This consolidation is unofficial and is for reference only. For the official version of the regulations, consult the original documents on file with the Registry of Regulations, or refer to the Royal Gazette Part II. Regulations are amended frequently. Please check the list of Regulations by Act to see if there are any recent amendments to these regulations filed with the Registry that are not yet included in this consolidation. Although every effort has been made to ensure the accuracy of this electronic version, the Registry of Regulations assumes no responsibility for any discrepancies that may have resulted from reformatting. This electronic version is for your personal use and may not be copied for the purposes of resale in this or any other form.
Offshore Petroleum Royalty Regulations
made under Section 23 of the
Offshore Petroleum Royalty Act
S.N.S. 1987, c. 9
O.I.C. 1999-337 (June 17, 1999), N.S. Reg. 71/99
as amended by O.I.C. 2007-89 (February 19, 2007), N.S. Reg. 55/2007
Table of Contents
Allowed Cumulative Field Costs
Reservoir Performance Risk Amount
Royalty Returns and Assessments
Assignments of working interest in the Field
Assignment of working interest in Field Assets
Assignment of Assets Proceeds Balance
Adjustment of Royalty Consequences
Further rules for determining costs and revenues
Cost respecting assets not used in the Field
Deemed Allowed Operating Cost and Allowed Capital Cost
Non-Arm’s-Length use of Field Assets
Arm’s-Length use of Field Assets
1 These regulations may be cited as the Offshore Petroleum Royalty Regulations.
Interpretation and application
2 (1) In these regulations
(a) “Abandonment Cost” has the meaning set forth in Section 3;
(b) “Abandonment Loss” has the meaning set forth in Section 4;
(c) “Accord Act (Canada)” means the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act (Canada);
(d) “Accord Act (Nova Scotia)” means the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation (Nova Scotia) Act;
(e) “Act” means, unless the context otherwise requires, the Offshore Petroleum Royalty Act;
(f) “Allowed Cumulative Field Costs” has the meaning set forth in Section 5;
(g) “Arm’s Length” has the meaning set forth in Section 22;
(h) “Arm’s-Length Transaction” means, subject to subsection 22(3), any transaction between Persons that are dealing at Arm’s Length;
(i) “Assessment” means an assessment made by the Minister pursuant to Section 9 of the Act;
(j) “Asset Proceeds Balance” has the meaning set forth in Section 6;
(k) “Assistance” in relation to a cost, expense or other amount means any amount that is a reimbursement, compensation or other payment from a government, municipality or other public authority in respect of the cost, expense or other amount, including any amount of related assistance, or reimbursement or benefit whether as a grant, subsidy, forgivable loan, investment allowance, tax credit or any other form of assistance, not including
(i) any resource allowance or a replacement or successor provision under the Income Tax Act (Canada),
(ii) any deduction in computing income or taxable income that is not in excess of net cost, or
(iii) any similar allowance, provision or deduction under a provincial income tax statute;
(l) “Average BTU Production Content” has the meaning set forth in subsection 7(1);
(m) “Average BTU Sale Content” has the meaning set forth in subsection 7(2);
(n) “Avoidance Transaction” has the meaning set forth in Section 28;
(o) “Board” means the Canada-Nova Scotia Offshore Petroleum Board;
(p) “Business Day” means a day on which chartered banks are open for business in both Calgary, Alberta and Halifax, Nova Scotia;
(q) “Buyout Payment” has the meaning set forth in Section 8;
(r) “Canada-Nova Scotia Benefits” has the meaning set forth in Section 9;
(s) “Commercial Discovery” means a commercial discovery as that term is used in the Accord Act (Nova Scotia);
(t) “Condensate” means a hydrocarbon other than crude oil that is in liquid form at the time of being measured by the relevant Petroleum Royalty Meter and that may contain LPG, excluding impurities;
(u) “Condensate Produced” means the volume of Condensate produced from the Field excluding any Condensate that is or will become LPG Produced from the Field, as measured by the relevant Petroleum Royalty Meter, adjusted to include Condensate that is Waste;
(v) “Condensate Sale Price” has the meaning set forth in subsection 11(1);
(w) “Condensate Sale Proceeds” has the meaning set forth in subsection 10(1);
(x) “Crude Oil” means
