Royalty Information for wells spud up to and including December 31, 2016

These questions represent the policy intent of the Government of Alberta. The questions are subject to change. Regulations prevail over these questions.

The term spud date refers to the day the drill bit hits the ground or when an existing well is re-entered, as defined by Alberta Energy Regulator’s Directive 059.

Changes to the Alberta Royalty Framework royalty rates were effective for the January, 2011 production month.

Changes to the Natural Gas Deep Drilling Program were effective on May 1, 2010.

The Emerging Resources and Technologies Initiatives for Shale Gas, Coalbed Methane, Horizontal Oil  and Horizontal Gas wells were all effective on May 1, 2010.

Non-project oil sands well events subject to royalty calculation under section 27 of the Oil Sands Royalty Regulation 2009, moved to adjusted ARF royalty rates with the January 2011 production month. Project oil sands wells were not affected.

Well events royalties prior to 2011 were calculated under the Natural Gas Royalty Regulation 2009, or the Petroleum Royalty Regulation 2009. (Note: regulations can be viewed in html or PDF with no charge, other formats may be subject to additional fees.)

The Modernized Royalty Framework came into effect on January 1, 2017.

General Royalty Questions

Which programs were offered a 5% royalty rate for the first year and why was this offered?
Some volume caps are expressed in metres cubed oil equivalent. How are gas volumes converted to cubic metres of oil equivalent?
Some volume caps are expressed in metres cubed oil equivalent. How are condensate volumes converted to cubic metres of oil equivalent?
Some volume caps are expressed in metres cubed oil equivalent. How are natural gas liquids (NGL) volumes converted to cubic metres of oil equivalent?
Why are oil equivalent volumes specified in royalty programs meant mainly for gas well events?
For wells qualifying for both the NGDDP and any of the 5% royalty rates, including the New Well Royalty Rate (NWRR), the Horizontal Gas NWRR, the Coal Bed Methane NWRR or the Shale Gas NWRR, how are royalties calculated?

New Well Royalty Rate (NWRR) Questions

Which wells qualified for the NWRR rate?
Why are there restrictions for re-entry, suspended and inactive wells?
Is there a drilling date requirement to receive the New Well Royalty Rate?
Are there any wells that do not qualify for the New Well Royalty Rate?

Natural Gas Deep Drilling Program Questions

Why is the Government of Alberta making changes to the NGDDP?
What qualifies and what doesn’t under the royalty adjustment?
What is the revised NGDDP benefit schedule for a development well?
What is the revised NGDDP benefit schedule for an exploratory well?
Will the supplemental adjustment be given to any well?
How is the measured depth determined for the purpose of benefit calculations?
Are measured depths of all laterals eligible for the NGDDP?
Example 1 - Exploratory well with 2 well events
Example 2 - Exploratory well with 1 well event
Example 3 - A Development well with 2 well events
Example 4 - A Development well with a deepening situation
Example 5 - A Development well with 3 well events

Shale Gas New Well Royalty Rate Questions

Why is the Government of Alberta extending the 5% royalty rate beyond 12 production months for shale gas wells?
What qualifies and what doesn’t under the Shale Gas New Well Royalty Rate?
What is the cap for the Shale Gas New Well Royalty Rate and what is the maximum number of production months?

Coalbed Methane New Well Royalty Rate Questions

What qualifies and what doesn’t under the Coalbed Methane New Well Royalty Rate?
Must well events produce exclusively from coal formations to qualify for the Coalbed Methane New Well Royalty Rate?
What is the cap for the Coalbed Methane New Well Royalty Rate and what is the maximum number of production months?

Horizontal Oil New Well Royalty Rate Questions

What qualifies and what doesn’t under the Horizontal Oil New Well Royalty Rate?
Can a horizontal oil well event receive the 5% royalty rate for 12 production months under New Well Royalty Rate and additional production months and volume caps under Horizontal Oil New Well Royalty Rate?
Does solution gas and gas products, including sulphur, qualify for the 5% royalty rate under the Horizontal Oil New Well Royalty Rate?
What if a well has a gas well event and an oil well event in the same well, which caps would apply?
What is the Horizontal Oil New Well Royalty Rate for an oil well event?
Does each horizontal oil well event get its own cap?
How is the depth determined for the Horizontal Oil New Well Royalty Rate?

Horizontal Gas New Well Royalty Rate Questions

What qualifies and what doesn’t under the Horizontal Gas New Well Royalty Rate program?
Can a horizontal gas well event receive the 5% royalty rate for 12 production months under New Well Royalty Rate and additional production months and volume caps under Horizontal Gas New Well Royalty Rate?
Does oil production qualify for the 5% royalty rate under the Horizontal Gas New Well Royalty Rate?
What if a well has a gas well event and an oil well event in the same well, which caps would apply?
What is the Horizontal Gas New Well Royalty Rate for a gas well event?
Does each horizontal gas well event get its own cap?