Credits

When you produce oil or natural gas in B.C. you may qualify for a credit. Credits are applied to your royalty invoice and reduce the amount of royalty you pay.

Natural Gas Deep Well Credit

To offset the higher drilling and completion costs associated with deep wells, qualifying wells (PDF) will receive a credit on their monthly royalty invoice if they are actively producing.

Information provided by the well operator on the directional survey and completion reports filed with the Oil and Gas Commission (OGC) is used to calculate the credit. Find out more about how the credit is calculated (PDF).

Each producer's share of the credit is based on their ownership interest in the deep well events as reported on the BC-12, Reporting Interest Statement.

If the well event also qualifies for the deep discovery well exemption, the credit won’t be applied while the natural gas is exempt from royalties. However, your credit amount will be reduced by the cumulative amount of the exemption you received.

The credit is applied to the net royalties payable for all deep well events within the same well. However, if the net royalty amount would be zero in a production month, a minimum royalty amount (PDF) is payable.

The credit balance will continue to be reduced by the monthly royalties (minus the minimum amount payable) until the full amount of the credit has been used.

Natural Gas Deep Well Re-Entry Credit

When a previously drilled well is drilled deeper to maximize the development of known resources, qualifying wells (PDF) will receive a credit on their monthly royalty invoice if they are actively producing.

Information provided by the well operator on the directional survey and completion reports filed with the Oil and Gas Commission (OGC) is used to calculate the credit. Find out more about how the credit is calculated (PDF).

Each producer's share of the credit is based on their ownership interest in the deep well events as reported on the BC-12, Reporting Interest Statement.

If the well event also qualifies for the deep discovery well exemption, the credit won’t be applied while the natural gas is exempt from royalties. However, your credit amount will be reduced by the cumulative amount of the exemption you received.

The credit is applied to the net royalties payable for all deep well events within the same well. However, if the net royalty amount would be zero in a production month, a minimum royalty amount (PDF) is payable.

The credit balance will continue to be reduced by the monthly royalties (minus the minimum amount payable) until the full amount of the credit has been used.

Only one credit type (deep well or deep re-entry well) can be used to reduce royalties on a well event. If a deep re-entry well event is in the same zone as a deep well event, the deep re-entry credit will displace any unused balance of the deep well credit.

For more information on deep well credits, see section 5.9 in the Oil and Gas Royalty Handbook (PDF).

Infrastructure Credits

To offset the cost of exploration and production in under-developed areas of B.C., qualifying companies can receive a credit for up to 50% of the cost to construct roads or pipelines.

Each year, applications for the Infrastructure Royalty Credit Program are requested. The amount you are approved for can be claimed against the royalties you owe on the BC-15, Petroleum and Natural Gas Remittance Advice.