| Interpretation |
In these model clauses: -
(1) "The Act of 1934" and "the Act of 1998" mean, respectively, the Petroleum (Production) Act 1934[5] and the Petroleum Act 1998[6].
(2) The "Regulations" mean the Petroleum (Production) Regulations 1935.
(3) "Licensee" means a person to whom a licence under the Act is granted his successors in title and the persons deriving title under him.
(4) "The licensed area" means the area for the time being upon which the Licensee may exercise powers and privileges granted by this licence.
(5) "Petroleum" includes any mineral oil or relative hydrocarbon and natural gas existing in its natural condition in strata, but does not include coal or bituminous shales or other stratified deposits from which oil can be extracted by destructive distillation.
(6) "Crude oil" means oil in its natural state before the same has been refined or otherwise treated but excluding water and foreign substances.
(7) "Natural gas" means gas obtained from boreholes and wells and consisting primarily of hydrocarbons.
(8) "Casinghead petroleum spirit" means any liquid hydrocarbons obtained from natural gas by separation or by any chemical or physical process.
(9) "Ancillary right" means any facility right or privilege other than the rights granted by this licence at any time vested in the Licensee in respect of any part of the licensed area.
(10) "The Minister" means the Secretary of State.
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| Extension of licensed area |
The Licensee may at any time during the term hereby granted or any renewal thereof, but subject nevertheless to the payment of all minimum annual payments and royalties hereby reserved and the performance and observance by the Licensee of all the terms and conditions hereof, apply to the Minister to extend this licence to any lands, the boundaries of which are delineated in manner prescribed by paragraph (5) of regulation 2, adjoining the licensed area:
Provided that the licensed area as thus extended shall comply in all respects with regulation 3.
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Right of Licensee to determine Licence |
Without prejudice to any obligation or liability imposed by or incurred under the terms and conditions hereof the Licensee may at any time during the term hereby granted or any renewal thereof determine this licence by giving to the Minister not less than eighteen months previous notice in writing to that effect.
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| Right of Licensee to abandon portions of the licensed area |
Without prejudice to any obligation or liability imposed by or incurred under the terms and conditions hereof the Licensee shall be entitled at any time during the term hereby granted or any renewal thereof by giving six months notice in writing to the Minister to surrender the rights granted by this licence in respect of any part or parts of the licensed area:
Provided that -
(a) the part of the licensed area in respect of which the said rights are retained shall comply with the Regulations; and
(b) the part of the licensed area in respect of which the said rights are surrendered shall either be an area in respect of which a licence could be granted in accordance with regulation 3 or be of such shape and size as the Minister may determine.
To the notice hereinbefore referred to shall be attached two copies of the Ordnance Survey Map annexed to the licence upon which shall be delineated the boundaries of the area to be surrendered.
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| Refund of minimum annual payment on determination or surrender |
Upon the determination by the Licensee of the term hereby granted or any renewal thereof, or upon the surrender by him of the rights granted by this licence in respect of any part or parts of the licensed area, the Minister will refund to the Licensee an apportioned part of any minimum annual payment paid by the Licensee in advance in respect of the licensed area or any such part or parts thereof for a period the whole of which has not expired at the date of such determination or surrender.
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| Avoidance of harmful methods of working |
(1) The Licensee shall maintain all apparatus and appliances and all boreholes and wells capable of producing petroleum in good repair and condition and shall execute all operations in or in connection with the licensed area in a proper and workmanlike manner in accordance with methods and practice customarily used in good oilfield practice and without prejudice to the generality of the foregoing provision the Licensee shall take all steps practicable in order -
(a) to control the flow and to prevent the escape or waste of petroleum discovered in or obtained from the licensed area; and
(b) to conserve the licensed area for productive operations; and
(c) to prevent damage to adjoining petroleum bearing strata; and
(d) to prevent the entrance of water through boreholes and wells to petroleum bearing strata; and
(e) to prevent the escape of petroleum into any water-well spring stream river lake reservoir estuary or harbour.
(2) The Licensee shall comply with any instructions from time to time given by the Minister in writing relating to any of the matters set out in sub-clause (1) hereof. If the Licensee objects to any such instruction on the ground that it is unreasonable he may, within 14 days from the date upon which the same was given, refer the matter to arbitration in manner provided by clause .................. hereof (the marginal note whereof is "Arbitration").
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| Provision of storage tanks pipes pipelines or other receptacles |
The Licensee shall use methods and practice customarily used in good oilfield practice for confining the petroleum obtained from the licensed area in tanks gasholders pipes pipelines or other receptacles constructed for that purpose. No petroleum shall, save as a temporary measure during an emergency, be placed or kept in an earthen reservoir.