(i) crude oil, regardless of gravity, produced at a well head in liquid form, excluding impurities,
(ii) any other hydrocarbons except Condensate, Gas and LPG, and without limiting the generality of the foregoing, includes liquid hydrocarbons that may be extracted or recovered from deposits of oil sand, bitumen, bituminous sand, oil shale or from any other types of deposits on the surface or subsurface or the seabed or its subsoil of the Offshore Area, excluding impurities;
(y) “Crude Oil Produced” means the volume of Crude Oil produced from the Field as measured by the relevant Petroleum Royalty Meter, adjusted to include Crude Oil that is Waste;
(z) “Crude Oil Sale Price” has the meaning set forth in subsection 11(2);
(aa) “Crude Oil Sale Proceeds” has the meaning set forth in subsection 10(2);
(ab) “Cumulative Final Return Allowance” has the meaning set forth subsection 12(6);
(ac) “Cumulative Gross Revenue” has the meaning set forth in Section 16;
(ad) “Cumulative Primary Return Allowance” has the meaning set forth in subsection 12(2);
(ae) “Cumulative Secondary Return Allowance” has the meaning set forth in subsection 12(4);
(af) “Fair Market Value” has the meaning set forth in Section 14;
(ag) “Final Date of Field Payout” has the meaning set forth in subsection 13(3);
(ah) “Final Return Allowance” has the meaning set forth in subsection 12(5);
(ai) “Force Majeure” means an event including, without limiting the generality of the foregoing, an act of God, an act of the public enemy, war, revolution, insurrection, arrest, civil disturbance, blockade, riot, epidemic, strike, a lockout or other industrial disturbance, fire, lightning, earthquake, storms, floods, tsunami, washout, ice-flow, icebergs, high seas, fog, explosion, breakage or accident, shortage of or inability to obtain labour or materials or government restraint, action, delay or inaction, which the Interest Holder was unable to prevent or provide against by the exercise of reasonable diligence at a reasonable cost;
(aj) “GAAP” means Canadian generally accepted accounting principles and all relevant accounting procedures and conventions of the Interest Holder provided that such policies are in accordance with Canadian generally accepted accounting principles;
(ak) “Gas” means natural gas and includes all hydrocarbon substances, other than Crude Oil, Condensate, LPG and impurities, produced in association with gas;
(al) “Gas Produced” means the volume of Gas produced from the Field excluding any Gas that is or will become LPG Produced from the Field, as measured by the relevant Petroleum Royalty Meter adjusted to include Gas that is Waste;
(am) “Gas Sale Price” has the meaning set forth in subsection 11(3);
(an) “Gas Sale Proceeds” has the meaning set forth in subsection 10(3);
(ao) “Gross Revenue” has the meaning set forth in Section 15;
(ap) “Included Risk” for a Field means a risk relating to Field Assets, including the design, construction and assembly of Field Assets, or activities occurring in the Nova Scotia Area and that occur within, or in furtherance of activities within, the Field Area, other than activities in respect of Petroleum Produced that is downstream of the relevant Royalty Valuation Point, excluding political risks, abandonment other than risk related to the conduct of the abandonment work, business interruption or change in applicable Royalty;
(aq) “Income Tax Act (Canada)” means the Income Tax Act, R.S.C. 1985, First Supplement as amended from time to time, except as noted in subsection 22(1);
(ar) “Incremental Asset” means, subject to any agreement in writing between the Interest Holder and the Minister, the interest of the Interest Holder in any asset or any part thereof to the extent that that interest was acquired for use in respect of Petroleum other than Petroleum Produced from the Field, and where an asset would otherwise be a Field Asset, the Interest Holder may elect that the asset be deemed to be an Incremental Asset, provided that the result of the election may not reasonably be expected to result in a significant overall reduction in Royalty payable in respect of the Field or any Other Field;
(as) “Incremental Cost” means any cost that is
(i) incurred in respect of a Field Asset where the cost is a betterment under GAAP, to the extent that the cost is incurred for the purpose of use in respect of Petroleum other than Petroleum Produced from the Field, or
(ii) the cost of an Incremental Asset;
