Tenure


In Alberta, the Crown owns 81% of the province's mineral rights (approximately 53.7 million hectares of land). The remaining 19% are 'freehold' mineral rights owned by the federal government on behalf of First Nations or in National Parks, and by individuals and companies.

 The tenure system facilitates the leasing of rights that enable companies to explore for and develop petroleum and natural gas from Alberta's resources, for the benefit of Albertans.

Petroleum and natural gas (PNG) rights owned by the Province of Alberta can be acquired through a competitive bid auction held about every two weeks. PNG Leases and Licences are issued to the successful bidders. Yearly, the province holds an average of 24 land auctions (Sales) and issues an average of 2,160 PNG Agreements as per the last three calendar years (2015 to 2017). As of February 2018, Alberta Energy administers about 77,000 PNG Agreements.

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

  • Annual rent of $3.50 per hectare must be paid for each hectare contained within a PNG Lease or Licence

  • Tenure holders must meet all regulatory requirements

  • Rights in a PNG Licence are validated or earned to continue beyond agreement expiry by the drilling of a well.

  • A PNG Lease must be proven productive at the end of its five-year term by drilling, producing, mapping, being part of a unit agreement or by paying offset compensation. This allows the lease to continue indefinitely beyond the end of its term.

               

 

 

​​The tenure ends when an agreement holder can no longer prove his agreement is capable of producing oil or gas in paying quantities or is lost through rental or royalty payment default or by voluntary surrender.

Owners of freehold mineral rights, except the federal government, pay a tax to the Crown based on the production of oil or gas from their holdings. The tax ensures the owners contribute to Alberta's infrastructure and regulatory costs.