B.C. oil and natural gas royalty transition
The current B.C. oil and natural gas royalty system is changing.
The existing royalty system has been in place for more than 30 years. The way natural gas is produced has changed significantly over this time period, as have market conditions, drilling technology and costs, and global climate change concerns.
A new royalty system will replace the existing royalty system. The transition to the new system will take place from September 1, 2022 to August 31, 2024.
As of September 1, 2024, all wells will transition into the new royalty system.
Regulation for the transition period
The regulation for the transition period under the Petroleum and Natural Gas Act was created on May 19, 2022. The regulation will apply from September 1, 2022. The regulation sets out some important definitions:
“initial production period”, in relation to a gas well event, means the period that (a) begins on the first day of the first producing month, and (b) ends on the last day of the producing month in which the gas well event reaches 8 760 production hours;
“production hour”, in relation to a gas well event, means an hour in which any quantity of oil or natural gas is produced from the gas well event.
A copy of the regulation (PDF, 609k) is available.
New and existing wells are affected differently
If you are an oil and gas producer with existing wells and are currently paying oil or gas royalties, the existing royalty system will apply until August 31, 2024. In general, nothing will change until then. Learn more about how existing wells are affected.
For any new well with a spud date on or after September 1, 2022, a transitional provision applies. The spud date is the date the ground is broken for the new well. Learn more about how new wells are affected.
As more information about the transition to the new royalty system becomes available over the next two years, we’ll update this page. Subscribe to this page to be notified by email when updates about the transition are available.
As changes to how you report and pay royalties under the new system are implemented, our oil and natural gas royalties and taxes website will be updated. To make sure you know about new reporting and payment instructions, we recommend you also subscribe to our What’s new in B.C. oil and gas royalties and taxes page.
About the Royalty Review project
Changes to the royalty system are the result of the Natural Gas Royalty Review project led by the Ministry of Energy, Mines and Low Carbon Innovation. Learn more about the project and check out the What We Heard consultation report.