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St. John's, Newfoundland and Labrador, Canada

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Revised Statutes of Newfoundland 1990


CHAPTER P-10

AN ACT RESPECTING PETROLEUM AND NATURAL GAS

Analysis

1. Short title

2. Definitions

PART I
PETROLEUM AND NATURAL GAS

3. Petroleum separate from soil

4. Development area

5. Rights of lessee

6. Payments to owner of undeveloped petroleum

7. Cancellation of order

8. Licences, permits and leases

9. Regulations

10. Proof of financial responsibility

11. Fisheries Compensation Board for Petroleum Related Damages

12. Compensation fund

13. Assessment

14. Contribution for fund

15. Prevention of damages

16. Subrogation

17. Regulations

18. Limitation

19. Trial Division

20. Fees, etc.

21. Survey, prospecting and exploration

22. Assurances of Crown lands to lessee

23. Acquisition of privately owned lands

24. Licensees and permittees

25. Arbitration

26. Order to protect life

27. Order for entry

28. Offence

29. Penalty

PART II
ROYALTIES

30. Definition

31. Royalty generally

32. Basic royalty

33. Incremental royalty

34. Royalty agreement

35. Payment in kind

36. Delivery of petroleum

37. Determining equivalent volume

38. Storage facilities

39. Regulations

40. Notice to pay Crown

41. Reports, returns and audit

42. Failure to pay interest

43. Assessment


Short title

1. This Act may be cited as the Petroleum and Natural Gas Act.

RSN1970 c294 s1

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Definitions

2. In this Act

(a) "Crown petroleum" means petroleum which is vested in the Crown under this Act;

(b) "development area" means an area declared to be a development area by order of the Lieutenant-Governor in Council made under subsection 4(1);

(c) "gas" means natural gas and includes substances, other than oil, that are produced in association with natural gas;

(d) "lessee" means a person to whom a lease has been issued under the regulations;

(e) "licensee" means a person to whom a licence has been issued under the regulations;

(f) "minister" means the Minister of Mines and Energy;

(g) "oil" means

(i) crude petroleum regardless of gravity produced at a well head in liquid form, and

(ii) other hydrocarbons, except coal and gas, and hydrocarbons that may be extracted or recovered from deposits of oil sand, bitumen, bituminous sand, oil shale or from other types of deposits on the seabed or subsoil of the offshore area;

(h) "permittee" means a person to whom a permit has been issued under the regulations;

(i) "person" includes a natural person, a company or other corporation as well as the heirs, executors, administrators, trustees, guardians or other legal representatives of them;

(j) "petroleum", in addition to its ordinary meaning, includes oil and gas;

(k) "privately owned petroleum" means petroleum or a right, title or interest in it which is held by a person other than the Crown;

(l) "undeveloped petroleum" means petroleum which has been declared undeveloped under subsection 4(2); and

(m) "well" means an orifice in the ground made by drilling, boring or in another manner, from which petroleum is obtained or obtainable, or which is being made for the purpose of seeking or obtaining petroleum or ascertaining the presence of petroleum.

RSN1970 c294 s2; 1973 No33 Sch; 1986 c40 s1; 1987 c28 Sch B; 1989 c23 Sch B

PART I
PETROLEUM AND NATURAL GAS

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Petroleum separate from soil

3. (1) Petroleum which exists or which may be found in or under land or land covered by water, including the bed of the sea, and which is within the jurisdiction of the Legislature of the province is declared to be and to have always been property separate from the soil.

(2) Petroleum referred to in subsection (1) is declared to be vested in the Crown and to have always been vested in the Crown, whether the land, or land covered by water, including the bed of the sea, in or under which the petroleum is located was

(a) alienated from the Crown by a statute of the province or by deed, lease, licence or other instrument made under or ratified by a statute of the province;

(b) acquired by or under a statute or law relating to prescription, the limitation of actions, suits or proceedings, or a possessory right; or

(c) acquired by devolution of law or by another means.

