Producer cost of service allowance (PCOS)
Last updated on March 31, 2026The producer cost of service allowance (PCOS) is an annual rate that offsets the cost of moving the Crown's share of natural gas from the wellhead to the inlet of the processing plant. It does not include capital and operating costs for producer-owned plants, which are covered by the gas cost allowance.
The PCOS reduces the amount of gas royalties you have to pay every month.
New gas wells spud on or after September 1, 2022, must complete their initial production period of 8,760 production hours (or an additional 3,647 production hours for dry gas wells spud on or after September 1, 2024) before receiving the PCOS.
Learn more at gov.bc.ca/royaltytransition.
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Who can receive the PCOS
A producer can receive PCOS for a well if they do all of the following:
- Report production information on the well in the year that they claim PCOS
- Use every piece of equipment and pipeline connected to the well in the year that they claim PCOS
Calculation of the PCOS rate
The PCOS rate depends on the volume and type of natural gas. For royalty purposes, the two types of natural gas are:
Conservation gas
Each reporting facility that produces conservation gas produced from the well automatically receives a fixed PCOS rate of $16.00 per 103m3 of raw gas.
Non-conservation gas
For non-conservation gas, annual PCOS rates for each reporting facility are calculated using information you reported in Petrinex’s PCOS Management.
The PCOS rate per 103m3 of raw gas are based on estimated costs for qualifying equipment at the reporting facility, which includes:
- Gathering lines
- Compressors
- Dehydrators
- Line-heaters
- Field processing units
- Number of producing wells reporting to the battery
Qualifying equipment must be in the field (not past the plant inlet) and used to carry non-conservation gas.
How the PCOS rate reduces your gas royalties
Each month, the annual PCOS rate is used to generate the PCOS allowance. The allowance is then deducted from the total gross royalty you owe for each well.
The PCOS allowance is calculated as either of the following, whichever is less:
- Volume of raw gas produced from well × Weighted average royalty rate (%) for well × Annual PCOS rate
- 95% of your total gross royalty
How to receive the PCOS
If you only produce conservation gas, you will automatically receive the fixed PCOS allowance of $16.00 per 103m3.
If you produce non-conservation gas, to receive PCOS, your facility operator needs to submit information every year through PCOS Management in Petrinex by March (for the exact date, check the Petrinex calendar).
We will review your submission by the March invoice run and the updated annual PCOS rate will be applied to your January to December production month royalty invoices.
Submitting information for PCOS under special circumstances
If you have a new reporting facility
You need to create and add PCOS equipment inventory in Petrinex first before you can get the allowance. The deadline to complete the inventory is the end of the month following the month the facility started operating.
If the reporting facility changes qualifying equipment
You need to add, change, delete or share qualifying PCOS equipment in Petrinex by March (for the exact date, check the Petrinex calendar).
We will review your submission by the March invoice run. The updated annual PCOS rate will be applied to your January to December production month royalty invoices.
Contact information
Find out who to contact for your questions about oil and natural gas in B.C.