(at) “Independent Auditors’ Report” means a report by the independent auditors of an Interest Holder or of the operator of a Field or any Field Asset, in respect of a Royalty Return for a Period, stating that, in their opinion, the Royalty Return of the Interest Holder for the Period presents fairly, in all material respects, the amount of Royalty payable by the Interest Holder for the Period in accordance with these regulations and any agreement in writing between the Interest Holder and the Minister;
(au) “Interest Holder” for a Field or an area that is subsequently determined to be a Field means
(i) a holder of a share in a Production Licence in respect of the Field or a portion of the Field or a former holder of a share in a Production Licence that has expired, or
(ii) where a Production Licence has not been issued in respect of the Field or a portion of the Field, a holder of a share in an exploration licence or Significant Discovery licence in respect of the Field or a portion of the Field;
(av) “LPG” means hydrocarbons that are composed principally of hydrocarbons that are heavier than methane but lighter than pentane and which are extracted from Condensate or Gas and sold as liquid or compressed ethane, butane or propane, or a mixture of such hydrocarbons;
(aw) “LPG Produced” means, where LPG is extracted by or on behalf of the Interest Holder from Condensate or Gas that has been produced from the Field, the volume of LPG so extracted as measured by the relevant Petroleum Royalty Meter, adjusted to include LPG that is Waste;
(ax) “LPG Sale Price” has the meaning set forth in subsection 11(4);
(ay) “LPG Sale Proceeds” has the meaning set forth in subsection 10(4);
(az) “LTBR” has the meaning set forth in Section 17;
(ba) “Month” means a calendar month, except that where a Period is deemed to begin or end at a particular time under Section 40, the first or last Month of that Period may be a portion of a calendar month, and the first Month shall be the calendar month in which the Field Commencement Date occurs;
(bb) “Month of Cessation” means the Month in which Commercial Production from the Field ceases, other than where it may reasonably be considered that the cessation is only for a temporary period;
(bc) “Net Loss” has the meaning set forth in subsection 18(2);
(bd) “Net Revenue” has the meaning set forth in subsection 18(1);
(be) “Non-Technical Costs” means personnel costs, expenses or other amounts in respect of advertising, public relations, community liaison or legal services, other than in respect of the regulatory process or as required by or under any Canadian federal or provincial enactment, financial services, financial accounting, financial auditing, executive search consultants, human resources, clerical staff, charitable donations, general management consulting, or management consulting in relation to any of the foregoing matters but does not include a cost, expense or other amount described in subclauses (ck)(i) or (ii);
(bf) “Noon Day Rate” for a particular Month or day in a Month in respect of a particular foreign currency means the exchange rate quoted by the Bank of Canada as its noon day rate for converting foreign currency into Canadian dollars utilizing the same method as that used by the Interest Holder for accounting purposes in converting foreign currency into Canadian dollars, except that if the method is contrary to industry standards, another reasonable method shall be used that is not contrary to industry standards and is acceptable to the Minister;
(bg) “Notice” means any notice, consent, request and other document authorized or required to be given pursuant to these regulations or any agreement between the Minister and the Interest Holder entered into pursuant to the Act;
(bh) “Nova Scotia Area” means collectively the Offshore Area and the geographical area of the Province to the inner limit of the Offshore Area;
(bi) “Offshore Area” means the lands and submarine areas within the limits described in Schedule I of the Accord Act (Nova Scotia);
(bj) “Payout Statements” means the payout statements to be filed with a Royalty Return;
(bk) “Period” for an Interest Holder means a period of 12 consecutive Months ending on the last day of the fiscal period of the Interest Holder for financial reporting purposes, or such other date as is acceptable to the Minister, except that
(i) the following periods:
(A) the first Period (which shall start on the Field Commencement Date),
(B) the last Period (which shall end when the Interest Holder may no longer incur Abandonment Costs), and
