2019/20 AER Administration Fees (Industry Levy)
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.
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 fiscal 2019. The first set of administrative fees ($154M) was issued on July 12, 2019, to allow us to secure the appropriate funds to operate until a budget was approved. The Government of Alberta has approved a total industry levy of $233.2M; we are now issuing the second set of administrative fees to collect the remaining $79.2M
2019 Administration Fees (Industry Levy)
| ($000) | ||||
| Sector | 2019A | 2019B | Total | 2018 |
| Oil and gas | 112 948 | 58 104 | 171 052 | 185 440 |
| Oil sands | 38 805 | 19 962 | 58 767 | 63 711 |
| Coal | 2 247 | 1 156 | 3 403 | 3 690 |
| Total | 154 000 | 79 222 | 233 222 | 252 841 |
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 per cent 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 fees or penalty is not paid, the AER may use various enforcement tools to collect payment:
- The AER may close producing wells or facilities.
- 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.
- 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) 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 for the second invoice is set at 1.404670 of the base fee specified for wells in all classes in the AFR.
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 as identified below.
| Category | Allocation ($000) | Adjustment factor |
| Primary ongoing | 2 367 | 1.497486 |
| Thermal ongoing | 7 732 | 1.368030 |
| Thermal growth | 4 734 | 2.520813 |
| Mining ongoing | 2 920 | 0.464589 |
| Mining growth | 2 209 | 7.448167 |
| Total | 19 962 |
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.
Contact
If you have questions about the 2019/20 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
Email: @email
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
Email: @email
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.
Attachements
FAQ – Bulletin 2019-31: 2019/20 AER Administration Fees (Industry Levy)