Lower your oil and 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
• Marginal well royalty reduction
• Ultramarginal well royalty reduction
• Net profit royalty program

Low productivity well royalty reduction

Gas well events that on average produce less than 5,000 cubic metres of natural gas per day in a calendar month and meet additional requirements, qualify for the low productivity well royalty reduction.

You do not need to apply for this reduction. We determine the productivity of the well event using information from Petrinex. If the well event qualifies, we automatically use a lower royalty rate when we calculate your royalty invoice. 

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

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

Note: This program is only available to wells spudded before September 1, 2022. 

Marginal well royalty reduction

Shallow gas well events that have an average daily production of less than 23 cubic metres of natural gas per metre of well depth and meet additional requirements, qualify for the marginal well royalty reduction.

You do not need to apply for this reduction. We determine the productivity of the well event using production and depth information from Petrinex.

Well events must produce for 12 months before they qualify for this reduction. After the 12-month qualification period, the royalty on a qualifying well event for the previous 12 months will be recalculated. 

If the well event qualifies for the reduction, 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 cubic metres. 

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.

Note: This program is only available to wells spudded before September 1, 2022. 

Ultra-marginal well royalty reduction

Shallow gas well events that meet stringent low productivity and depth requirements, qualify for the ultra-marginal well reduction.

You do not need to apply for this reduction. We determine the productivity of the well event using production and depth information from Petrinex.

Well events must produce for 12 months before they qualify for this reduction. After the 12-month qualification period, the royalty on a qualifying well event for the previous 12 months will be recalculated.

If the well event qualifies for the reduction, 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 cubic metres. 

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

Note: This program is only available to wells spudded before September 1, 2022. 

Net profit royalty program

The net profit royalty program (NPRP) promotes 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 accepted for this program. For information about how the program works, see the bulletin Net Profit Royalty Program (PNG 006) (PDF, 270KB).