(C) a Period that commences or ends by virtue of an assignment pursuant to Section 40,
may each be less than 12 Months in duration, and
(ii) the Minister may permit a lesser number of Months in any Period pursuant to a request by an Interest Holder;
(bl) “Person” means a natural person, corporation, association, union, government or government agency and includes a partnership or trust;
(bm) “Petroleum” means a hydrocarbon that is Condensate, Crude Oil, Gas or LPG;
(bn) “Petroleum Produced” means, subject to Section 55, collectively
(i) Condensate Produced,
(ii) Crude Oil Produced,
(iii) Gas Produced, and
(iv) LPG Produced,
and a “Component of Petroleum Produced” means any one of the types listed in subclauses (i) to (iv);
(bo) “Petroleum Royalty Meter” for a Field means a device used to measure volume of Petroleum that is located as provided in Section 19;
(bp) “Petroleum Sale Price” means any or all of the Condensate Sale Price, Crude Oil Sale Price, Gas Sale Price or LPG Sale Price;
(bq) “Pool” means a natural underground reservoir containing or appearing to contain an accumulation of Petroleum that is separated or appearing to be separated from any other such accumulation;
(br) “Primary Date of Field Payout” has the meaning set forth in subsection 13(1);
(bs) “Primary Return Allowance” has the meaning set forth in subsection 12(1);
(bt) “Production Licence” means a licence issued by the Board to produce Petroleum from a Field or Other Field or portion of a Field or Other Field;
(bu) “Production Startup Date” for a Field means the later of the Field Commencement Date and the first day of the Month in which Commercial Production first occurs;
(bv) “Related” and “Related Persons” have the meanings set forth in subsection 22(2);
(bw) “Relevant BTU Adjustment Factor” has the meaning set forth in subsection 7(3);
(bx) “Reservoir Performance Risk Amount” has the meaning set forth in Section 20;
(by) “Royalty” means, subject to any agreement in writing between the Minister and the Interest Holder, the royalty payable in respect to a Field pursuant to these regulations;
(bz) “Royalty Benefit” means a reduction, avoidance or deferral of Royalty or other amount payable under these regulations or an increase in a refund of the Royalty or other amount;
(ca) “Royalty Consequences” to a Person means the Royalty or other amount related to Royalty payable by or refundable to a Person under these regulations;
(cb) “Royalty Paying Month” of an Interest Holder for a Field means a Month for which Royalty is payable by the Interest Holder;
(cc) “Royalty Return” means the return to be filed with the Minister pursuant to Section 29;
(cd) “Royalty Valuation Point” means a place at which the Petroleum first leaves the Field Area;
(ce) “Secondary Date of Field Payout” has the meaning set forth in subsection 13(2);
(cf) “Secondary Return Allowance” has the meaning set forth in subsection 12(3);
(cg) “Short Term Rate” means the minimum rate, from time to time, at which the Bank of Canada makes short term Canadian dollar advances to members of the Canadian Payments Association;
(ch) “Significant Discovery” means significant discovery as that term is used in the Accord Act (Nova Scotia);
(ci) “Support Facility” means a facility located in the Nova Scotia Area including an office, railspur line other than a railspur line that was acquired or constructed primarily for the purpose of transporting Petroleum downstream of the relevant Petroleum Royalty Meter, weather station, helicopter pad, warehousing facility, pipeyard facility or other facility constructed in accordance with a requirement by a government or government authority that is used or intended to be used to provide services or support functions in respect of
(i) Petroleum Produced, or
(ii) activities that occur either within or outside the Nova Scotia Area and that are in regard to the Field, the Field Assets or Petroleum Produced,
other than services or support functions in respect of Petroleum that has passed downstream of the relevant Royalty Valuation Point;
(cj) “Tariff Balance” has the meaning set forth in Section 21;
(ck) “Technical Costs” means
(i) costs, expenses or other amounts in respect of engineers, geologists, geophysicists and other scientists, field personnel, environmental health and safety experts, all experts reasonably required in conjunction with the regulatory process (including public affairs, community liaison and consultants) and management consulting in relation to any of the foregoing matters,
