Archived - Terms and Conditions of the 2010-2011 Call for Bids - Specific to the Beaufort Sea

The Minister of Indian Affairs and Northern Development hereby calls for the submission of bids for Exploration Licences in respect of three (3) parcels comprising the following lands located in the area of the Beaufort Sea & Mackenzie Delta:

Maps & Shapefile of the Call of Bids

• Entire Call area (page size)   (439 Kb)
• Call area south of 75° (page size)   (519 Kb)
• Call area south of 75° (wall size)   (4.46 Mb)
• Call area north of 75° (page size)   (414 Kb)
• Download the shapefile for the 2010-2011 Call for Bids (.zip 7 Kb - NAD27)

Canada Petroleum Resources Act s.s. 24.1

Any submission of a bid in response to a Call for Bids shall be made on the understanding that the terms and conditions as contained herein are accepted and agreed to by the bidder. Such understanding shall include the acceptance of and agreement with the terms and conditions contained within the form of the Exploration Licence and with the Northern Benefits Requirements associated with new exploration programs.

Canada Petroleum Resources Act s.s. 14.3 (e), (f)

Calls for Bids remain open for at least 120 days following publication in the Canada Gazette.

Sealed bids must be delivered, either by registered mail or in person, to the following address prior to NOON, Mountain Time on June 21, 2011.

Compliance Information Analyst
National Energy Board
Frontier Information Office
444 Seventh Avenue S.W.
CALGARY AB T2P 0X8

Each bid submitted in response to a Call must be addressed to the Minister of Indian Affairs and Northern Development and be in double sealed envelopes bearing no corporate identification. The outer envelope should be clearly marked with the date and Call name, i.e. 2010-2011 Call for Bids - Beaufort Sea & Mackenzie Delta. The inner envelope(s) should be clearly marked with the date, Call name and parcel number, i.e. 2010-2011 Call for Bids - Beaufort Sea & Mackenzie Delta - Parcel No___.

Individuals or companies submitting more than one bid may place all bids in a single outer envelope.

The Bid Submission Form is included in this package.

To be accepted, bids must be accompanied by separate financial instruments in respect of the issuance fee (clause 11) and the Bid Deposit (clause 13(a)).

Canada Petroleum Resources Act s.s. 14.3 (g)

Selection of the successful bid will be made on the basis of a single criterion, namely, the total amount of money that the bidder proposes to spend doing exploratory work on each parcel within Period 1 of the term of the Exploration Licence (Work Proposal Bid).

Canada Petroleum Resources Act s.s. 14.3 (d)

Work proposal bids of less than one million dollars for each parcel will not be considered.

Canada Petroleum Resources Act s.s. 15.1

For the purpose of issuing an Exploration Licence, the Minister will choose the highest bid in terms of the single bidding criterion (Work Proposal Bid).

Bids will be accepted only in relation to an entire parcel.

In the event of two or more bids being tied, each bidder involved will be notified of the tie and have the opportunity to submit a new bid in its proper form within a time frame specified by the Department of Indian Affairs and Northern Development, which will not be for more than 24 hours after being notified.

Bidding results will be made available as soon as possible following the closing of the Call via posting on this website.

The identities of unsuccessful bidders and the amounts of their bids will not be disclosed.

Canada Petroleum Resources Act s.s. 16.1, 16.2

The Minister is not required to issue an interest as a result of a Call for Bids. The Minister may issue an interest to the successful bidder within six (6) months after the closing date specified in the Call for Bids.

Canada Petroleum Resources Act s.s. 14.3 (a)

Any Exploration Licence which may result from a Call for Bids will be issued pursuant to the Canada Petroleum Resources Act, R.S., 1985, c. 36, 2nd supplement, or legislation made in amendment thereof or in substitution therefor and any regulations made thereunder from time to time.

Term

Canada Petroleum Resources Act s.s. 14.3 (c)

The term for Exploration Licences issued from the 2010-2011 Call for Bids - Beaufort Sea & Mackenzie Delta will be nine (9) years consisting of two consecutive periods of five (5) and four (4) years.

Frontier Lands Registration Regulations s. 15

Issuance fees of $250.00 per grid, or portion thereof, must be submitted with the bid by separate cheque made payable to the "Receiver General for Canada".

Canada Petroleum Resources Act s.s. 14.3(c)

The drilling of one (1) exploratory or delineation well prior to the end of Period 1 of the term is a condition precedent to obtaining tenure to Period 2.

Such a well should reach a depth sufficient to evaluate a prospective horizon as described in the geological prognosis in the application for Authority to Drill a Well.

Where a well has been commenced and drilling is being pursued diligently, Period 1 shall continue until the well has been completed. Period 2 shall be reduced accordingly.

Failure to drill a well on the lands by the end of Period 1 will result in the termination of the Exploration Licence. Consequently, lands revert to the Crown.

Bidders are reminded that the Minister may, pursuant to CPRA s 33(1), order the drilling of an additional well to delineate, both in terms of extent and geological formation, any significant discovery that may be declared on an exploration licence.

1. Bid Deposit

   1. Each bid must be accompanied by a Bid Deposit for the specific parcel in the amount of $10,000.00, in the form of a certified cheque, money order or bank draft payable to the "Receiver General for Canada". Each Bid Deposit must relate to a single parcel.
   2. Bid Deposits will be returned to unsuccessful bidders, without interest, following announcement of the winning bidder(s).
   3. The Bid Deposit ($10,000.00) will be returned to the winning bidder once the Work Deposit is received by the Rights Administrator.
   
