Status: Bill 12 passed July 3, 2019
Ministry responsible: Energy

Overview

Bill 12: the Royalty Guarantee Act assures investors making long-term oil and gas investments in Alberta that the rules won’t change halfway through the game.

Previous royalty reviews have shown that Alberta’s royalty rates are competitive with other energy jurisdictions. However, industry needs long-term certainty that the current royalty structure will be maintained.

To increase investor confidence, the act guarantees that the royalty structure in place when a well is drilled remains in place for at least 10 years.

Key changes

Bill 12 amends the Mines and Minerals Act and guarantees that for a period of at least 10 years:

  • no major changes to the oil and gas royalty structure will occur
  • when a well starts producing, it will be under the same royalty structure for that same period of time
  • the current royalty structure, rules and processes remain in place to provide flexibility for government and industry to adjust to market changes and technology advancements, including the ability to:
    • make regular required adjustments, such as setting monthly par prices
    • provide incentives, when appropriate

Bill 12 also confirms that the transition to the Modernized Royalty Framework for wells drilled on or before December 31, 2016 will occur as planned in 2026.

This guarantee will provide enough time to recover most of the producible oil and gas from new and existing wells. It applies to current oil, oil sands and natural gas royalty frameworks, including crude oil, pentanes, methane, ethane, propane and butane.

Next steps

Bill 12 will come into effect upon receiving Royal Assent.

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