Natural Gas Royalties
Natural gas producers receive royalty invoices each month for each well event or tract in a Production Entity (PE) they have an interest in that has volumes available for sale. The amount owing is determined using information reported in Petrinex by producers, purchasers and facility operators.
Calculating Royalties
Royalties are calculated monthly. Once royalty rates are established, the royalty amount payable is calculated based on:
- Ownership interest in raw, marketable gas and by-product volumes available for sale
- The natural gas monthly reference price
The gross royalty payable is reduced by a Producer Cost of Service (PCOS) allowance and any applicable exemptions or credits. However, if the net royalty amount would be zero in a production month, a minimum royalty amount (PDF) may be payable.
For more information on calculating your royalties, refer to sections 5.0 and 7.0 of the Oil and Gas Royalty Handbook (PDF).
Royalty Rates
Royalty rates are calculated differently for natural gas and natural gas by-products.
Natural Gas
Natural gas royalty rates are determined every month for each well event or tract in a Production Entity (PE). The royalty rate can be up to 27% of the value of the natural gas and is based on:
- Whether the gas is produced from Crown Land or freehold land
- Whether the gas is classified as conservation gas or non-conservation gas
- The reference price of the plant
- The select price
Natural Gas By-Products
Natural gas by-products have a fixed royalty rate. Gas reference prices do not apply to their sales values. There are three marketable natural gas by-products associated with natural gas production:
| By-Product | Royalty Rate |
| Natural Gas Liquids (NGL) | 20% |
| Condensate | 20% |
| Sulphur | 16.667% |
Reduce your Royalties
There are certain circumstances where natural gas producers may qualify for:
Allowances
The following allowances are available to cover the costs associated with processing the Crown’s royalty share of natural gas:
Exemptions
Natural gas production may be exempt from the payment of royalties in the following situations:
- Discovery wells
- Natural gas or natural gas by-products used for oil or natural gas production, drilling or injection
Credits
The following credits are available to qualifying wells:
- Natural Gas Deep Well Credit
- Natural Gas Deep Well Re-Entry Credit
- Infrastructure Credits (e.g. road credits)
Lower Royalty Rates
Lower royalty rates may be available if you qualify for one of these programs:
