Saskatchewan Natural Gas Crown Royalty and Freehold Production Tax Regime
February 2010 www.er.gov.sk.ca
Objective of Presentation
• Overview of the Saskatchewan Natural Gas Crown Royalty and Freehold Production Tax (Royalty/Tax) Regime
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Saskatchewan Natural Gas Crown Royalty Regime
Two Components 1.
Basic Royalty Structure • •
2.
Sensitive to Price Sensitive to Production Rate of Well
Volume Incentive •
Exploration Drilling Incentive
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Royalty/Tax Rate (per cent) g
Basic Fourth Tier Gas Royalty/Tax Structure
CROWN ROYALTY Curve
Straight Line
CROWN ROYALTY (C x MGP) - D
25
K - (X / MGP)
FREEHOLD PRODUCTION TAX Crown Royalty Rate - PTF
115.4
Monthly Gas Production Per Well (thousand cubic metres)
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Price Sensitive Royalty Structure 40
Crown Royalty Rate (per cent)
35
30
25
20
15
10
Minimum @ $50/103m 3 5 Reference Well
0
25
250 3
3
Production (10 m /month) www.er.gov.sk.ca
Price Sensitive Royalty Structure 40
Crown Royalty Rate (per cent)
35
30
25
20
@ $100/103m 3
15
10
Minimum @ $50/103m 3 5 Reference Well
0
25
250 3
3
Production (10 m /month) www.er.gov.sk.ca
Price Sensitive Royalty Structure 40
Crown Royalty Rate (per cent)
35
30
25
@ $200/103m 3
20
@ $100/103m 3
15
10
Minimum @ $50/103m 3 5 Reference Well
0
25
250 3
3
Production (10 m /month) www.er.gov.sk.ca
Price Sensitive Royalty Structure 40
Crown Royalty Rate (per cent)
35
30
@ $400/103m 3
25
@ $200/103m 3
20
@ $100/103m 3
15
10
Minimum @ $50/103m 3 5 Reference Well
0
25
250 3
3
Production (10 m /month) www.er.gov.sk.ca
Price Sensitive Royalty Structure 40
Maximum @ Infinite Price
Crown Royalty Rate (per cent)
35
30
@ $400/103m 3
25
@ $200/103m 3
20
@ $100/103m 3
15
10
Minimum @ $50/103m 3 5 Reference Well
0
25
250 3
3
Production (10 m /month) www.er.gov.sk.ca
Royalty Rate Comparison for New Natural Gas Wells 40 Sask. Fourth Tier $2.50/mcf
Crown Royalty Rate (per cent) ...
35
Sask. Fourth Tier $5.00/mcf Sask. Fourth Tier $10.00/mcf
30
25
20
15
10
5
0 0
100
200
300
400
500
600
700
800
900
1000
Gas Well Productivity (thousand cubic feet per day)
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Incentive Volume and Applicable Royalty/Tax Rates for Exploratory Natural Gas Wells
Maximum Rate Exploratory Well Definition Well must be at least 4.8 km (3 miles) from nearest gas well or gas well location
Incentive Volume
Crown Royalty
Freehold Production Tax
25 million m3 (887,343 mcf)
2.5%
0%
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Crown Royalty Rate (per cent) g
Royalty Rate Applied To Incentive Volume 35 30 25 20 15 10 Maximum Rate Applied to Incentive Volume
5 0 0
100
200
300
400
500
Monthly Gas Production (thousand cubic metres)
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Associated Gas Royalty/Tax Structure 40 Sask. Fourth Tier AG $2.50/mcf
Crown Royalty Rate (per cent) ...
35
Sask. Fourth Tier AG $5.00/mcf Sask. Fourth Tier AG $10.00/mcf
30
25
20
15
10
5
0 0
100
200
300
400
500
600
700
800
900
1000
Gas Well Productivity (thousand cubic feet per day)
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Value of Crown Share of Production
Royalty Revenue (dollars) • Crown Share of Production x Well-head Value
Crown Share of Production (thousand cubic metres) • Royalty Rate x Well’s Monthly Production Volume
Well-head Value (dollars per thousand cubic metres) • (PGP or OGP) – Gas Cost Allowance (GCA) where: • PGP and OGP are expressed in $/10³m³ at field gate • GCA is postage stamp rate of $10/10³m³
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Operator’s Price Election Option
PGP (Provincial Average Gas Price) • Established by the minister each month or
OGP (Operator’s Average Gas Price) • Based on the average value of the operator’s Saskatchewan gas sales each month
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www.er.gov.sk.ca/oilgasroyaltytax
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www.er.gov.sk.ca/royaltytaxinfocirc PR-IC01
Crude Oil Price Sensitive Royalty/Tax Structure
PR-IC02
Natural Gas Price Sensitive Royalty/Tax Structure
PR-IC03
Royalty/Tax Incentive Volumes for Vertical Oil Wells
PR-IC04
Royalty/Tax Incentive Volumes for Exploratory Gas Wells
PR-IC05
Royalty/Tax Incentive Volumes for Horizontal Oil Wells
PR-IC06
Royalty/Tax Regime for Incremental Oil Produced From New or Expanded Waterflood Projects
PR-IC07
Reclassification Program for Oil Wells Producing “Old Oil”
PR-IC08
Helium and Associated Gases Royalty Structure
PR-IC09
Well-head Value of Crude Oil for Royalty/Tax Purposes
PR-IC10
Well-head Value of Natural Gas for Royalty/Tax Purposes
PR-IC11/11A
Royalty/Tax Regime Applicable to EOR Projects
PR-IC12
Royalty/Tax Program for High Water-Cut Oil Wells
PR-IC13
Recovered Crude Oil Tax Structure
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Royalty Rate Calculator
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www.er.gov.sk.ca/roytaxclass
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Contact Information
Mike Ferguson Director Petroleum Royalties Branch Saskatchewan Ministry of Energy and Resources tel: (306)787-2605 fax: (306)787-2478 email:
[email protected]
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