Oil Sands - Glossary (Tenure)

The following terms are defined in the context of the Oil Sands Tenure Regulation (AR 50/2000)

This glossary is a copy of the one provided in the Oil Sands Tenure Guidelines released on June 15, 2006.

agreement holder	In this document, the holder of an oil sands permit or lease.
bitumen	A thick, sticky form of crude oil which is so heavy and viscous that it will not flow unless it is heated or diluted with lighter hydrocarbons. At room temperature, bitumen looks much like cold molasses.
bonus	The amount paid for Crown mineral rights. The Crown receives a bonus regardless of whether the rights are sold directly or through a public offering.
continued lease	An oil sands lease which is granted for an indefinite term once the holder of a primary lease (or equivalent) has met the required minimum level of evaluation. Continued leases are classified as producing or non-producing. Non-producing continued leases are subject to escalating rent.
Crown rights	Surface rights or mineral rights which are owned by the government. In this document, “the Crown” refers to the Government of Alberta, unless otherwise specified.
crude bitumen	Defined in the Mines and Minerals Act as "a naturally occurring viscous mixture, mainly of hydrocarbons heavier than pentane, that may contain sulphur compounds and that, in its naturally occurring viscous state, will not flow to a well."
designated representative	In relation to an Oil Sands Agreement, means (i) the person who is designated as the representative of the lessee(s) of the agreement, according to the notice of the designation given to the Minister, or (ii) the lessee of the agreement, if the agreement is held by only one lessee who has not given the Minister a notice of a designation of a representative or has given the Minister a notice of the revocation of a previous designation of a representative.
direct purchase	The purchase of Crown-owned oil sands rights by private sale rather than through the public offering process.
disposition	A grant, a transfer, or an agreement.
escalating rent	A payment due from developers who wish to retain their oil sands rights to non-producing continued leases. Rent for such leases is charged on an escalating basis according to a schedule determined by the Department.
evaluation	The process of gathering descriptive technical data—including geological, geophysical, engineering and production information—about the oil sands zone or zones included in oil sands agreements. Evaluation data provides valuable information about the nature and characteristics of the oil sands resource.
fractional Crown rights	Crown rights held when the Crown holds less than 50% of the rights to the smallest applicable spacing unit, as established by the EUB.
freehold rights	Mineral rights that are not owned by the federal or provincial governments.
in situ	"In place" production methods which use steam, solvent and oxygen injection to recover deeply buried bitumen deposits.
land sale	See public offering.
lease	An oil sands agreement which grants rights to develop and use oil sands resources. Two types of leases are exist under the Oil Sands Tenure Regulation: primary and continued.
lease continuation	The process of continuing the term of a lease to a company or individual who holds a primary lease (or equivalent).
lease selection	The process of converting an oil sands permit to a primary lease(s).
lessee	The holder of a lease according to the records of the Department. In this document, the term lessee refers only to holders of oil sands leases.
minimum level of evaluation (MLE)	See evaluation. Applications for lease selection or lease continuation must be supported by technical data that meets a minimum level of evaluation (MLE), as outlined in section 3 of the Oil Sands Tenure Regulation.
minimum level of production (MLP)	A Department-defined benchmark which establishes the minimum level of production that must be met for an oil sands lease to be classified as producing. The required minimum level of production per term year is 2,400 m3 of bitumen per section, on average, over the lease term.
non-producing	A lease classification which indicates that a lease has not met the required minimum level of production. Non-producing continued leases are subject to escalating rent.
oil sands	Defined in the Mines and Minerals Act as “(i) sands and other rock materials containing crude bitumen, (ii) the crude bitumen contained in those sands and other rock materials, and (iii) any other mineral substance associated with the above-mentioned crude bitumen, sands or rock materials and includes a hydrocarbon substance declared to be oil sands under section 7(2) of the Oil Sands Conservation Act.”
oil sands agreement	A permit or lease.
oil sands well	A well which is drilled to penetrate an oil sands deposit for the purpose of evaluating the deposit or bringing it into production.
permit	An oil sands agreement which is granted for a five-year term.
permitee	The holder of a permit according to the records of the Department. In this document, the term permitee refers only to holders of oil sands permits.
primary lease	An oil sands lease which is granted for a 15-year term or a 21-year term under the previous regulations.
producing	A lease classification which indicates that a continued lease has met the required minimum level of production, and is therefore not subject to escalating rent.
public offering	A public auction, where oil sands rights are awarded to the highest bidder. Public offerings are also called sales or land sales.
royalty	A share of production or equivalent revenue.
sale	See public offering.
spacing unit	Spacing units, which are established by the EUB, specify the spacing of wells drilled into individual reservoirs for the purpose of producing oil, gas, or oil sands products. This regulates production rates and ensures efficient drainage of the resource. The standard spacing unit for oil and oil sands is one well per quarter section.
tenure	The term tenure describes The system through which Crown-owned mineral rights—including oil sands rights—are leased and administered.
term year	The term year for an oil sands agreement is defined by the anniversary date of the agreement. For example, in the case of a lease signed on October 18, 2002, the anniversary date is October 18 of each subsequent year, and each term year spans from October 18 to October 18 of the following year.
undisposed	A term that refers to Crown-owned mineral rights which have not been assigned. Undisposed rights can be acquired through oil sands agreements.

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Oil Sands - Glossary (Tenure)