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 takes place from September 1, 2022 to August 31, 2024.

As of September 1, 2024, all wells move to 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 is now in effect. It 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, Order in Council No. 263 (PDF, 610KB) is available.

Impact of the transition period on oil and gas wells

Between September 1, 2022 and August 31, 2024, you may have different royalties, deductions and allowances for your well.

Most wells remain under the existing royalty system

The existing royalty system will apply until August 31, 2024 for:

• Existing oil and gas wells spudded before September 1, 2022
• New oil wells spudded on or after September 1, 2022

In general, nothing will change until then. Learn more about how existing wells and new oil wells are affected.

New gas wells have a transitional provision

For any new gas 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 gas wells are affected.

Keep informed

As more information about the transition to the new royalty system becomes available over the next two years, we’ll update this page. To be notified by email when information is updated, sign up for our subscription service and select “Royalty transition 2022-2024” as your topic of interest.

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 select "Oil and natural gas royalties and taxes" as a topic of interest when you sign up for our subscription service.

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.