(3) Subsection (2) does not apply to petroleum or a right, title or interest in petroleum which, before April 15, 1965, was expressly assured to a person other than the Crown by a statute of the province which is not repealed or by a valid and subsisting deed, lease, licence or other instrument made under or ratified by a statute of the province.

RSN1970 c294 s3

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Development area

4. (1) The Lieutenant-Governor in Council may by order declare an area of the province to be a development area, and the development area shall be defined in the order.

(2) When a development area is defined under subsection (1), the Lieutenant-Governor in Council may in the order defining it or by a subsequent order declare all or a part of privately owned petroleum in the development area which

(a) is not held under an existing permit or lease issued under this Act or the regulations; and

(b) has not, in the opinion of the Lieutenant-Governor in Council, been satisfactorily explored, prospected or developed during the immediately preceding 3 years,

to be undeveloped petroleum.

(3) Subject to the approval of the Lieutenant-Governor in Council, undeveloped petroleum may be dealt with and disposed of by the minister representing the Crown in accordance with the regulations, as if it were Crown petroleum.

RSN1970 c294 s4

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Rights of lessee

5. (1) In respect of undeveloped petroleum, the minister and a lessee shall have the same rights they would have, if the minister were the owner in fee simple of the petroleum and the lessee were his or her tenant.

(2) Subject to the terms and conditions of a licence or permit issued to him or her under the regulations, a licensee and permittee has for the period prescribed in the instrument issued to him or her the right to deal with undeveloped petroleum as if it were Crown petroleum.

RSN1970 c294 s5

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Payments to owner of undeveloped petroleum

6. (1) The minister shall, during the currency of a lease issued by him or her in respect of undeveloped petroleum, pay to the owner of that petroleum royalties received by the minister from the lessee in respect of the undeveloped petroleum which remain in his or her hands after deducting expenses incurred by or on his or her behalf in connection with prospecting, developing or producing the undeveloped petroleum, deducting a management fee not exceeding 10% of the balance remaining after deducting those expenses which may be prescribed by the Lieutenant-Governor in Council and deducting taxes and other money lawfully payable to the Crown by the owner.

(2) Deductions made by the minister for expenses incurred by or on his or her behalf, for management fees and in respect of taxes and other money shall be paid into the Consolidated Revenue Fund of the province.

RSN1970 c294 s6

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Cancellation of order

7. An order may be made by the Lieutenant-Governor in Council cancelling an order made under section 4 relating to the whole or a part of a development area in respect of which there is no existing permit or lease issued under this Act or the regulations, and where an order is made under this section the area to which the order of cancellation relates shall stop being a development area, and the rights of the owner of undeveloped petroleum in the area to which the order relates shall be restored immediately, without the necessity of an assurance of title other than this section, but a further order may be made under section 4 with respect to that area.

RSN1970 c294 s7

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Licences, permits and leases

8. (1) A person shall not undertake or begin an operation relating to the exploration for or exploitation of petroleum within the jurisdiction of the Legislature, except in accordance with an existing licence, permit or lease, issued under the regulations, which relates to the area in which the operation is carried on.

(2) Until regulations are made under section 9 providing for the issue of licences and permits, and with the prior approval of the Lieutenant-Governor in Council, the minister may issue an interim permit to a person authorizing him or her to search, prospect and explore for petroleum in an area in the province described in the interim permit.

(3) An interim permit issued under subsection (2) may be issued for the term and subject to the terms and conditions that, with the prior approval of the Lieutenant-Governor in Council, the minister may prescribe, and the terms and conditions shall be mentioned in the permit.

(4) With the prior approval of the Lieutenant-Governor in Council, the minister may, in an interim permit issued under subsection (2), prescribe, as or as part of the terms and conditions of the interim permit

(a) that the person to whom the permit is issued shall be entitled to receive a permit issued under the regulations when made, where the person so requests within the period prescribed in the interim permit;

(b) the minimum benefits which shall accrue to that person under the permit issued under the regulations; and

(c) that the person to whom the permit is issued shall have and may exercise the rights conferred on a permittee by section 21,

or the terms and conditions referred to in paragraphs (a), (b) and (c), but where the rights referred to in paragraph (c) are conferred by an interim permit, there shall be imposed on the person to whom the permit is issued the liability to pay compensation to be determined in the manner and paid to the persons and in circumstances prescribed or provided in section 21 with respect to the payment of compensation under that section.

