1. General Structure of Petroleum Ownership and
Regulation
1.1 System of Petroleum Ownership
General
Canada is a federal state comprised of a federal government, ten
provincial governments and three territorial governments. Both the
federal government and the provincial and territorial governments
have the jurisdiction to make laws (generally referred to as Acts)
and other subsidiary legislation (generally referred to as
Regulations). Under this system, there is both state (Crown) and
private (freehold) ownership of petroleum. In addition, the
ownership of petroleum in situ may be split by formation and by
substance.
Canada operates on a "tax and royalty" system and not
on a "production sharing contract" system. Within this
tax and royalty system, there is broad freedom to contract, and
detailed laws and regulations accompany the development of
petroleum.
