Bulletin – Administrative Fees – Industry Levy
Energy Regulation Program
Due to delays in the finalization of the 2019/20 budget, the Government of Alberta approved the AER to issue two sets of administrative fees for 2019. The first set of administrative fees ($154M) was issued on July 12, 2019, to allow the AER to secure the appropriate funds to operate until a budget was approved. The Government of Alberta approved a total industry levy of $233.2M, and the AER is now issuing the second set of administrative fees to collect the remaining $79.2M.
The amount of each invoice depends on the AER’s revenue requirement, 2018 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 November 29, 2019, and payments are due by January 6, 2020.
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 the imposition of a late-payment penalty, which is set at 20 percent on any portion of the fee that remains unpaid after the due date.
Invoices for 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, 2018. 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 administration fee or penalty is not paid, the AER may use various enforcement tools to collect payment:
(a) the AER may close producing wells or facilities.
(b) 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; and
(c) 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, 2018.
All operating wells are 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 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.
Oil Sands
Fees are levied in five categories based on operating information for the 2018 calendar year. An operator may have activities in more than one category. Each category is subject to an adjustment factor.
Coal
The administration fee for coal is based on each mine’s share of total production volumes for the year ended December 31, 2018. It is set at $ 0.0.060932 per tonne of coal, as specified in the AFR.
Appeals
Payment of all invoices is required by January 6, 2020, regardless of whether an appeal has been filed. Following a decision of the appeal, adjustments will be applied as needed.
