Gas cost allowance (GCA)

Gas cost allowance (GCA), called “Allowable Costs” in Petrinex, offsets the capital costs and direct operating costs associated with:

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

The GCA reduces the amount of oil and gas royalties you have to pay every month.

On this page

• Who can receive the GCA
• Eligible costs for the GCA
• Calculation of the GCA rate
• How to receive the GCA (Allowable Costs in Petrinex)

Who can receive the GCA

A producer can receive GCA if they do any of the following:

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

If you’re a producer who pays to have your gas processed or moved on a sales line, you can only claim the approved GCA rate rather than the custom processing fee.

Eligible costs for the GCA

To qualify as an eligible capital cost (in other words, a depreciable capital addition) or direct operating cost, the cost must be:

• Directly attributed to the producer-owned plant or producer-owned sales line
• Incurred or paid by the producer
• Considered by the administrator to be reasonable in the circumstances
• Not already recovered from another party

Find examples of eligible and ineligible costs on the page how to submit information for GCA in Petrinex. For the legislation that defines the eligibility of costs, see Schedules I and II of the Gas Cost Allowance Order (PDF, 100KB).

Calculation of the GCA rate

The GCA rate is calculated as follows:

 (Depreciable capital additions + return rate on base + direct operating costs) ÷ annual throughputs × operating months

Estimate and actual GCA rates

Either the estimate or the actual GCA rate is applied to your royalties.

You must report estimate costs and throughputs at the beginning of each year. This produces the estimate GCA rate. The rate is applied for that calendar year’s royalty invoices. The estimate rate is calculated based on the estimated capital and operating costs. The costs are then divided by estimated annual throughputs and then multiplied by the number of operating months.

You may report actual costs and throughputs the following year, in which case the estimate rate is adjusted to produce the actual GCA rate. The actual rate is calculated based on the actual allowable capital and operating costs incurred at the plant.

The Ministry of Finance may ask you to resubmit your information if an estimate GCA rate for the following year is materially different from what was filed in the prior year. In that case, your GCA will be recalculated.

How the GCA rate reduces your oil and gas royalties

Oil and natural gas liquid royalties

For oil and natural gas liquid (NGL), the GCA rate contributes to transportation costs. Transportation costs are deducted in the calculation of oil and NGL royalties, which reduces the amount you pay on your monthly oil royalty invoice (for oil) or gas royalty invoice (for NGL).

Gas royalties

For gas, the GCA rate is factored into the calculation of the monthly producer price. Since the producer price can be used as the gas reference price in the calculation of your royalty rate, it may reduce the amount you pay on your monthly gas royalty invoice.

How to receive the GCA (Allowable Costs in Petrinex)

To receive the GCA (called “Allowable Costs” in Petrinex), you need to submit information every year in Petrinex by March (for the exact date, check the Petrinex calendar).

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

Learn how to submit information for GCA in Petrinex.

If you set up a new reporting facility

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