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AER Bulletin 2019-17: 2019/20 AER Administration Fees (Industry Levy)

Administration Fees


The AER noted that its 2019/20 budget was not yet approved. As a result, the AER stated that it would issue two sets of administrative fees for 2019/20. The first set of administrative fees would allow the AER to operate until an approved budget was provided by the Government of Alberta, at which point the AER would issue a second set of administrative fees to collect the remaining approved amount.

2019 Administration Fees (Industry Levy)

The amount of each invoice would depend on the AER’s revenue requirement, 2018 production volumes, the number of wells and schemes, and the number of operators within the sector. Invoices to operators detailing the fee calculations were to be mailed on July 12, 2019, and payments due by August 12, 2019.

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, and impose a late-payment penalty, set at 20 percent on any portion of the fee remaining unpaid after the due date. Invoices for administration fees are sent to and made payable by the party that was the operator on record (as defined in section 29 of REDA).

For conventional wells and oil sands schemes, “operator” means the entity that filed well production, injection, or disposal data, or all three, with Petrinex, Canada’s Petroleum Information Network. If the operator failed to pay the fee, the late-payment penalty would be added and the AER would pursue the approval holder (if the actual operator and approval holder were two different parties) for payment of the full amount.

If the administration fees or penalty was not paid, the AER could use various enforcement tools to collect payment, including

(a) closing producing wells or facilities.

(b) garnishing production from operating wells and facilities to collect any outstanding debts;

(c) enforcing against the AER’s priority lien under section 103 of the Oil and Gas Conservation Act on a defaulting approval holder’s wells, facilities, and pipelines and on land or interests in land, including mines and minerals, equipment, and petroleum substances; and

(d) using other enforcement tools, as set out in the legislation.

Oil and Gas

The AER explained that the administration fee in the conventional oil and gas sector was based on individual well production of oil/bitumen or gas and the number of production and service wells for the year ended December 31, 2018.

All operating wells were classified into one of eight base fee classes, as set out in the Alberta Energy Regulator Administration Fees Rules (“AFR”). In addition, an adjustment factor would be applied to each base fee. This adjustment factor would ensure that the total administration fee collected for the sector satisfies the revenue requirement for the AER.

Alberta Upstream Petroleum Research Fund

The Canadian Association of Petroleum Producers (“CAPP”) and the Explorers and Producers Association of Canada (“EPAC”) jointly requested that the AER’s administration fee process be used to collect $4,194,000 to fund the Alberta Upstream Petroleum Research Fund (“AUPRF”) in 2019. The AER agreed to assist and included an amount for this funding in the oil and gas well administration fee invoices. Payment of the AUPRF was voluntary.

Oil Sands

Fees were to be levied based on operating information for the 2018 calendar year into the following categories:

(a) primary ongoing;

(b) thermal ongoing;

(c) thermal growth;

(d) mining ongoing; and

(e) mining growth.

An operator could have activities in more than one category. Each Category would be subject to an adjustment factor.

Coal

The administration fee for coal was based on each mine’s share of total production volumes for the year ending December 31, 2018. It was set at $0.118462 per tonne of coal as specified in the AFR.

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