(5) A person holding a valid interim permit issued under this section shall have and may exercise the rights and privileges vested in and conferred on the person by the permit and shall fulfil and discharge the duties, obligations and liabilities imposed on him or her by this Act and the interim permit.

RSN1970 c294 s8; 1974 No93 s2

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Regulations

9. The Lieutenant-Governor in Council may make regulations

(a) providing for the issue and renewal of exploratory licences to search for petroleum generally throughout the province and to drill those wells and do other acts and things prescribed in the regulations;

(b) providing for the issue and renewal of permits authorizing a person to prospect and explore for petroleum in a defined area of the province and to drill the wells and do other acts and things in that area that may be prescribed in the regulations;

(c) providing for the issue and renewal of leases to permittees over that part of the area covered by a permit which may be prescribed in the regulations empowering the lessee to

(i) carry out exploratory work and drill wells in the lands comprised in the lease, and

(ii) produce, mine, quarry or extract petroleum from the lands comprised in the lease;

(d) prescribing the procedure for applying for licences, permits and leases and renewals of them, the forms, and the limitations in respect of time and area;

(e) prescribing the terms and conditions upon which licences, permits and leases may be issued and renewed;

(f) prescribing bonds or cash deposits instead of bonds, to be given to the Crown for the Crown's benefit or that of others, conditioned upon the performance by a person of a term or condition of a licence, permit or lease or the carrying out of an undertaking entered into in relation to it;

(g) prescribing the causes for which licences, permits and leases may be suspended and cancelled;

(h) prescribing limitations upon the assignment or other transfer and the devolution of licences, permits and leases and an interest in them, and requiring the consent of the minister, before an assignment or other transfer of a devolution is effective;

(i) prescribing fees and rentals for licences, permits and leases and renewals of them;

(j) providing that the permission of the minister shall be obtained by licensees, permittees and lessees in respect of each well drilled or operated, or proposed to be drilled or operated and prescribing the terms and conditions upon which the permission shall be given;

(k) prescribing the manner in which records of licences, permits and leases, returns from licensees, permittees and lessees, and other matters under this Act shall be kept in the Department of Mines and Energy;

(l) prescribing the information to be gathered, the records to be kept, and the returns to be made by licensees, permittees and lessees concerning a phase of their operations;

(m) prescribing where, within the area covered by a permit or lease issued under this Act, or by another method of concession or grant, including a concession or grant under special statute, a well may or may not be drilled and to what depth and in what manner, and how wells may be located in relation to each other;

(n) prescribing the methods and the equipment and materials to be employed in drilling operations and in the operation of wells;

(o) prescribing the safeguards to be applied in drilling operations and in the operation of wells for the protection and conservation of a petroleum field pool or deposit or source or a part of the preceding, or for the protection of life or property;

(p) for the inspection of drilling operations and of petroleum wells and the operation of them and of works and other things related to them;

(q) restricting the production of wells generally or of a particular class of wells or of a particular well;

(r) for establishing or providing for the establishment of areas as Crown reserves;

(s) providing for the disposal of the whole or a part of a Crown reserve and prescribing the manner, terms and conditions and stipulations of the disposal;

(t) prescribing that an area shall not be available for licences, permits or leases or shall be so available only for purposes of geological or geophysical examination;

(u) assigning to officers and employees in the Department of Mines and Energy duties under this Act;

(v) providing that in the areas of the province that may be designated in the regulations, licensees, permittees or lessees shall not enter upon Crown lands or private lands without first obtaining the permission of the minister or other person that may be designated in the regulations, and prescribing the terms and conditions upon which the permission shall be given; and

(w) generally, to give effect to the purpose of this Act and for securing the orderly and efficient development of a supply of petroleum found in the province.

