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The Energy Resources Conservation Board (ERCB) regulates energy resource development within Alberta and has a mandate to ensure that the discovery, development, and delivery of Alberta’s energy resources take place in a fair and responsible manner that takes into account public safety, environmental protection, and resource conservation.
For 2013/14, the revenue required by the ERCB to support its operations, as approved by the Government of Alberta, is $154.4 million. In Budget 2013, the Government of Alberta announced that this year’s revenue requirement will be 100 per cent funded by an industry levy.
Upon proclamation of the Responsible Energy Development Act, expected in June 2013, the ERCB will cease to exist and the Alberta Energy Regulator (AER) will take its place. At that time, all ERCB funding will be transferred to support the AER’s operations.
|Oil and gas||112 118||81 443|
|Oil sands||39 791||29 059|
|Coal||2 489||2 203|
|Total||154 398||112 705|
The ERCB’s revenue requirement affects operator levy invoices. Other factors also contribute to the fee determination at an operator level, including an increase or decrease in wells or entities within the sector, ownership transfer and amalgamations, new entrants, and volume fluctuations. Invoices vary according to individual operations and are based on operating statistics for the calendar year. Invoices to operators detailing the fee calculations will be mailed on April 30, 2013, and payments are due by May 30, 2013.
The Energy Resources Conservation Act (ERCA) authorizes the ERCB to make regulations to levy an administration fee on the sectors that it regulates. The ERCA 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 ERCB may also close producing facilities for failure to pay an invoice or late-payment penalty.
Oil and gas, oil sands, and coal sector invoices for 2013 administration fees are sent to and are payable by the party that was the operator as at December 31, 2012. For conventional wells and oil sands schemes, “operator” means the entity that files well production, injection, and/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.
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, 2012.
All operating wells are classified into one of eight base fee classes as set out in the Energy Resources Conservation Board Administration Fees Regulations (ERCB AFR) and illustrated in the table below. In addition, an adjustment factor is specified and applied to each base fee. This adjustment factor ensures that the total administration fee collected for the sector satisfies the net revenue requirement for the ERCB with respect to that sector not funded by the Government of Alberta.
* m3/yr: cubic metres per year.
The adjustment factor is set at 2.279718 of the rate specified for wells in all classes in the ERCB AFR.
The Canadian Association of Petroleum Producers (CAPP) and the Explorers and Producers Association of Canada (EPAC) have jointly requested that the ERCB’s administration fee process be used to collect $2 381 691 to fund broad industry initiatives in 2013 (see attached CAPP/EPAC letter). Consistent with prior years, the ERCB has agreed to this request and includes an additional charge for this purpose in the 2013 oil and gas well administration fee invoices, increasing the adjustment factor used for invoicing from 2.279718 to 2.328145. BII funds collected by the ERCB are passed through to CAPP and EPAC.
Payment of the BII is voluntary. Further, the 20 per cent late-payment penalty referred to above does not apply to unpaid BII amounts. The ERCB is not involved in and does not make any decisions regarding the manner in which BII funds are spent or to whom BII funds are disbursed. On request, the ERCB may provide information to CAPP and EPAC regarding paid and unpaid BII amounts by operator.
Fees are levied in five categories based on operating information for the calendar year 2012. 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||4 970||2.395203|
|Thermal ongoing||15 532||3.907532|
|Thermal growth||9 454||2.280521|
|Mining ongoing||5 783||1.442944|
|Mining growth||4 052||10.077213|
The administration fee for coal is based on each mine’s share of total production volumes for the year ended December 31, 2012. It is set at 0.087985 per tonne of coal as specified in the ERCB AFR.
If you have questions about the 2013 administration fees, see the attached Frequently Asked Questions or contact:Anila Kaceli
Any appeal must be made in writing (faxes are not acceptable) to:Tom Heywood
Payment of all invoices is required by May 30, 2013, regardless of whether an appeal has been filed. Subsequent adjustments may be applied, if needed, following consideration of the appeal.
<original signed by>
Tom Heywood, CA
Chief Financial Officer