Deep-Well Royalty Program
$2,810,000
Royalty
Description:
This program provides royalty credits to companies when they drill deep wells. The credits cover a portion of the drilling and completion costs for these wells and can be used to reduce the royalties payable for a producing well.
NOTE: Producers do not need to apply separately for this program. Qualified wells will receive deep-well credits automatically, subject to review by the Province.
Comments on Funding:
Tier 1:
Royalty credits available to Tier 1 Deep Wells range from a minimum of $440,000 (for a well with a deep-well depth of 2,500 metres) to a maximum of $2.81 million (for wells 5,500 metres or deeper).
The exact value of the royalty credit available to a Tier 1 Deep Well is set out in Table 3 in section 7(7)(c) of the Royalty and Freehold Production Tax Regulation.
Tier 2:
Tier 2 targets deeper wells than Tier 1 and offers a higher maximum royalty credit. It has been in place since 2003 (and was designated as Tier 2 with the introduction of Tier 1 of the program in 2014).
Royalty credits available to Tier 2 deep wells vary based on the location of the well (whether it is “east” or “west”) and the concentration of Hydrogen Sulfide in the gas produced from the well (whether the well is “sweet” or “sour”). The exact value of the royalty credit available to a Tier 2 deep well is set out in Table 2 in section 7(7)(c) of the Royalty and Freehold Production Tax Regulation.
Continous intake.
Eligibility:
Applicants must meet all of the following criteria:
To qualify for Tier 1:
1. A gas well with a spud date of April 1, 2014 or later that is not part of a coalbed methane project;
2. A horizontal well with a completion point (the point where the well bore first exceeds 80 degrees from vertical) shallower than 1,900 metres; and,
3. A “Deep-Well Depth” (calculated based on total vertical depth plus horizontal length times horizontal length factor) greater than 2,500 metres.
To qualify for Tier 2:
1. Vertical Well
a. A gas well that is not part of a coalbed methane project and is not a deep re-entry well, and has a completion point deeper than 2,500 metres;
2. Horizontal Well
a. A gas well that is not part of a coalbed methane project and is not a deep re-entry well, and has a completion point deeper than 1,900 metres;
Application Steps:
Applicants will receive deep-well credits automatically, subject to review by the Province.
Documentation Needed:
No specific documentation has been identified.
Other Things to Note:
About the author
Maurice