RSN1970 c294 s9; 1973 No33 Sch; 1986 c40 s3

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Proof of financial responsibility

10. (1) A lessee, licensee or permittee involved in petroleum exploration, development or production activities shall provide in a form satisfactory to the Minister of Finance, proof of financial responsibility in an amount prescribed by the regulations, sufficient to meet the costs of clean-up and rehabilitation incurred as a result of the activities of that lessee, licensee or permittee.

(2) A lessee, licensee or permittee involved in petroleum exploration, development or production activities is strictly liable for

(a) a loss which may occur as a result of pollution caused by that lessee, licensee or permittee; and

(b) the costs of clean-up and rehabilitation incurred by the province or a person.

1983 c19 s1

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Fisheries Compensation Board for Petroleum Related Damages

11. (1) The Lieutenant-Governor in Council may establish a board to be known as the Fisheries Compensation Board for Petroleum Related Damages consisting of a chairperson and 6 other members.

(2) The members appointed under subsection (1) shall include representatives of fishers, fishing companies and the petroleum industry.

(3) The board established under subsection (1) is a corporation.

(4) In sections 11 to 17, "board" means the board established under this section.

1983 c19 s1

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Compensation fund

12. (1) The board shall administer a fund to compensate fishers for damage to fishing equipment or boats involved in the fishery or losses consequential to the fishery including lost fishing time in harvesting arising out of petroleum exploration, development or production activities.

(2) Compensation and other expenses to fishers under subsection (1) and the regulations shall be paid out of a fund to be called the Fisheries Compensation Fund for Petroleum Related Damages that shall be held by the Minister of Finance on behalf of the board.

1983 c19 s1

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Assessment

13. For the purposes of creating and monitoring the fund established under section 12, the Lieutenant-Governor in Council shall establish an assessment or other contributory process to accumulate the fund in the manner and amount that may be prescribed in the regulations.

1983 c19 s1

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Contribution for fund

14. A lessee, licensee or permittee involved in petroleum exploration, development or production activities in the area as prescribed in the regulations shall contribute to the fund established under section 12.

1983 c19 s1

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Prevention of damages

15. The board shall advise the minister of measures for the prevention and mitigation of petroleum pollution damage to the fishery including the implementation of training programs for fishers and persons involved in petroleum exploration, development or production activities.

1983 c19 s1

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Subrogation

16. Where a fisher or fishing company claims compensation under this Act and compensation is paid by the board, the board is subrogated to the rights of the fisher or the fishing company and may maintain an action in the name of the fisher or the company or in the name of the board against the person whom the action lies for the whole or an outstanding part of the claim of that fisher or that fishing company.

1983 c19 s1

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Regulations

17. The Lieutenant-Governor in Council may make regulations

(a) prescribing the amount of financial responsibility and the form of the proof of financial responsibility under section 10;

(b) prescribing the term of office of persons for appointment as members of the board and the rates of compensation of those members;

(c) providing the board with the powers, duties and functions that may be necessary;

(d) prescribing the manner and amount of an assessment or other contributory process under section 13;

(e) prescribing those persons who may be required to pay assessments or make contributions to the fund under section 14;

(f) defining the sources and types of damage for which compensation may be paid by each lessee, licensee or permittee;

(g) prescribing the criteria for establishing the eligibility of persons to claim compensation from a lessee, licensee or permittee;

(h) prescribing the classes of claimants eligible to make claims for compensation from a lessee, licensee or permittee and the procedures to be followed in making those claims;

(i) prescribing the area in which regulations shall apply;

(j) providing for the payment of clean-up and rehabilitation costs;

(k) providing for certificates of proof of financial responsibility;

(l) prescribing the forms to be used for making claims for compensation;

(m) providing for the manner in which claims are to be proven and assignment to the board of a person's claim against the party causing the damage where compensation is made by the board; and

(n) generally, to give effect to the purpose of sections 10 to 16.

