(1)  A royalty under this Act –

(a) is not payable in respect of petroleum that the Minister is satisfied was unavoidably lost before the quantity of that petroleum was ascertained; and

(b) is not payable in respect of petroleum that is used by the permittee, lessee, or licensee, as approved by the Minister, for the purposes of petroleum exploration operations or operations for the recovery of petroleum; and

(c) is not payable in respect of petroleum that, with the approval of the Minister, is flared or vented in connection with operations for the recovery of petroleum.

(2)  Where petroleum that has been recovered by a permittee, lessee, or licensee is, with the approval of the Minister, returned to a natural reservoir, a royalty under this Act is not payable in respect of that petroleum by reason of that recovery, but this subsection does not affect the liability of that or any other permittee, lessee, or licensee to pay a royalty in respect of petroleum that is recovered from that natural reservoir.