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Volume 52, No. 16

B.C. Reg. 193/2009

The British Columbia Gazette,

Part II

August 24, 2009

B.C. Reg. 193/2009 , deposited August 20, 2009, pursuant to the PETROLEUM AND NATURAL GAS ACT [Section 73]. Order in Council 409/2009, approved and ordered August 20, 2009.

On the recommendation of the undersigned, the Administrator, by and with the advice and consent of the Executive Council, orders that, effective August 31, 2009, the Petroleum and Natural Gas Royalty and Freehold Production Tax Regulation, B.C. Reg. 495/92, is amended as set out in the attached Appendix.

— B. LEKSTROM, Minister of Energy, Mines and Petroleum Resources ; C. HANSEN, Presiding Member of the Executive Council .

Appendix

Section 1 of the Petroleum and Natural Gas Royalty and Freehold Production Tax Regulation, B.C. Reg. 495/92, is amended

(

a) in the definition of "deep well event" in subsection (1) by striking out " subsection (5) " and substituting " subsection (5) or (5.1) ",

(

b) in the definition of "horizontal length factor" in subsection (1) by adding the following paragraph:

(a.1) for a gas well event in a well that has a spud date after August 31, 2009 and a measured depth to the completion point of between 1 900 metres and 2 875 metres, the amount determined by the following formula:

60 – 0.035 × (measured depth to completion point – 2300)

(

c) by repealing the definition of "reporting facility" in subsection (1) and substituting the following:

"reporting facility" means

(

a) a battery as defined in the Drilling and Production Regulation, or

(

b) if there is no battery to receive the effluent from a well event, the surface equipment associated with that well event that measures the volume of effluent produced; ,

(

d) in subsections (4) (b) (

i) and (6) (c) (i) (

A) and (ii) (

A) by striking out " the calendar month in which marketable gas is first produced from the well event " and substituting" " the calendar month in which the well event first commences continuous production ",

(

e) in subsections (4) (b) (ii) and (6) (c) (i) (

B) and (ii) (

B) by striking out " producing " and substituting " continuous production ",

(

f) in subsection (5) by striking out " A well event " and substituting " Subject to subsection (5.1), a well event ",

(

g) by adding the following subsection:

(5.1) In the case of a well that has a spud date after August 31, 2009, a well event is a deep well event if

(

a) the well event is a gas well event,

(

b) the well event, if in a horizontal well, has a completion point that has a true vertical depth deeper than 1 900 metres,

(

c) the well event, if in a vertical well, has a completion point that has a true vertical depth deeper than 2 500 metres,

(

d) the well event is not a deep re-entry well event,

(

e) the well event is not part of a coalbed methane project, and

(

f) the well event is not an ultra-marginal well event. , and

(

h) by repealing subsection (6) (

b) and substituting the following:

(

b) the well event is either in a vertical well and has a true vertical depth to the top of the pay of the well event of less than 2 500 metres or in a horizontal well and has a true vertical depth to the top of the pay of the well event of less than 2 300 metres, .

Section 6 is amended

(

a) in subsection (1) by striking out " and (1.2) " and substituting " , (1.2), (1.4), (1.5) and (1.6), " and by adding the following subsections:

(1.4) If natural gas that is of a class referred to in Column 1 of item 1.1, 1.2 or 3 in subsection (1) is produced from a gas well event described in subsection (1.5), the royalty or tax percentage rate specified in Column 2 of that item is 2% for the 12 calendar months beginning with the month in which the well event first commenced continuous production.

(1.5) In order to be eligible for the royalty or tax percentage rate referred to in subsection (1.4), a gas well event must be a gas well event that

(

a) is in a well that has a spud date after August 31, 2009 and before July 1, 2010,

(

b) first commences continuous production before December 31, 2010, and

(

c) is not part of a coalbed methane project.

(1.6) Subsections (1.2) and (1.3) (

b) and (

c) do not apply with respect to a gas well event described in subsection (1.5) until the end of 12 calendar months after the month in which the well event first commenced continuous production.

Section 7 is amended

(

a) in subsection (2) (

a) by striking out " , and " and substituting " , or ",

(

b) in subsection (5) (

c) by striking out " subject to subsection (8), if the royalty or tax is payable in relation to a deep well event that is the deepest well event " and substituting " subject to subsections (8) and (10), if the royalty or tax is payable in relation to a deep well event that is the deepest deep well event ",

(

c) in subsection (5) (

d) by striking out " subject to subsection (9) " and substituting " subject to subsections (9) and (10) ",

(

d) by repealing subsection (7) (

c) and substituting the following:

(

c) the well depth deduction amount means, for a producer with interests in one or both of deep well events, and deep re-entry well events, in a single well, the amount determined by the following formula:

(CV + AD) × PI

where

means

the cumulative value that, in the portion of Table 1 or, with respect to a deep well event in a well with a spud date after

August 31, 2009, Table 2 applicable to the well under subsection (7.1), is shown opposite the table depth of whichever

of those deep well events is the deepest (the "deepest well event");

means

the incremental value that, in the portion of Table 1 or, in the case of a deep well event in a well with a spud date after

August 31, 2009, Table 2 applicable to the well under subsection (7.1), is shown opposite the table depth of the

deepest well event multiplied by the positive difference between the deep well depth of that well event and the table

depth of that well event;

means

the producer's interest in the deepest well event;

table depth

means

the deep well depth of the deepest well event rounded down to the nearest 500 metres,

Table 1

West Special Sour

East Special Sour

Depth

(metres)

Cumulative Value

$000

Incremental

Value $/Metre

Depth

(metres)

Cumulative Value

$000

Incremental

Value $/Metre

2 500

4 200

2 500

1 500

3 000

2 100

3 000

3 500

2 400

3 500

1 075

4 000

2 750

4 000

1 450

4 500

3 150

4 500

1 875

1 000

5 000

3 600

1 000

5 000

2 375

1 100

5 500

4 100

5 500

2 925

West Sweet

East Sweet

Depth

(metres)

Cumulative Value

$000

Incremental

Value $/Metre

Depth

(metres)

Cumulative Value

$000

Incremental

Value $/Metre

2 500

3 800

2 500

1 400

3 000

1 900

3 000

3 500

2 175

3 500

1 000

4 000

2 475

4 000

1 350

4 500

2 825

4 500

1 750

5 000

3 225

5 000

2 200

1 000

5 500

3 675

5 500

2 700

Table 2

West Special Sour

East Special Sour

Depth

(metres)

Cumulative Value

$000

Incremental

Value

$/Metre

Depth

(metres)

Cumulative Value

$000

Incremental

Value $/Metre

2 500

2 500

3 000

3 000

3 500

3 500

4 000

4 000

4 500

4 500

5 000

5 000

5 500

5 500

West Sweet

East Sweet

Depth

(metres)

Cumulative Value

$000

Incremental

Value $/Metre

Depth

(metres)

Cumulative Value

$000

Incremental

Value $/Metre

2 500

2 500

3 000

3 000

3 500

3 500

4 000

4 000

4 500

4 500

5 000

5 000

5 500

5 500

(

e) by adding the following:

(10) For a well event described in

section 6 (1.5) that is also a deep well event, the deduction under subsection (5) (

c) of this

section in relation to the well event for the 12 calendar months beginning with the month in which the well event first commenced continuous production is deemed to be the same as the deduction that would have been made had

section 6 (1.4) not been enacted.

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