1983 c19 s1

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Limitation

18. A claim may not be presented nor an action started for losses recoverable under sections 10 to 17 unless the claim is presented or the action is started within 3 years after the date of the discovery of the loss for which the claim is asserted.

1983 c19 s1

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Trial Division

19. Actions under sections 10 to 18 shall be started in the Trial Division.

1983 c19 s1

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Fees, etc.

20. (1) Fees, rentals and other payments due the Crown under this Act or the regulations in respect of Crown petroleum or undeveloped petroleum shall bear interest at the rate of 6% annually on the sums outstanding from the time they become due until they are paid.

(2) The sums may be recovered as a debt in a court.

(3) The sums until paid shall constitute a 1st and paramount lien upon the subject matter of the permit or lease and upon works, equipment and material constructed or brought upon the land covered by the permit or lease by the permittee or lessee, subject only to precedence of the claim of a worker asserted and prosecuted under the Mechanics' Lien Act.

(4) This section does not apply to a lease issued under this Act before April 1, 1990.

RSN1970 c294 s10; 1986 c40 s4; 1990 c23 s8

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Survey, prospecting and exploration

21. A permittee or lessee shall, while the permit or lease exists, have the rights accruing to him or her under the permit or lease in respect of and limited to petroleum in and under the area to which it applies and may enter upon and survey and prospect and explore lands, whether lands belonging to the Crown or another person, in that area or a part of it by all means which may be necessary to prove the existence, value and extent of the petroleum there whether by geochemical, geological or geophysical or other surveys, diamond drilling, surface or subterranean prospecting, excavations, or works pertaining to the execution of an active exploration and development program, making compensation for damage or injury sustained by the owner of surface, mineral or other rights or the holder of a timber licence within the area, and the compensation shall, unless settled by private agreement, be determined by arbitration in the manner provided in section 25.

RSN1970 c294 s11

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Assurances of Crown lands to lessee

22. (1) The Lieutenant-Governor in Council shall assure to a lessee the surface Crown lands that may be reasonably necessary in connection with the production of petroleum by that person, including the lands that may be reasonably necessary for rights of way, telegraphs, telephones, electric power transmission lines, railways, tramways, roads, waste dump areas, or sites for mills, works, factories, warehouses, townsites, wharves, piers, docks or other shipping facilities, for the purpose of the efficient construction, maintenance or operation of the production of petroleum under this Act, the regulations and a lease, or for another purpose which may be incidental to the efficient production of petroleum, on the terms and conditions as to the rental or otherwise that may be mutually agreed upon as reasonable and equitable between the Lieutenant-Governor in Council and the lessee.

(2) The assurances executed under subsection (1) may be by grant, lease or licence and a lessee may for the purpose of the efficient production of petroleum or for another purpose incidental to that production cut and use Crown timber or take and use Crown quarry material.

(3) Subsections (1) and (2) shall not have the effect of preventing the Lieutenant-Governor in Council from granting to a person, by way of grant, lease, licence or permit, surface or mineral rights in Crown lands, including timber, minerals and quarry materials, together with the right to cut down, carry away or win and get them, where the rights have not been granted or specifically agreed to be granted to the lessee.

RSN1970 c294 s12

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Acquisition of privately owned lands

23. Where a lessee wishes to acquire private lands or rights in them or over them reasonably necessary for the purposes referred to in subsection 22(1), the Lieutenant-Governor in Council shall acquire those lands or rights by purchase, expropriation under the Expropriation Act, or otherwise, and the mode of acquisition shall be determined by mutual agreement, and shall transfer title and possession of those lands or rights to the lessee at cost.

RSN1970 c294 s13

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Licensees and permittees

24. (1) A licensee and permittee may produce, mine, quarry or extract from the lands described in his or her licence or permit those quantities of petroleum which, in the opinion of the minister, are necessary for test purposes or for another purpose authorized by the licence or permit.

(2) A lessee may produce, mine, quarry or extract the petroleum from the lands comprised in the lease and do other things that are authorized by his or her lease.