(ii) charges of all regulatory bodies and agencies, excluding fines and penalties, and
(iii) any other costs of personnel which are not Non-Technical Costs;
(cl) “Third Party Costs” means, subject to the provisions of any agreement in writing between the Minister and the Interest Holder, any costs, expenses or other amounts incurred with a Person that deals at Arm’s Length with the Interest Owner and each Other Interest Holder other than
(i) an amount arising under a back-to-back arrangement which is indirectly payable to a Person that does not deal at Arm’s Length with the Interest Holder or any Other Interest Holder of the Field,
(ii) salaries, wages, remuneration, fees or related benefits of an individual who is employed by, or who performs services primarily for and is akin to a contract employee of the Interest Holder, the operator of the Field or any Field Asset or an Other Interest Holder of the Field or a Person that is Related to any such Person, and
(iii) costs of temporary replacement of an individual described in subclause (ii), such as for vacation, sickness, disability, bereavement, maternity leave or paternity leave;
(cm) “Transaction” includes any arrangement or event, and a “Series of Transactions” includes any related Transactions completed in contemplation of the series; and
(cn) “Waste” means Petroleum that has been produced, saved and recovered from the Field Area (other than Petroleum that has passed through the relevant Petroleum Royalty Meter) that meets each of the following tests:
(i) it is waste within the ordinary meaning of that term or as understood in the oil and gas industry,
(ii) it arises as a result of Gross Negligence, and
(iii) it is attributable to one or more of the following:
(A) drilling, equipping, completing, operating or producing of any well in a manner that causes the unnecessary or excessive loss or destruction of Petroleum after being produced, saved and recovered (excluding blowouts),
(B) inefficient storage of Petroleum above ground or underground,
(C) production of Petroleum in excess of available storage, transportation or marketing facilities, or
(D) the escape or flaring of Gas that could be economically recovered or economically injected into an underground reservoir.
(2) Additional definitions are found in Part II of these regulations, and, subject to subsection (3), will apply together with the definitions in subsection (1).
(3) Except as may otherwise be agreed between the Minister and an Interest Holder, Parts I and II of the regulations apply together in determining the obligations and liabilities of the Interest Holder and the Minister in respect of Royalty and other matters relating to a Field Area.
3 (1) Subject to subsection (2), the Abandonment Cost of an Interest Holder for a Field shall be
(a) a cost, expense or other amount incurred in closing down, decommissioning, abandoning, or removing, in whole or in part, a Field Asset, including ongoing repair, maintenance, monitoring or keeping a Field Asset in a safe condition following the cessation of the use of that Field Asset in contemplation of abandonment of that Field Asset within the time frame contemplated by clause (2)(c), restoration of land or seabed in which a Field Asset is or was located and consulting in respect of, or obtaining approval to, any of the foregoing; or
(b) a Buyout Payment made by the Interest Holder, in connection with liabilities relating to a Field Asset, to a Person with whom the Interest Holder deals at Arm’s Length, and where a Buyout Payment has been received by an Interest Holder in respect of a Field Asset, any amount incurred by the Interest Holder and otherwise falling within clause (a) in respect of the Field Asset shall be reduced, after taking into account the applicable Overhead Uplift, by the amount of the Buyout Payment attributable to the Field Asset, adjusted to reflect the intervening time period between the end of the Month in which the Buyout Payment was received and the end of the Month in which the Abandonment Cost under clause (a) is incurred, using the LTBR applicable at the end of the Month in which the Buyout Payment was received, and if such reduction is greater than the actual aggregate Abandonment Costs under clause (a) that are incurred in respect of the Field Asset, the difference shall be included in the Asset Proceeds Balance of the Interest Holder who received the Buyout Payment for the Month in which the final Abandonment Costs in respect of the Field Asset were incurred or the Month of Cessation, whichever is earlier.
