Upcoming Changes To The B.C. Oil And Gas Royalty Framework

Oil and natural gas producers that access and develop publicly owned resources in the Province of British Columbia must pay either a royalty or a freehold production tax to the Province. The royalty rates are based on oil and natural gas prices, volume of production, and may be subject to deductions through government royalty programs.

On September 1, 2022, the Province will begin a two-year transition period to implement a new oil and gas royalty framework, through an amendment to the Petroleum and Natural Gas Royalty and Freehold Production Tax Regulation, B.C. Reg. 495/92 by Order in Council No. 263 (May 19, 2022). This new framework will feature an increased minimum royalty rate and the elimination of certain deduction programs. The new framework will replace the existing framework, which has been in place for nearly three decades, and responds to the significant recent changes in drilling technology, market conditions, and environmental protection concerns.