RSN1970 c294 s14

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Arbitration

25. (1) For an arbitration prescribed in section 21, the permittee or lessee and the owner shall each appoint 1 arbitrator, and where either party fails to appoint an arbitrator after 7 clear days' notice in writing has been given to it by the other requiring it to do so, then the party who has given the notice may apply to the Trial Division or a judge of it, and the court or judge after notice to the party in default shall appoint the arbitrator and the 2 arbitrators so appointed shall appoint a 3rd arbitrator or umpire, and where they fail to appoint the 3rd arbitrator or umpire after 7 clear days' notice in writing from either party to do so, the Trial Division or a judge of it shall, on the application either of the permittee or lessee or the owner, appoint the 3rd arbitrator or umpire, and the 3 so appointed shall proceed to hear the parties on the matter in dispute and make their decision and award.

(2) The award in an arbitration held under this Act shall be made in writing and delivered promptly to the parties, and the decision and award of the arbitrators or of 2 of them shall be final and binding on the parties, except that either party may appeal to the Court of Appeal on questions of law only by giving notice of the appeal to the other party within 1 month following the receipt of the award.

(3) Costs of the arbitration including reasonable compensation for the arbitrators shall be borne and paid equally by the parties or as the arbitrators may otherwise direct.

(4) The Arbitration Act applies in respect of an arbitration under this Act to which the Crown or a minister of the Crown is a party.

RSN1970 c294 s16; 1974 No57 Sch D;
1986 c42 Schs A&B

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Order to protect life

26. Where the Lieutenant-Governor in Council may make a regulation of general or particular application, the minister may, where it appears necessary to do so for the preservation or protection of life or property, of a petroleum field or part of it, of a well or other work or of an investment, make a specific order directed to a particular person, and the order shall, without publication in the Gazette, be of the same effect as a regulation for a period not exceeding 30 days that the minister specifies in the order, but the Lieutenant-Governor in Council or the minister may revoke or suspend the order.

RSN1970 c294 s17

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Order for entry

27. (1) Where resistance or opposition is made by a person to the entry on land, whether the land is Crown land or owned by a person other than the Crown, of a permittee or lessee who is authorized to make the entry by this Act, the regulations or an order made under this Act or the regulations, the Provincial Court judge resident in the district where the land is located or, in his or her absence, another Provincial Court judge may, on the application of the person proposing to enter and on proof of a right to do so, order the sheriff or a peace officer to put down the resistance or opposition and allow the entry to be made.

(2) When a person applies for an order under subsection (1), the Provincial Court judge to whom the person applies may require him or her to give security satisfactory to the judge for the payment of the compensation referred to in section 21, and the judge may refuse to issue the order until the security is given.

(3) The sheriff or peace officer shall carry out an order made under subsection (1) and directed to him or her, and shall immediately make a return to the Provincial Court judge stating the manner in which he or she executed it.

RSN1970 c294 s18

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Offence

28. A person who

(a) contravenes this Act or the regulations or an order made under this Act or the regulations;

(b) fails otherwise to comply with a requirement or obligation imposed upon him or her under this Act or the regulations or an order made under this Act or the regulations; or

(c) makes a false statement in a form or return completed or made under this Act or the regulations or a licence, permit or lease,

is guilty of an offence under this Act, and every day during which the contravention or failure to comply continues or every false statement relating to a separate transaction constitutes a separate offence.

RSN1970 c294 s19

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Penalty

29. A person who is guilty of an offence under this Act is liable on summary conviction to a fine not exceeding $1,000 and in default of payment of the fine, to imprisonment for a term not exceeding 12 months, or to both a fine and imprisonment.

RSN1970 c294 s20

PART II
ROYALTIES

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Definition

30. In this Part "lease" includes a similar instrument issued under the Canada-Newfoundland Atlantic Accord Implementation Newfoundland Act and the Canada-Newfoundland Atlantic Accord Implementation Act (Canada).

1990 c21 s9

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Royalty generally

31. A royalty determined under this Part is reserved to the Crown in right of the province on all petroleum recovered under this Act.