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| Protection of mines and coal seams |
Where any borehole or well drilled within the licensed area shall penetrate any mine or any workable seam of coal the Licensee shall case such borehole or well in such manner as to prevent any water or petroleum in the borehole or well from entering such mine or workable seam of coal.
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Disposal of waste oil, salt water and refuse |
The Licensee shall drain all waste oil, salt water and refuse from tanks gasholders boreholes and wells into proper receptacles erected and maintained by him for that purpose at a safe distance from such tanks gasholders boreholes and wells and from any buildings or structures whether situate within the licensed area or not and shall dispose of such waste oil salt water and refuse in manner from time to time approved by the Minister. The Licensee shall not use or permit any waste oil, salt water or refuse to flow into or over or to be deposited upon any land, whether situate within the licensed area or not.
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| Distance of boreholes or wells from boundaries of licensed area |
No borehole or well shall except with the consent in writing of the Minister be drilled or made within a distance of 121.92 metres from the boundaries of the licensed area.
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| Preservation of amenities |
The Licensee shall carry out all operations within the licensed area in such a manner as not to interfere unnecessarily with the amenities of the locality in which the licensed area is situate.
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| Measurement of petroleum obtained from the licensed area |
(1) The Licensee shall measure or weigh by a method or methods customarily used in good oilfield practice and from time to time approved by the Minister, all crude oil and natural gas won and saved, other than natural gas used for the purpose of carrying on drilling and production operations and pumping to field storage and refineries, and all casinghead petroleum spirit recovered from the licensed area.
(2) If any measuring or weighing appliance shall at any time be found to be false or unjust the same shall, if the Minister so determines after considering any representations in writing made by the Licensee, be deemed to have existed in that condition during the period of three months prior to the discovery thereof or the period elapsed since the last occasion upon which the same was examined or tested whichever shall be the less and accordingly the royalties payable in respect of such period shall be adjusted.
(3) The Licensee shall not make any alteration in the method or methods of measurement or weighing used by him or any appliances used for that purpose without first informing the Minister and the Minister may in any case require that no alteration shall be made save in the presence of a person authorised by him.
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| Disposal of crude oil and products thereof |
So long as the crude oil or products thereof obtained from the licensed area can be consumed in Great Britain or Northern Ireland, the Licensee shall if so required by the Minister ensure that such crude oil or products thereof shall be sold only for consumption in Great Britain or Northern Ireland.
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| Licensee to keep records of boreholes |
The Licensee shall keep accurate records in a form from time to time approved by the Minister of the drilling, deepening, plugging or abandonment of all boreholes and wells and of any alterations to the casing thereof. A log of all boreholes and wells shall be kept in a form from time to time approved by the Minister containing particulars of the following matters -
(a) the strata and subsoil through which the borehole or well was drilled; and
(b) the casing inserted in any borehole or well and any alteration to such casing; and
(c) any petroleum, water, mines or workable seams of coal encountered; and
(d) such other matters as the Minister may from time to time require.
The Licensee shall deliver copies of the said records and log to the Minister as and when required.
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| Plans and record |
(1) The Licensee shall furnish to the Minister on or before the .................. day of each month during the term hereby granted or any renewal thereof a record in a form from time to time approved by the Minister of the progress of his operations in the licensed area. Such record shall contain -
(a) a statement of the depth drilled in each borehole or well; and
(b) a statement of any petroleum, water, mines or workable seams of coal encountered in the course of the said operations; and
(c) a statement of all crude oil produced, and casinghead petroleum spirit recovered; and
(d) a statement of the areas in which any geological work has been carried out.
(2) Within two months after the end of each year comprised in the term hereby granted or any renewal thereof the Licensee shall furnish to the Minister a record in a form from time to time approved by him of the operations conducted in the licensed area during each such year together with a plan upon a scale approved by the Minister showing the situation of all boreholes or wells. The Licensee shall also indicate on the said plan -
(a) all development and other works executed by him in connection with searching boring for and getting petroleum; and
(b) full particulars of any ancillary rights acquired for the exercise of the rights granted by this Licence.
(3) The Licensee shall also keep accurate geological plans, maps and records relating to the licensed area.
(4) The Licensee shall furnish to the Minister such other plans and information as to the progress of operations in the licensed area as he may from time to time require.
(5) The functions of the Minister under sub-clause (4) of this clause shall not only be exerciseable by him but also be concurrently exerciseable by the Chancellor of the Exchequer.
