British Columbia has an enormous undeveloped resource base of coalbed gas (CBG), estimated at approximately
100 Tcf. Coalbed gas can play a significant role in British Columbia’s energy economy. The royalty regime for CBG reflects the unique development and production costs of this resource by providing appropriate royalty credits to initiate the development of the CBG industry. This regime will facilitate the development of provincial CBG resources, while providing a reasonable return to natural gas producers and the Crown.
The regime:
- includes produced-water handling costs in the producer cost of service allowance to address the added water management costs;
- creates a royalty bank to collect excess allowance to be used against future-assessed CBG royalties;
- increases the marginal well adjustment factor threshold to 600,000 cubic feet per day from 180,000 cubic feet per day to address the lower production rates; and
- provides a $50,000 royalty credit for CBG wells.
More information can be found in 
The Coalbed Methane Royalty Program.
Chart 3 illustrates the CBG well adjustment factor.
