AER Bulletin 2014-34

AER Bulletin 2014-34: 2014B AER Administration Fees (Industry Levy)

VIEW PDF (67.99 KB)

2014B AER Administration Fees (Industry Levy)

Nov 03, 2014


Energy Regulation Program

The Alberta Energy Regulator (AER) regulates energy resource development in Alberta and has a mandate to ensure the safe, efficient, orderly, and environmentally responsible development of hydrocarbon resources over their entire life cycle. This includes allocating and conserving water resources, managing public lands, and protecting the environment while providing economic benefits for all Albertans.

The Government of Alberta approved the issuance of two levies for the 2014 fiscal year totalling $243.2 million to support the AER’s ongoing operations. The first levy was issued on April 15, 2014, in the amount of $207.3 million. The second levy, of $35.9 million was approved on October 16, 2014.

2014 Administration Fees (Industry Levy)

 

Allocation ($000)

Sector

2014B

2014A

2014A & 2014B

Oil and gas

26 054

150 422

176 476

Oil sands

9 310

53 752

63 062

Coal

536

3 094

3 630

Total

35 900

207 268

243 168


The AER’s revenue requirement affects operator levy invoices, but operator fees are also determined by other factors, such as changes in the numbers of wells or entities within the sector, ownership transfers and amalgamations, new entrants, and volume fluctuations. Invoices vary with individual operations and are based on operating statistics for the 2013 calendar year. Invoices to operators detailing the fee calculations will be mailed on November 3, 2014, and payments are due by December 3, 2014.

The Responsible Energy Development Act (REDA) authorizes the AER to make rules to levy an administration fee on the oil and gas, oil sands, and coal sectors. REDA also authorizes the imposition of a late-payment penalty, which is set at 20 per cent on any portion of the fee that remains unpaid after the due date. The AER may also close producing facilities for failure to pay an invoice or late-payment penalty.

Invoices for 2014B administration fees are sent to and are payable by the party that was the operator as of December 31, 2013. For conventional wells and oil sands schemes, “operator” means the entity that files well production, injection, or disposal data with PETRINEX, Canada’s petroleum information network (formerly the Petroleum Registry of Alberta). If the operator fails to pay the fee, the licensee is responsible for paying the invoiced amount plus any penalty.

Oil and Gas
Determination of Administration Fees

The administration fee in the conventional oil and gas sector is based on individual well production of oil/bitumen or gas and the number of production and service wells for the year ended December 31, 2013.

All operating wells are classified into one of eight base-fee classes as set out in the Alberta Energy Regulator Administration Fees Rules (AER AFR) and illustrated in the table below. An adjustment factor is applied to each base fee. This adjustment factor ensures that the total administration fee collected for the sector satisfies the AER’s revenue requirement.

Class

Min. production (m3/yr)*

Max. production (m3/yr)*

Base fee

1

Service wells

 

$100.00

2

0.01

300

$100.00

3

300.1

600

$125.00

4

600.1

1200

$312.00

5

1200.1

2000

$750.00

6

2000.1

4000

$1250.00

7

4000.1

6000

$1625.00

8

6000.1

>

$1875.00

* m3/yr: cubic metres per year.

The adjustment factor is set at 0.545781 of the base fee specified for wells in all classes in the AER AFR.

Oil Sands

Fees are levied in five categories based on operating information for the calendar year 2013. An operator may have activities in more than one category. Each category is subject to an adjustment factor as identified below.          

Category

Allocation ($000)

Adjustment factor

Primary ongoing

1104

0.516331

Thermal ongoing

3606

0.850087

Thermal growth

2208

0.608046

Mining ongoing

1362

0.320392

Mining growth

1030

1.101824

Total

9310

 


Coal

The administration fee for coal is based on each mine’s share of total production volumes for the year ended December 31, 2013. It is set at $0.018005 per tonne of coal as specified in the AER AFR.

Contact

If you have questions about the 2014B administration fees, please contact
Anila Kaceli
Team Lead, Revenue & Cash Management
Alberta Energy Regulator
Finance Branch
Suite 1000, 250 – 5 Street SW
Calgary AB T2P 0R4
Telephone: 403-297-6985
Fax: 403-297-3195
E-mail: anila.kaceli@aer.ca

Appeals

Any appeal must be made in writing (faxes are not acceptable) to
Tom Heywood, CA
Vice President of Finance & Chief Financial Officer
Alberta Energy Regulator
Finance Branch
Suite 1000, 250 – 5 Street SW
Calgary AB T2P 0R4
Telephone: 403-297-2133
Fax: 403-297-3195
E-mail: tom.heywood@aer.ca

Invoices must be paid by December 3, 2014, regardless of whether an appeal has been filed. Subsequent adjustments may be applied, if needed, following the decision on an appeal. 

<original signed by>

Tom Heywood, CA
Vice President of Finance & Chief Financial Officer
Finance Branch