British Columbia (BC) has unveiled a revamped oil and natural gas production royalty system that would replace a patchwork of complex incentives with a flat 5% rate on all wells until costs are fully paid.

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The sliding-scale royalties on paid-for wells would range from 5% to 40%. Rates would be driven by prices fetched on various markets for oil, condensate, natural gas and liquid byproducts. For new drilling, the reform takes effect Sept. 1. For producing wells, the switch occurs Sept. 1, 2024.

“This new system is long overdue and will replace an outdated system that was in place for nearly three decades,” said BC Energy Minister Bruce Ralston.

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