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Licensee to keep samples of strata petroleum and water |
As far as reasonably practicable the Licensee shall correctly label and preserve for reference for a period of six months characteristic samples of the strata encountered in any borehole or well and samples of any petroleum or water discovered in any borehole or well in the licensed area. The Minister or any person authorised by him shall be entitled to require that representative specimens of any such sample be delivered to the Minister and to retain any specimen so delivered.
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| Reports to be treated as confidential |
All logs records plans maps accounts and information which the Licensee is or may be from time to time required to furnish under the provisions of this licence shall be supplied at the expense of the Licensee and shall (except with the consent in writing of the Licensee which shall not be unreasonably withheld) be treated by the Minister as confidential. The Minister shall nevertheless be entitled at any time to make use of any information received from the Licensee for the purpose of preparing and publishing aggregated returns and general reports on the extent of operations under the Act of 1998.
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| Ancillary rights |
(1) The Licensee shall give notice in writing to the Minister forthwith upon the service or receipt by the Licensee of any notice as to the determination or forfeiture of any ancillary right and shall give at least six months previous notice in writing to the Minister of the date on which the term for which any such right was granted will expire.
(2) The Licensee shall inform the Minister in writing forthwith of the commencement of any action suit proceeding or arbitration either in connection with any ancillary right or arising out of the exercise of the rights and privileges granted by this licence and shall furnish to the Minister such information as to any such action suit proceeding or arbitration as he may from time to time require.
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| Notice of the site and commencement of boreholes and wells |
(1) As soon as the site of any borehole or well has been decided the Licensee shall notify the Minister in writing of the situation thereof and the same shall be described by a certain number in the plans and records which the Licensee is required to keep under the provisions of this licence. The Licensee shall notify the Minister of any change of the number of any such borehole or well which may be made.
(2) No borehole or well shall be commenced and no borehole or well shall be recommenced after work has been discontinued thereat for more than six months unless three clear days notice in writing shall first have been given to the Minister.
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| Abandonment and plugging of boreholes |
(1) The Licensee shall give to the Minister not less than seven days previous notice in writing of his intention to abandon any borehole or well and no cemented string or other permanent form of casing shall be withdrawn from any borehole or well which it is proposed to abandon without the prior consent in writing of the Minister.
(2) Every borehole or well which the Licensee intends to abandon shall, unless the Minister otherwise determines, be so securely plugged by the Licensee as to shut off all water from all petroleum bearing strata mines or any workable seams of coal.
(3) Before commencing to plug any borehole or well which it is intended to abandon the Licensee shall submit to the Minister for his approval particulars in writing of the method of plugging which it is proposed to adopt.
(4) The Minister may in any case require that no borehole or well shall be plugged or any works be executed for that purpose save in the presence of a person authorised by him.
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| Local Resident Manager |
The Licensee shall before commencing any operations in the licensed area furnish to the Minister the name and address of the manager resident in the locality of the licensed area under whose supervision such operations are to be carried on. Any notice which the Minister or any person authorised by him is in accordance with the terms of this licence required or entitled to serve upon the Licensee shall be sufficiently served if the same shall be delivered or sent by post to such manager at such address.
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| Advertisements, prospectuses, etc. |
(1) No statement shall be made either in any notice advertisement prospectus or other document issued by or to the knowledge of the Licensee or in any other manner claiming or suggesting whether expressly or by implication that Her Majesty or any Government Department or any person or body acting on behalf of Her Majesty has or have formed or expressed any opinion that the licensed area is from its geological formation or otherwise one in which petroleum is likely to be obtainable.
(2) The foregoing provisions of this clause or a statement to the effect thereof shall be included in or indorsed on any prospectus, statement in lieu of prospectus, notice, circular, advertisement, or other invitation issued by, or to the knowledge of, the Licensee offering to the public for subscription or purchase any shares or debentures of a company or intended company.
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Indemnity against third party claims |
The Licensee shall at all times keep the Minister effectually indemnified against all actions proceedings costs charges claims and demands whatsoever which may be made or brought against the Minister by any third party in relation to or in connection with this licence or any matter or thing done or purported to be done in pursuance thereof.
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| Security |
(1) In this clause -
(a) "deposit" means the sum deposited with the Minister of Power by the Licensee on the execution of this licence, and
(b) "banker's guarantee" means the banker's guarantee furnished to that Minister by the Licensee on the execution of this licence as an alternative to a deposit,
in accordance with this licence as it had effect when granted and as security for the observance and performance by the Licensee of the terms and conditions of this licence and for the purposes hereinafter mentioned.
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