Credits and deductions

When you produce oil or natural gas in B.C. you may qualify for a credit or deduction. Credits and deductions are applied to your royalty invoice and reduce the amount of royalty you pay.

• Natural gas deep well deduction
• Infrastructure credits (such as road credits)

Natural gas deductions

Types of deductions

Natural gas deep well deduction

To offset the higher drilling and completion costs associated with deep wells, qualifying wells that are spudded prior to September 1, 2022 may receive a deduction on their monthly royalty invoice. See Royalty Programs for Deep Gas Wells (PNG 001) (PDF, 280KB) for qualifications. 

Natural gas deep well re-entry deduction

When a previously drilled well is drilled deeper to maximize the development of known resources, qualifying wells that are spudded prior to September 1, 2022 may receive a deduction on their monthly royalty invoice. See Royalty Programs for Deep Gas Wells (PNG 001) (PDF, 280KB) for qualifications. 

Which type of deduction applies to your well

Only one deduction type (deep well or deep re-entry well) can be used to reduce royalties on a well event. If a deep re-entry well event is in the same zone as a deep well event, you will lose any remaining balance of the deep well deduction, as it will replaced by the deep re-entry well credit. 

How the deduction is calculated

Information provided by the well operator on the directional survey and completion reports, which are filed with the British Columbia Energy Regulator (BCER), is used to calculate the deduction. Find out more about how the deduction is calculated on Royalty Programs for Deep Gas Wells (PNG 001) (PDF, 280KB). 

Each producer's share of the deduction is based on their ownership interest in the deep well events as reported in Petrinex. 

How the deduction applies to your invoice

The deduction is applied to the gross royalty payable minus producer cost of service for all deep well events within the same well. However, the minimum royalty program limits the amount of deduction a producer may deduct from the gross royalty payable less producer cost of service.

The deduction balance will continue to be reduced by the amount of deduction that applies, to reduce the gross royalty payable minus producer cost of service until the full amount of the deduction has been used.

If the well event qualifies for a deduction and a deep discovery well exemption

If the well event also qualifies for the deep discovery well exemption, the deduction will not be applied while the natural gas is exempt from royalties. However, your deduction amount will be reduced by the cumulative amount of the exemption you received. 

Infrastructure credits

To offset the cost of exploration and production in under-developed areas of B.C., qualifying companies can apply for the Infrastructure Royalty Credit Program and receive a credit for up to 50 percent of the cost to construct roads or pipelines.

Applications are currently closed.

If you received approval from the Ministry of Energy, Mines and Low Carbon Innovation from a prior application, you will still receive credits.

The amount you are approved for will be applied against the total sum of royalties you owe on your Crown invoice.