Understanding Oil & Natural Gas Royalties

When oil and natural gas resources are produced in B.C., the province charges a royalty or a freehold production tax. What you are charged depends on who owns the rights to the underlying oil and natural gas on the land producing the resource:

Royalties are charged when the government owns the oil and natural gas rights.

The freehold production tax is charged when the government doesn’t own the oil and natural gas rights.

Royalties and freehold production taxes are covered in the same legislation and both are commonly referred to as royalties.

The money raised by oil and natural gas royalties and freehold production taxes is used to fund vital social services such as education and health care and is sometimes shared with First Nations communities under revenue sharing agreements.

Both operators and producers file reports necessary to calculate the amount of royalties or taxes due. However, only producers pay royalties or taxes.

Find out more about:

Set up a Well or Facility

Before you can explore for oil and natural gas, you need to acquire oil and natural gas rights from the province. Once you have acquired the rights, you must file applications and reports with the Oil and Gas Commission (OGC) and the Ministry of Finance.

You will need a client code (also referred to as a payor code) to file most of these reports. Learn how to set up a new client code.

Oil and Gas Startup Process

Suspend Well Operations

If a producer suspends operations and your well won’t be producing for 12 consecutive months or more, the well operator must file a BC-11, Notice of Commencement or Suspension of Well Operations.