B.C. oil and natural gas royalty transition impact on existing wells

As a result of government’s Royalty Review project, royalty rates on existing oil and gas wells are changing. How allowances and deductions apply are also changing.

For the transition period, existing wells are defined as:

• Gas wells spud before September 1, 2022
• Oil wells spud before September 1, 2024

No transitional provisions for existing wells

For existing wells, the pre-existing royalty framework applies until December 31, 2026. During the transition period, gas wells spud before September 1, 2022, can continue to apply for and receive:

• Cost allowances
• Deep well deductions
• Royalty reduction programs, including the low productivity, marginal and ultra-marginal royalty program (until December 31, 2026)

New royalty framework for wells in 2027

On January 1, 2027, the new royalty framework will take effect. Under the new framework, wells will have new royalty rates based on commodity price ranging from 5 to 40 percent. Wells will also no longer receive royalty rate reductions, and the current allowances will be replaced by a new gathering and processing allowance.