P&NG Direct Purchase FAQs
Frequently Asked Questions for Direct Purchases - Crown Petroleum and Natural Gas Rights
What is a direct purchase?If I want to purchase a portion of land , what is the smallest applicable spacing unit?
What documentation do I need to submit to prove that I control the freehold portion?
If my Land Agent holds the freehold agreement, can I apply for the direct purchase?
What is the cost to purchase minerals through a direct purchase?
How long does it take to process a direct purchase request?
What if the rights I want to acquire do not qualify for a direct purchase?
How do I apply for a direct purchase?
What is a direct purchase? There are three types of direct purchases.
- Portions of Land
A portion of Crown rights in a spacing unit can be acquired through a direct purchase if you control the freehold rights in the balance of the spacing unit (i.e. hold the title to the freehold mineral rights or have an active freehold lease with the title owner). Simply being party to a Farm Out Agreement or Letter of Intent does not mean that you control the freehold rights in the spacing unit.The portion of Crown rights must be less than 50 per cent of the smallest applicable spacing unit for the land.
- Single Substance
The holder or designated representative of an active agreement that grants the rights to a single substance (natural gas or petroleum) can acquire the rights to the corresponding single substance.
A Land Agent may authorize his client (for the existing agreement) to facilitate the purchase.
- Complementing Rights in an Oil Sands Area
If I want to purchase a portion of land, what is the smallest applicable spacing unit?
A normal oil spacing unit of a quarter section or a smaller special spacing unit as designated by the Energy Resources Conservation Board will be used to calculate the percentage of Crown rights in each spacing unit. For example, if one legal subdivision spacing exits for oil and you wish to purchase gas, the one legal subdivision spacing will be used to determine if the Crown portion is less than 50 per cent of each spacing unit you are purchasing.
What documentation do I need to submit to prove that I control the freehold portion?
To support your request you must submit a statutory declaration stating that you or the company have ownership of or control over the P&NG in the freehold portion of the spacing unit. This control may occur by virtue of being the owner of a percentage of undivided interest in the P&NG or the holder of a percentage of undivided interest in the P&NG under a valid and existing freehold lease. The statutory declaration can be found on the Department's website at http://www.energy.gov.ab.ca/ under Our Business, Tenure, Forms & Reporting.
You must indicate on the statutory declaration the substance and zone(s) you own or hold a controlling interest. The Crown lease will be issued with the available corresponding mineral rights.
If my Land Agent holds the freehold agreement, can I apply for the direct purchase? When a Land Agent holds the freehold agreement for a third party, and the Agent does not wish to facilitate the direct purchase, the Agent can advise the Crown of their client's name and provide authorization to the Crown to deal directly with their client. The bonus, fee and rent will be requested from the client and the agreement will be issued in the Land Agent's name.
What is the cost to purchase minerals through a direct purchase?
The bonus to purchase a portion of land is $500.00 per hectare with a minimum bonus of $2,000.00.
The bonus to purchase a single substance is calculated at 75 per cent of the regional price per hectare based on the average of the prices bid in the region (Plains, Northern or Foothills) for the last six petroleum and natural gas sales held immediately prior to the date the request is received.
The bonus to purchase complementing rights in an oil sands area is calculated at 125 per cent of the regional price per hectare based on the average of the prices bid in the region (Plains, Northern or Foothills depending on where the requested land is located) for the last six petroleum and natural gas sales held immediately prior to the date the request is received.
The regional price is posted on the Department's Web site on the Friday after each public sale at: http://www.energy.gov.ab.ca/, under Our Business, Tenure, Petroleum & Natural Gas Sales, Direct Purchase, Direct Purchase Pricing.
A 625.00 issuance fee is applicable to all direct purchases. The first year's rent of $3.50 per hectare with a minimum rent of $50.00 is also required except, when purchasing a single substance where your existing agreement will be amended to include the additional substance.
How long does it take to process a direct purchase request?
Once a request, including all the required information is received, the processing time is approximately two months.
What if the rights I want to acquire do not qualify for a direct purchase
If a parcel of Crown rights does not qualify for a direct purchase or the applicant finds the direct purchase terms unsuitable, the parcel may be posted in the first available public sale.
How do I apply for a direct purchase?
A request for a direct purchase must be submitted using the Departments Electronic Transfer System (ETS). ETS gives you access to a web-based posting system for petroleum and natural gas rights.
You can submit a request by logging into ETS and choosing the "Posting Requests" folder.
If you do not have an ETS account, you will need to apply for an account so that you can do business electronically with the department. More information about ETS and how to set up an account or change your current account is available here.
If you have questions concerning direct purchases of Crown petroleum and natural gas rights, please call our information line at 780-644-2577.