The territorial government has started implementing rental fees on onshore significant discovery licences (SDLs) in an effort to bring itself in line with other Canadian jurisdictions.
An SDL is a type of legal authorization a company can have if it discovers oil or gas resources during exploration. According to the GNWT, some companies holding SDLs will have to pay annual rental fees starting now.
The new policy applies to less than half - 34 out of 80 - active SDLs issued between 2000 and today. The GNWT says that it covers about 438,000 hectares, or about 72 per cent of all SDL land in the territory.
The new fee schedule is as follows:
- $8.00 per hectare due end of March 2026;
- $10.50 per hectare due end of March 2027;
- $13.00 per hectare due end of March 2028; and
- an added $2.50 per hectare annually in following years.
The GNWT estimates its rental revenue will be up to $3.5 million in its first year, $4.6 million in year two and $5.7 million annually from years three to ten.
It explains that revenues from rentals will go to the GNWT, the federal government, and Indigenous governments and other organizations that are signatories to the territory's devolution agreement.
If companies choose to release their SDLs instead of paying fees or developing the land, the GNWT says those lands would then become available for new investment.
SDLs issued after July 2020 are also valid for a fixed 15-year term but any issued before that date remain valid indefinitely, according to the GNWT. It adds that fees will be refundable on a one-to-one basis for approved work done on the licensed lands.