(2) A cost, expense or other amount shall constitute an Abandonment Cost only to the extent that
(a) in the case of an amount that is not a Buyout Payment, it is a cost, expense or other amount that is
(i) required to be incurred by statute, regulation, rule or binding order of the Board or other applicable regulatory authority,
(ii) incurred in accordance with prudent and desirable industry practices, or
(iii) approved by the Minister for inclusion as an Abandonment Cost; or
(b) in the case of a Buyout Payment made by the Interest Holder, it is a cost, expense or other amount that may reasonably be expected to be
(i) required to be incurred at a later time by statute, regulation, rule or binding order of the Board or other applicable regulatory authority,
(ii) incurred in accordance with prudent and desirable industry practices, or
(iii) approved by the Minister for inclusion as an Abandonment Cost,
and that would have been an Abandonment Cost of the Interest Holder making the Buyout Payment if it were incurred by that Interest Holder at the later time referred to in subclause (i); and
(c) it is incurred
(i) prior to the end of the Month of Cessation or within 3 years after the end of the Month of Cessation, or
(ii) in accordance with a decision made by the Interest Holder within 2 years after the end of the Month of Cessation to abandon the relevant Field Assets and the abandonment of those Field Assets is completed as soon as reasonably practicable after the decision is made, and in particular without any intentional material delay for the purposes of earning amounts that are of the type described in clause 21(a) respecting Tariff Balance.
4 The Abandonment Loss of an Interest Holder for a Field at the end of the Month shall be
(a) where the Month is the Month of Cessation or any previous Month, the lesser of
(i) the Net Loss for that Month, taking into account any Net Loss brought forward under subsection 27(3) as an addition to Allowed Capital Costs, or
(ii) the aggregate of the Abandonment Costs incurred in that Month and the Abandonment Costs included in any Net Loss from the previous Month brought forward to that Month under subsection 27(3), inclusive in each case of Overhead Uplifts and taking into account any reductions to such Abandonment Costs under subsection 44(8), where the Abandonment Costs included in any Net Loss from the previous Month brought forward to that Month under subsection 27(3) means the lesser of
(A) the Net Loss from the previous Month, or
(B) the aggregate of the Abandonment Costs incurred in the previous Month and any Abandonment Costs included in a Net Loss brought forward to the previous Month under subsection 27(3), computed in accordance with this paragraph, inclusive in each case of Overhead Uplifts and taking into account any reductions to such Abandonment Costs under subsection 44(8);
(b) where the Month is after the Month of Cessation, the aggregate of
(i) the amount determined in clause (a) at the end of the Month of Cessation, and
(ii) the aggregate of all Abandonment Costs, inclusive of Overhead Uplifts, incurred after the Month of Cessation by the Interest Holder in respect of the Field Assets, taking into account any reductions thereto under subsection 44(8).
Allowed Cumulative Field Costs
5 The Allowed Cumulative Field Costs of an Interest Holder for a Field as at the end of any Month shall be the aggregate of
(a) Allowed Predevelopment Costs of the Interest Holder incurred on or before the end of the Month;
(b) Allowed Capital Costs of the Interest Holder incurred on or before the end of the Month, excluding any amount added to Allowed Capital Costs for a Month under subsection 27(3) or 27(4);
(c) Allowed Operating Costs of the Interest Holder incurred on or before the end of the Month;
(d) Royalty payable by the Interest Holder for all previous Months; and
(e) the Royalty that would be payable for the Month if the Royalty were calculated using the formula for calculating Royalty that was applicable in determining the Royalty payable for the immediately preceding Month,
minus
(f) the aggregate of the Tariff Balance and Asset Proceeds Balance of the Interest Holder, determined at the end of the Month but reduced to take into account any reduction in Tariff Balance or Asset Proceeds Balance as a result of the reduction under subsection 44(8) to Allowed Operating Costs or Allowed Capital Costs incurred during the Month.
