Bulletin 2016-15

Bulletin 2016-15: 2016 AER Administration Fees (Industry Levy)

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2016 AER Administration Fees (Industry Levy)

May 17, 2016

Energy Regulation Program

The Alberta Energy Regulator (AER) regulates energy resource development within 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.

For 2016/17, the revenue required to support the AER’s operations, as approved by the Government of Alberta, is $238 403 000.

2016 Administration Fees (Industry Levy)

Allocation ($000)
Sector 2016 2015
Oil and gas 173 081 174 308
Oil sands 61 746 62 184
Coal 3 576 3 601
Total 238 403 240 093

The amount of each invoice depends on the AER’s revenue requirement, 2015 production volumes, the number of wells and schemes, and the number of operators within the sector. Any change in the above factors changes the invoice amount for each operator. Invoices to operators detailing the fee calculations will be mailed on May 18, 2016, and payments are due by June 20, 2016.

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. Invoices for 2016 administration fees are sent to and are payable by the party that was the operator on record (as defined in section 29 of REDA) as of December 31, 2015. For conventional wells and oil sands schemes, “operator” means the entity that files well production, injection, or disposal data, or all three, with Petrinex, Canada’s Petroleum Information Network. If the operator fails to pay the fee, the late-payment penalty will be added and the AER will pursue the approval holder (if the actual operator and approval holder are two different parties) for payment of the full amount.

If the administrative levy or penalty is not paid, the AER may use various enforcement tools to collect payment:

  1. The AER may close producing wells or facilities.
  2. The AER may garnish production from operating wells and facilities to collect any outstanding debts. Under section 103 of the Oil and Gas Conservation Act,if an approval holder has failed to pay debts to the AER, the AER has a lien on its wells, facilities, and pipelines and on land or interests in land, including mines and minerals, equipment, and petroleum substances. The AER’s lien has priority over all other liens, charges, rights of set-off, and mortgages and other security interests.
  3. The AER may use other enforcement tools, as set out in legislation.

Oil and Gas

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, 2015.
All operating wells are classified into one of eight base fee classes, as set out in the Alberta Energy Regulator Administration Fees Rules (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 revenue requirement for the AER.

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 1 200 $312.00
5 1 200.1 2 000 $750.00
6 2 000.1 4 000 $1 250.00
7 4 000.1 6 000 $1 625.00
8 6 000.1 > $1 875.00

The adjustment factor is set at 3.840193 of the base fee specified for wells in all classes in the AFR.

Alberta Upstream Petroleum Research Fund (AUPRF)

The Canadian Association of Petroleum Producers (CAPP) and the Explorers and Producers Association of Canada (EPAC) have jointly requested that the AER’s administration fee process be used to collect $3 115 105 to fund the Alberta Upstream Petroleum Research Fund (AUPRF) in 2016. The AER has agreed to assist and has included an amount for this funding in the oil and gas well administration fee invoices. As a result, the adjustment factor used for invoicing has increased from 3.840193 to 3.909308. Payment of the AUPRF is voluntary. Funds collected by the AER will be passed to Petroleum Technology Alliance of Canada (PTAC). The AER is not involved in and does not make any decisions regarding the manner in which these funds are spent or to whom the funds are disbursed. On request, the AER may provide information to PTAC regarding paid and unpaid AUPRF amounts by operator.

Oil Sands

Fees are levied in five categories based on operating information for the 2015 calendar year. 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 7 322 3.592942
Thermal ongoing 23 917 4.736563
Thermal growth 14 643 4.058984
Mining ongoing 9 031 1.799801
Mining growth 6 833 17.031687
Total 61 746

Coal

The administration fee for coal is based on each mine’s share of total production volumes for the year ended December 31, 2015. It is set at $0.130190 per tonne of coal as specified in the AFR.

Contact

If you have questions about the 2016 administration fees, please contact
Anila Kaceli
Team Lead, Revenue & Cash Management
Finance Branch
Alberta Energy Regulator
Suite 1000, 250 – 5 Street SW
Calgary, AB T2P 0R4
Telephone: 403-297-6985
E-mail: anila.kaceli@aer.ca

Appeals

Any appeal must be made in writing to
Tom Heywood, CA
Vice President of Finance & Chief Financial Officer
Finance Branch
Alberta Energy Regulator
Suite 1000, 250 – 5 Street SW
Calgary, AB T2P 0R4
Telephone: 403-297-2133
E-mail: tom.heywood@aer.ca
Payment of all invoices is required by June 20, 2016, regardless of whether an appeal has been filed. Following a decision of the appeal, adjustments will be applied as needed.

<original signed by>

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


Bulletin 2016-15: 2016 AER Administration Fees (Industry Levy) FAQs [PDF]