Gas Reference Prices
The gas reference price is the price per 103m3 used to calculate the gross royalty amount for marketable gas and to determine gas royalty rates. The gas reference price is the greater of the Producer Price and the Posted Minimum Price (PMP).
The Producer Price is the average monthly sales price for each producer at the inlet of each processing plant where they have production. The producer price is determined by the Ministry of Energy, Mines & Petroleum Resources using information provided by producers each month.
Actual processing and transportation charges for each processing plant are deducted from the average sales value. For producer-owned plants, these charges are deducted using a gas cost allowance.
For more information on the producer price, see section 5.3 of the Oil and Gas Royalty Handbook (PDF).
The province establishes a Posted Minimum Price (PMP) based on current market prices to ensure natural gas resources aren’t discounted. The PMP is 80% of the estimated average sales price for gas produced each month in a specific area.
The PMP varies by designated plant groups to take into account the wide range of costs that can exist between plants and the differing prices between markets. There are five plant groups:
- Fort Nelson
- Pine River
- Plants Delivering Gas to the Spectra Transportation System
- Plants Delivering Gas to TransCanada & Alliance Transportation Systems
For more information on the PMP, see section 5.4 of the Oil and Gas Royalty Handbook (PDF)(pg.51).