Part 5Retention

Part 5—Retention 28—Retention licences (1) There will be 4 categories of retention licence: (a) a petroleum retention licence; (b) a geothermal retention licence; (c) a gas storage retention licence; (d) a regulated substance retention licence. (2) A retention licence protects the interests of the licensee in a regulated resource of the kind relevant to the category of the licence for a reasonable period in connection with 1 or more of the following purposes: (a) to facilitate— (i) proper evaluation of the productive potential of a discovery that has been made by the licensee; or (ii) carrying out the work necessary to bring the discovery to commercial production; or (iii) without limiting a preceding subparagraph, in the case of a gas storage retention licence—the testing of the natural reservoir for the storage of a regulated substance; (b) without limiting paragraph (a), to provide a means by which the licensee may maintain an interest in a regulated resource until production is commercially feasible (subject to limits and conditions under this Act); (c) to facilitate other activities considered appropriate by the Minister. (3) Accordingly, a retention licence authorises the licensee to carry out in the licence area (according to the terms of the licence)— (a) operations to establish the nature and extent of a discovery of regulated resources; and (b) operations to establish the commercial feasibility of production and appropriate production techniques; and (c) other regulated activities specified in the licence. 30—Grant of retention licence (1) Subject to this Act, a person is, on application, entitled to the grant of a petroleum retention licence, a regulated substance retention licence or a geothermal retention licence in respect of a discovery of a relevant resource if— (a) a regulated resource has been discovered in the area for which the retention licence is to be granted and the existence of the regulated resource has been demonstrated by the drilling of at least one well; and (b) the person holds, or held at the time of the application for the retention licence, an exploration licence or a production licence over the area for which the retention licence is to be granted; and (c) the exploration licence or production licence authorised exploration for or production of a regulated resource of the relevant kind; and (d) the Minister is satisfied that production of the regulated resource is not currently commercially feasible, but is more likely than not to become commercially feasible within 15 years. (1a) Subject to this Act, a person is, on application, entitled to the grant of a gas storage retention licence in respect of a natural reservoir if the Minister is satisfied as to 1 or both of the following: (a) that it is reasonable to facilitate the testing of the natural reservoir for the storage of a regulated substance; (b) that the use of the natural reservoir for the storage of a regulated substance is not currently commercially feasible or reasonable (including by virtue of the fact that production of a regulated substance from a related area is not currently commercially feasible). (2) If the holder of an exploration or production licence is in default under the terms of the licence, the Minister may decline to grant a retention licence until the default is remedied. 31—Area of retention licence (1) The area of a petroleum retention licence or regulated substance retention licence must not exceed— (a) twice the area under which (according to a reasonable estimate at the time when the licence was granted or last renewed) the discovery is likely to extend; or (b) 10 000 km², whichever is the lesser. (2) The area of a geothermal retention licence or gas storage retention licence must not exceed 1 000 km2. 32—Term of retention licence (1) The term of a retention licence is 5 years or such term of less than 5 years as specified by the Minister in a particular case. (2) A retention licence may be renewed from time to time for a further term but only if the Minister is satisfied that production is not currently commercially feasible but is more likely than not to become commercially feasible within the next 15 years. (3) However, in the case of a gas storage retention licence it is unnecessary to be satisfied as to the 15 year period referred to in subsection (2) unless the Minister assesses or determines that the natural reservoir is more likely than not to be used in connection with the production of petroleum. (4) Subsection (3) does not derogate from the operation of section 36 or 79. 33—Work program to be carried out by retention licensee (1) A retention licence may include a mandatory condition requiring the licensee to carry out work, in accordance with a work program approved by the Minister, for either or both of the following purposes: (a) to establish the nature and extent of a discovery of regulated resources; (b) to establish the commercial feasibility of production and appropriate production techniques. (2) A work program to be carried out under the licence must, if the Minister so requires, be submitted with the application for the licence and from time to time as required under the conditions of the licence. (3) The Minister may approve a proposed work program with or without addition or variation. (4) The Minister may, on application by a licensee— (a) approve deferment of the work to be carried out under an approved work program; and (b) approve variation of the work program by substitution for work previously programmed of work that is, in the Minister's opinion, of equal or greater value. (5) To avoid doubt, Ministerial approval is not required for the acceleration of work to be carried out under an approved work program.