Lower Your Oil & Natural Gas Royalty Rates

To encourage drilling and to keep wells operating, the following programs are offered to lower the rate used to calculate your royalties:

Low Productivity Well Royalty Reduction

Gas well events that on average produce less than 5,000 m3 of natural gas per day in a calendar month and meet additional requirements (PDF), qualify for the Low Productivity Well Royalty Reduction.

You don’t need to apply for this reduction. We determine the productivity of the well event using information from the BC-S1, Monthly Production Statement. If the well event qualifies, a lower royalty rate is automatically used when your royalty invoice is calculated.

If you believe a well event qualifies, but you are not receiving the reduction, contact us.

Note: This reduction is applied to low production well events that are not eligible for the marginal or ultramarginal royalty reduction.

Marginal Well Royalty Reduction

Shallow gas well events that have an average daily production of less than 23 m3 of natural gas per metre of well depth and meet additional requirements (PDF), qualify for the Marginal Well Royalty Reduction.

You don’t need to apply for this reduction. We determine the productivity of the well event using:

If the well event qualifies, a lower royalty rate is automatically used to calculate your royalties when the average daily rate of production in a calendar month is less than 25,000 m3. Learn how the reduction factor is used to lower your royalty rate (PDF).

We send a notice to all producers with an ownership interest in the qualifying well event. If you haven’t received a notice for a well event that you believe qualifies, contact us.

New or Re-activated Wells

Well events must produce for 12 months before they can qualify for the marginal royalty reduction. However, there is an early recognition program in place that may identify well events that could qualify for the reduction so they can receive the lower royalty rate before the end of the 12 month qualifying period. This can reduce the number of royalty recalculations that need to be done over the initial 12 month period. If your well has been flagged and does not qualify after 12 months, your royalties will be re-calculated and additional amounts will be payable.

Ultramarginal Well Royalty Reduction

Shallow gas well events that meet stringent low productivity and depth requirements (PDF), qualify for the Ultra-Marginal Well Reduction.

You don’t need to apply for this reduction. We determine the productivity of the well event using:

If the well event qualifies, a lower royalty rate is automatically used to calculate your royalties when the average daily rate of production in a calendar month is less than 60,000 m3. Learn how the reduction factor is used to lower your royalty rate (PDF).

We send a notice to all producers with an ownership interest in the qualifying well event. If you haven’t received a notice for a well event that you believe qualifies, contact us.

New or Re-activated Wells

Well events must produce for 12 months before they can qualify for the ultramarginal royalty reduction. However, there is an early recognition program in place that may identify well events that could qualify for the reduction so they can receive the lower royalty rate before the end of the 12 month qualifying period. This can reduce the number of royalty recalculations that need to be done over the initial 12 month period. If your well has been flagged and does not qualify after 12 months, your royalties will be re-calculated and additional amounts will be payable.

Net Profit Royalty Program

The Net Profit Royalty Program (NPRP) is used to promote the development of high risk oil and natural gas resources that are otherwise unlikely to be developed.

This program allows producers to pay lower royalty rates in the initial stages of a project in exchange for higher royalty rates once the producers have recovered their capital costs.

Applications are not currently being accepted for this program. For information about how the program works, see the bulletin Net Profit Royalty Program (PNG 006) (PDF).