6 (1) Subject to Section 40, the Asset Proceeds Balance of an Interest Holder at any time during a Month shall be the amount, if any, by which
(a) subject to subsection (2), the aggregate of all amounts, each of which is an amount that is receivable or has been received by the Interest Holder on or before that time, including any deemed proceeds of disposition under Sections 41 or 48, for the sale, lease, licence or other disposition of Field Assets, to the extent of the amount of the cost of the assets, including Overhead Uplift, and taking into account any reduction of the cost for Assistance or increase to the cost under Section 45, that have been included as Allowed Predevelopment Costs or Allowed Capital Costs of the Interest Holder in respect of the Field, before any reduction under subsection 44(8), excluding
(i) any consideration received or receivable on a transaction to the extent that the consideration is for the sale or grant of a working interest, overriding royalty interest, carried interest, net profit interest, penalty associated with acquiring a carried interest or any similar interest in the Field, and
(ii) any insurance proceeds referred to in clause 18(1)(b) respecting Net Revenue, reading that clause without reference to the reductions contemplated by it,
exceeds the aggregate of
(b) the aggregate amount by which the Allowed Operating Costs or Allowed Capital Costs incurred in all previous Months have been reduced under clauses 44(8)(a), (b), or (f); and
(c) where the time is after the Month of Cessation, the amount included in Net Revenue for the Month of Cessation pursuant to subclause 18(1)(d)(i).
(2) For the purposes of clause (1)(a), the proceeds received or receivable by an Interest Holder for the disposition of a Field Asset shall be reduced by any amount that the Interest Holder pays to the purchaser or to another Person, under or concurrently with the disposition of the Field Asset, in consideration for the purchaser agreeing to assume the obligations of the Interest Holder in respect of Abandonment Costs in respect of the disposed Field Asset.
7 (1) The Average BTU Production Content of the Interest Holder in a particular Month for Gas Produced shall be determined by dividing the total heating value of the share of Gas Produced of the Interest Holder that is measured by the relevant Petroleum Royalty Meter in that Month, by the total volume of the share of Gas Produced of an Interest Holder, expressed in such units as are consistent with the units used to determine the Average BTU Sale Content of the Interest Holder in a particular Month for Gas Produced.
(2) The Average BTU Sale Content of the Interest Holder in a particular Month for Gas Produced shall be determined by dividing the total heating value of the share of Gas Produced of the Interest Holder that is disposed of by the Interest Holder in that Month, by the total volume of the share of Gas Produced of the Interest Holder, expressed in such units as are reasonable in the circumstances.
(3) The Relevant BTU Adjustment Factor in a particular Month for Gas Produced shall be determined by dividing the Average BTU Production Content in that Month by the Average BTU Sale Content in that Month, and despite the foregoing, if in a particular Month there has been no sale of Gas Produced in that Month, the Relevant BTU Adjustment Factor for Gas Produced in that Month shall be deemed to be 1.
8 (1) Subject to subsections (2) and (3), a Buyout Payment shall be,
(a) an amount that an Interest Holder of a Field pays to another Person to assume in whole or in part the liabilities of an Interest Holder for Abandonment Costs in respect of a Field Asset of that Field, other than under or concurrently with a Transaction governed by Section 40 or other Transaction involving a disposition of that Field Asset, where the Interest Holder no longer proposes to use the asset for the purposes of any Field;
(b) an amount that an Interest Holder of a Field receives from an Interest Holder of an Other Field in consideration for assuming in part the liabilities of the Interest Holder of the Other Field for Abandonment Costs in respect of a Field Asset of the Other Field, other than under a transaction governed by Section 40 or other transaction involving a disposition of that Field Asset, where the payor no longer proposes to use the Field Asset in whole or in part for the purposes of the Field or any Other Field and the recipient proposes to use the asset for the purposes of the Field; or
(c) a cost of insurance in respect of liabilities for Abandonment Costs, which cost of insurance is not an Allowed Operating Cost, but would be an Allowed Operating Cost if the definition of Included Risk in clause 2(1)(ap) were read without reference to the words “abandonment other than risk related to the conduct of the abandonment work”.
