Gas cost allowance

The gas cost allowance (GCA) offsets the capital and direct operating costs associated with:

• Processing the Crown’s share of raw gas at a producer-owned gas plant, and
• Transporting the Crown’s share of residue gas, oil or natural gas liquids (NGL) through a producer-owned sales line

The GCA is deducted from the producer's monthly producer price and is used to value the crown's share of royalty volumes. 

Who may receive the GCA

A producer may receive the GCA if they:

• Own a gas plant or sales line for their own use
• Pay to use a producer-owned gas plant or sales line

Producers who pay custom processing fees to process or transport their gas at producer-owned facilities may only claim the approved GCA rate rather than their custom processing fee.

How the GCA is calculated

The GCA rate is calculated by dividing the eligible costs (depreciation, return on rate base and direct operating costs) by the plant or sales line’s annual throughput. The GCA rate flows from the application of the allowable capital and operating costs.

Estimated costs and throughput are reported by the facility operator annually and are adjusted using the actual amounts reported in the following year.

Only the actual GCA rate is calculated based on the actual allowable capital and operating costs incurred at the plant. This amount is then subtracted from the actual plant's throughput raw gas volumes.

The estimate GCA rate is calculated based on the estimated allowable capital and operating costs incurred at the plant. This amount is then subtracted from the estimated plant throughput raw gas volumes, as well as the allowance adjustments that were carried forward from the previous year.

Eligible costs

To qualify as an eligible capital cost or direct operating cost, a cost must:

• Be directly attributed to the producer-owned plant or producer-owned sales line
• Be incurred by the producer
• Be considered by the administrator to be reasonable in the circumstances
• Not have been recovered from another party

To learn about the full requirements for eligible costs, see Schedules I and II of the Gas Cost Allowance Order.

Apply for the GCA on Petrinex

To receive the GCA, you need to apply every year by March 10 through the BC Allowable Cost Process on Petrinex.

We will review your request by March 20 and the GCA rate will be applied to your January to December production month royalty invoices.

If you set up a new reporting facility

For new reporting facilities, provide the details of your estimated capital costs on Petrinex around two months before start-up. This will help ensure that the estimated GCA rate is as accurate as possible. 

More information on GCA

Further information on GCA is available in section 3.5.1 of the Petrinex Readiness Handbook (PDF, 2.5MB). Any changes made throughout the year should be reported as required.