to claim expenses against the rent they pay. That would change rent payments into something like a deposit for operators that are actually doing work.

“If a resource is discovered, you want to get it to production,” said Sumanik. “It… puts money back in the pocket of the proponent who we hope will choose to put it back in the very same project.”

The government is also proposing a change to benefit agreement negotiations with First Nations. Currently, if the government and a First Nation cannot agree on a benefit agreement for a project on Yukon land, it falls to the First Nation to initiate a dispute resolution process. If the First Nation chooses not to, the project stays on hold.

The change would allow the government to initiate that process as well as the First Nation. The dispute resolution process ends with the government making a decision about whether and how a project on Yukon land will proceed.

Sumanik said this change was designed to prevent a prolonged “stalemate” between the government and First Nations. But he added that there has never been a situation where a project was delayed because of the law as it exists right now.

The government is looking for feedback from the public on the proposed amendments by 5 p.m. on September 14. A discussion document is available at www.yukonoilandgas.com.

Contact Maura Forrest at

maura.forrest@yukon-news.com

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