(2) A Buyout Payment made by an Interest Holder of a Field, or the portion of a Buyout Payment that reasonably relates to a particular Abandonment Cost, shall be deemed to have been made on the later of
(a) the day that it is actually made; or
(b) the earlier of the last day of the Month of Cessation and the last day of the Month in which the related abandonment cost was incurred.
(3) Where a Buyout Payment is actually made before the end of the Month of Cessation, the amount of the Buyout Payment shall be adjusted to reflect the intervening time period between the end of the Month in which the Buyout Payment was actually made and the date on which it is deemed to have been made by this definition, using the Short Term Rate if the intervening period is not more than 3 years, and otherwise using the LTBR, applicable at the end of the Month in which the Buyout Payment was actually made.
9 Canada-Nova Scotia Benefits shall be costs, expenses or other amounts incurred by or on behalf of the Interest Holder in respect of research, development, training or any other matters that contribute to the economy, people or government of the Province that are approved by the Minister for inclusion as Canada-Nova Scotia Benefits.
10 (1) The Condensate Sale Proceeds of an Interest Holder in a particular Month shall be the sum of
(a) the aggregate actual sale or other proceeds of Condensate Produced that is disposed of in that Month by the Interest Holder in an Arm’s-Length Transaction, adjusted for Allowed Netback Costs pursuant to these regulations or an agreement in writing between the Minister and the Interest Holder; and
(b) where Condensate Produced is disposed of by an Interest Holder otherwise than in a Transaction that is an Arm’s-Length Transaction, or is delivered by the Interest Holder to another Person in satisfaction of any obligation of the Interest Holder, the amount determined to be the Fair Market Value of the Condensate at the Royalty Valuation Point; and, for greater certainty, the Fair Market Value determined under this clause shall be adjusted, if necessary, for Allowed Netback Costs pursuant to these regulations or an agreement in writing between the Minister and the Interest Holder.
(2) The Crude Oil Sale Proceeds of an Interest Holder in a particular Month shall be the sum of
(a) the aggregate actual sale or other proceeds of Crude Oil Produced that is disposed of in that Month by the Interest Holder in an Arm’s-Length Transaction, adjusted for Allowed Netback Costs pursuant to these regulations or an agreement in writing between the Minister and the Interest Holder; and
(b) where Crude Oil Produced is disposed of by an Interest Holder otherwise than in a Transaction that is an Arm’s-Length Transaction, or is delivered by the Interest Holder to another Person in satisfaction of any obligation of the Interest Holder, the amount determined to be the Fair Market Value of the Crude Oil at the Royalty Valuation Point; and for greater certainty, the Fair Market Value determined under this clause shall be adjusted, if necessary, for Allowed Netback Costs pursuant to these regulations or an agreement in writing between the Minister and the Interest Holder.
(3) The Gas Sale Proceeds of an Interest Holder in a particular Month shall be the sum of
(a) the aggregate actual sale or other proceeds of Gas Produced that is disposed of in that Month by the Interest Holder in an Arm’s-Length Transaction, adjusted for Allowed Netback Costs pursuant to these regulations or an agreement in writing between the Minister and the Interest Holder; and
(b) where Gas Produced is disposed of by an Interest Holder otherwise than in a Transaction that is an Arm’s-Length Transaction, or is delivered by the Interest Holder to another Person in satisfaction of any obligation of the Interest Holder, the amount determined to be the Fair Market Value of the Gas at the Royalty Valuation Point; and for greater certainty, the Fair Market Value determined under this clause shall be adjusted, if necessary, for Allowed Netback Costs pursuant to these regulations or an agreement in writing between the Minister and the Interest Holder.
(4) The LPG Sale Proceeds realized by an Interest Holder in a particular Month for a particular type of LPG shall be the sum of
(a) the aggregate actual sale or other proceeds of LPG Produced of that type that is disposed of in that Month by the Interest Holder in an Arm’s-Length Transaction, adjusted for Allowed Netback Costs pursuant to these regulations or an agreement in writing between the Minister and the Interest Holder; and
(b) where L