   

2. Work Deposit

   1. The successful bidder will be required to post 25% of the Work Proposal Bid as security for the performance of work within 15 working days. This period commences the day following the notice of winning bids being posted on the Northern Oil and Gas Branch website. This deposit will be referred to as the Work Deposit.
   2. Failure to post the Work Deposit as security for the performance of work will result in forfeiture of the Bid Deposit and disqualification of the bid. In that event, the Minister may, if he sees fit, award the Exploration Licence to the second highest bidder without making another Call for Bids.
   3. The Work Deposit must be submitted in the form of an irrevocable standby letter of credit, a bank draft, money order or certified cheque made payable to the "Receiver General for Canada", or any other negotiable financial instrument approved in advance by the Rights Administrator. Failure to receive pre-approval may result in disqualification of the bid. Company cheques are not considered negotiable financial instruments for this purpose.
   4. Parties submitting a joint bid may submit separate guarantees representing their proportionate share of the required Work Deposit within 15 working days. This period commences the day following the notice of winning bids being posted on the Northern Oil and Gas Branch website. The bid representative as designated on the bid submission form will be responsible for collecting and submitting the holders' share of the Work Deposit.
   5. As expenditures are incurred exploring the Exploration Licence during Period 1 of the term, Work Deposits are refundable in accordance with the Allowable Expenditures. Since Work Deposits represent 25% of the total amount bid for a parcel, refunds are likewise prorated on the basis of 25% of allowable expenditures incurred. Any Work Deposit balance remaining at the end of Period 1 will be forfeit.
   6. Expenditures incurred in Period 2 of the term will not be credited against the Work Deposit as these may be credited against Period 2 rentals.
   
   

3. Drilling Deposit

   The interest owner may, at its option, in order to meet the work requirement, extend Period 1 for one year by posting a Drilling Deposit, in the name of the Receiver General for Canada with the Northern Oil and Gas Directorate of the Department of Indian Affairs and Northern Development, before the end of the last year of Period 1. Where Period 1 is extended by the posting of a Drilling Deposit, Period 2 shall be reduced accordingly.

   This Drilling Deposit shall be in the amount of one million dollars and in a form acceptable to the Department. If a Drilling Deposit is posted, it will be refunded in full if the licence is validated as required to obtain tenure for Period 2 by the drilling of a well. If a validation well is not drilled or has not been commenced within the one year extension, the Drilling Deposit will be forfeited to the Receiver General for Canada upon the termination of the licence at the end of Period 1. If a well has been commenced and drilling operations are being diligently pursued, Period 1 will continue until the well has been completed. Allowable expenditures cannot be applied against the Drilling Deposit.

   Successive one-year extensions to Period 1 are possible by the posting of further Drilling Deposits of one million dollars prior to the end of the extended period. This means, in effect, that with application for a successive extension, the previous year's Drilling Deposit is forfeit on the anniversary of the license.

   The Canada Petroleum Resources Act does not permit the overall term of the licence to extend beyond nine years. As a result, any extension to Period 1 will result in an associated reduction to Period 2.

   As a result of the extension of Period 1 by the posting of a Drilling Deposit, rentals payable in Period 2 will be applicable at the following rates, for the first year after the extension, at $5.50 per hectare and all subsequent years at $8.00 per hectare. All other rental provisions remain applicable.

Canada Petroleum Resources Act s.s. 14.3 (c)

Rentals are not applicable during Period 1 of the term.

Rentals paid during Period 2 are refundable in accordance with the Allowable Expenditures.

Refunds may be made or future rentals may be waived, as the case may be, as expenditures are incurred on the lands subject to the Exploration Licence during Period 2 of the term.

Any rental balance remaining at the end of Period 2 will be forfeit. In Period 2, rentals will be applicable at the following rates:

1st year $3.00/ha

2nd year $5.50/ha

3rd and 4th year $8.00/ha

Canada Petroleum Resources Act s.s. 14.3 (c)

Work Deposits and rentals will be refunded on the following basis, subject to further clarification by the Rights Administrator:

Costs related to the following classes of exploratory work undertaken as part of a program authorized by the National Energy Board may be claimed AT COST:

Data acquisition: by means of reflection seismic surveys or other geophysical, geo-technical or geological surveys, including costs relating to field acquisition and processing, inspection and clean-up.

Data purchase: from vendors at arm's length for re-processing and/or interpretation, to the extent that the data assist the evaluation of the specific licence.

Drilling operations: Costs relating to construction of access routes, preparation of drilling sites, transportation to and from well location and staging areas, onsite drilling and evaluation, support vessels, helicopters, site clean-up and restoration. Drilling operations involved in an exploratory or delineation well may entail waiting on weather, logging, well testing and completion. Extended formation flow testing will not be regarded as an allowable expenditure.

Mobilization and demobilization of equipment and supplies, and any incurred stand-by charges deemed reasonable by the Rights Administrator.

Notwithstanding the above, the Minister may agree to costs claimed with respect to classes of work or activity, or the use of innovative technology not contemplated by this schedule.

General and Administrative: Ten percent (10%) of the above allowable expenditures to reflect other costs not specifically itemized above, and including program specific consultations, data interpretation, regional office support, management and pre-and post program costs.

Guidance Notes on Claiming Allowable Expenditures describe the classes and scope of expenditures which may be viewed as allowable under the terms of Exploration Licences issued pursuant to the Canada Petroleum Resources Act in areas under the jurisdiction of the Minister of Indian Affairs and Northern Development, and are intended to assist interest owners of Exploration Licences to claim refunds from the Northern Oil and Gas Branch of the Department of Indian Affairs and Northern Development. The Guidance Notes may be amended from time to time.

Canada Petroleum Resources Act s. 81

Exploration Licences are subject to the payment of ESRF levies in accordance with section 81 of the Canada Petroleum Resources Act. Where applicable, the ESRF manager will send notices to the representative of the Exploration Licence.