Royalties and Royalty Programs

British Columbia collects royalties on oil and natural gas produced from a Crown lease. The royalty regime is structured to maximize the amount of economic rent collected from produced oil and natural gas, while ensuring that producers are able to earn fair return on their investment. British Columbia also has a competitive royalty regime compared to other jurisdictions in Canada and the US.

The goals of the current royalty regime are:

• Values to the Crown are maximized: encourage resource development to the benefit of the Crown in terms of maximizing royalties and taxes
• Equity: producers, large and small, are treated equally under the regime
• Long-term investment: the royalty regime is aimed at rational, long-term investment by industry 
• Administrative Ease: simple to administer and verify for government and industry.

Since 2002, the government has introduced royalty rates for marginal and ultra-marginal natural gas, royalty credits for deep gas exploration, summer drilling and infrastructure development. The coalbed methane royalty recognizes the unique development and production costs of this resource. All these new changes to the royalty regime will ensure that British Columbia’s fiscal regime remains competitive with other jurisdictions, encourage development of natural resources, and in turn increase direct revenue to the Province. These will also create jobs in the oil and gas sector and help revitalize the provincial economy.

The following Performance Measures Report provides details about the four goals of British Columbia’s current oil and gas royalty regime and establishes measurable indicators and targets.