1986 c40 s5

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Basic royalty

32. Petroleum produced according to a lease under this Act is subject to, and each holder of a share in the lease is liable for and shall pay to the Crown in right of the province, a basic royalty in an amount and in a manner prescribed by the regulations.

1986 c40 s5

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Incremental royalty

33. Each holder of a share of a lease is liable for and shall pay to the Crown in right of the province an incremental royalty that may be prescribed by the regulations.

1990 c23 s9

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Royalty agreement

34. (1) A basic royalty, incremental royalty or a royalty in kind reserved to the Crown in right of the province on petroleum may be in accordance with an agreement entered into by the Lieutenant-Governor in Council with the holder of a share of a lease or the holders of all shares of a lease.

(2) Where an agreement referred to in subsection (1) is entered into by the Lieutenant-Governor in Council, that agreement shall have the full effect of law as if set out specifically in this Act and shall prevail notwithstanding another provision of this Act with the exception of subsection (3).

(3) Where a document is inspected, examined, obtained or provided under or in accordance with an agreement entered into under subsection (1), the person by whom it is inspected, obtained or examined or to whom it is provided or a person authorized by the minister may make 1 or more copies of it and a document purporting to be certified by the person by whom it is inspected, obtained or examined or to whom it was provided or by a person authorized by the minister to be a copy is evidence of the nature and content of the original document and has the same probative force as the original document would have if it had been proven in the ordinary way.

(4) After a document has been certified under this section it shall be returned to the person from whom it was received.

1986 c40 s5; 1990 c21 s10

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Payment in kind

35. The minister may give notice to the holder owner of a lease not later than 90 days before the beginning of the royalty year, requiring payment in kind during that royalty year payable under this Part for that royalty year.

1986 c40 s5

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Delivery of petroleum

36. On receipt of a notice under section 35 the total of the royalties payable under a lease for that royalty year under this Part shall be estimated and paid by delivery of an equivalent volume of petroleum, as specified by the minister, of a condition and quality acceptable to the minister, at the time and place specified in the notice, in equal monthly instalments over that royalty year, subject to an audit at the end of that royalty year and to an adjustment, if necessary, payable in money only.

1986 c40 s5

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Determining equivalent volume

37. The equivalent volume of petroleum to be delivered under section 36 shall be determined by converting the total of the royalties payable to an equivalent volume of petroleum using the fair market values determined by the minister under the regulations.

1986 c40 s5

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Storage facilities

38. The minister shall provide, without cost to the interest owner, all tanks or other storage facilities necessary to accept payment of an equivalent volume of petroleum under this Part.

1986 c40 s5

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Regulations

39. (1) The Lieutenant-Governor in Council may make regulations

(a) prescribing the basic royalty on petroleum and the amount of that royalty;

(b) prescribing the incremental royalty on petroleum and the amount of that royalty;

(c) prescribing that the quantity of the royalty on petroleum be calculated at a place other than the place where the petroleum is first measured after it is recovered;

(d) prescribing that the royalty on petroleum be delivered to the Crown in right of the province at a place other than that at which its quantity is calculated;

(e) authorizing the minister to determine any component or value in the calculation of the royalty on a petroleum;

(f) respecting the circumstances under which the quantity of the royalty on petroleum shall be calculated on all or any of the products obtained by processing the petroleum or by reprocessing any of those products instead of on the petroleum;

(g) respecting the waiver or variation of all or part of the royalty on petroleum;

(h) defining the term "net profit" and "royalty year" as used in this Part;

(i) prescribing a royalty in kind, its terms and conditions and its calculation and delivery;

(j) restricting or limiting the meaning of a word or phrase defined in this Act and used in the regulations; and

(k) generally, to give effect to the purpose of this Act.

(2) Regulations made under this section may be related to a specified agreement or class of agreements.

(3) Where regulations are made under this section respecting the calculation of royalty on petroleum recovered under an agreement subject to a unit agreement or unit operation order, the regulations operate notwithstanding anything in the unit agreement or unit operation order.

1986 c40 s5; 1990 c23 s11

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Notice to pay Crown

40. (1) In this section "debtor" means a person indebted to the Crown in right of the province in respect of royalty on petroleum.

(2) Where the minister has knowledge or suspects that a person is or is about to become indebted or liable to make a payment to a debtor, the minister may, by a notice, require that person to pay the money otherwise payable to the debtor to the minister on account of the liability in respect of royalty on petroleum to the Crown in right of the province.

(3) Where a notice is given to a person under subsection (2), the requirement to pay is applicable to all future payments by that person to the debtor until the liability in respect of royalty on petroleum to the Crown in right of the province is fully satisfied.

(4) The receipt by the minister of money paid as required under subsection (2) or (3) is a sufficient discharge of the liability to the debtor to the extent of the payment.

(5) A person who discharges a liability to the debtor without complying with a notice given to that person under subsection (2) is liable to pay to the minister an amount equal to the liability discharged or the amount that person was required to pay to the minister, whichever is the lesser.

(6) Where a person carries on business under a name or style other than that name, a notice to that person under subsection (2)

(a) may be addressed to the name or style under which that person carries on business; and

(b) is validly given if it is left with an adult person employed at the place of business of the addressee.

(7) Where 2 or more persons carry on business as a partnership, a notice to those persons under subsection (2)

(a) may be addressed to the partnership name; and

(b) is validly given if it is given to 1 of the partners or left with an adult person employed at the place of business of the partnership.

1986 c40 s5

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Reports, returns and audit

41. Parties required by this Part to file reports and returns respecting royalties shall file the reports and returns in the form and manner prescribed by the regulations, shall submit the information or documentation in connection with the reports and returns that may be prescribed by the regulations and are subject to the audit or examination that may be prescribed by the regulations.

1986 c40 s5

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Failure to pay interest

42. The minister has the same remedies and powers in relation to the failure to pay interest owing to the Crown in right of the province under this Act that the minister has in relation to the failure to pay the principal amount on which the interest is computed.

1986 c40 s5

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Assessment

43. (1) The minister may at any time examine a report or return, assess or reassess the royalty payable for a period and give a notice of the assessment to the party required to pay royalty, but liability for royalty is not affected by an incorrect or incomplete assessment or by the fact that no assessment has been made.

(2) For the purposes of this Part,

(a) subject to being varied or vacated on an objection or appeal and subject to a reassessment, an assessment is valid and binding notwithstanding an error, defect or omission in it; and

(b) an assessment includes a reassessment.

(3) A party who objects to an assessment may, within 90 days from the date of mailing of the notice of assessment, give a notice of objection to the minister by registered mail setting out the reasons for the objection and all the relevant facts.

(4) On receipt of a notice of objection, the minister shall reconsider the assessment and confirm, vary or vacate the assessment and give notice of the decision to the objector by registered mail.

(5) Where the minister confirms or varies an assessment under subsection (4) or fails, within 90 days after the date of mailing of the notice of objection, to notify the party objecting that the minister has vacated, varied or confirmed the assessment, that party may appeal to the Trial Division to have the assessment vacated or varied.

(6) An appeal under subsection (5) may not be instituted after the expiration of 90 days from the date of mailing of a notice confirming or varying an assessment or, where no such notice is given, after the expiration of 180 days from the date of mailing of the notice of objection.

(7) Where an appeal is taken under subsection (5), the Trial Division shall immediately give notice of the appeal to the minister who, immediately after receiving the notice, shall forward to the court copies of all reports or returns, notices of assessment, notices of objection and other documents that are relevant to the appeal.

(8) The Trial Division may dispose of an appeal under subsection (5) by dismissing it or by allowing it and vacating or varying the assessment and may make the orders that are necessary for giving effect to a disposition.

(9) Proceedings in an appeal to the Trial Division under subsection (5) shall be held in private on request made to the court by a party to the appeal.

1986 c40 s5

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