Enersight Releases New Alberta Royalty Regime Calculations


As of 2:00 PM MST Wednesday afternoon (November 7, 2007), WellSpring will use the new Alberta Royalty formulas. All existing Alberta projects will, by default, use the old royalty calculations until January 2009. As of January 2009, the new formulas will be used.

If you are logged in at that time, you will need to save your work, log out and log back in again to access the new royalty formulas.

Assumptions and settings used by the new formulas are detailed below.

If you have any questions or comments, please contact Enersight at +1 (403) 246-7447 or e-mail support@enersight.com.
Calculation Mode

  1. By default, WellSpring now uses the new royalty formulas. As a result, you will most likely see a change in your results.

  2. If you would like to run your economics under the old Alberta Royalty Formulas, check the "Calculate with Old Alberta Royalty Regime" check box.
Royalty Settings

  1. Reference Prices and Select Prices are no longer used under the new regime.

  2. $/GJ can now be added to a PAR Price file. If a PAR price file is not selected, WellSpring will use the Sales Point price for the purpose of calculating royalty rates.

  3. Existing Crown and Freehold splits and Freehold Royalty Rates are preserved.

  4. Measured Depth is a new field used to calculate Deep Gas Royalty Rates.

    If the well is an existing well and was eligible for the Deep Gas Royalty Holiday Program under the old regime, WellSpring will set the Measured Depth to the Vertical Depth you entered under the old program. You will need to update this field to get the correct Measured Depth rate adjustment.

  5. If Percent Crown plus Percent Freehold is less than 100%, the difference is treated as Manual Royalty lands and the manual royalty rate will apply. No GCA or other deductions are applied to manual royalties.

  • Note: WellSpring converts Liquid Ethane from By-Product yields and extractions back into a gas for the purpose of gas royalty calculations.
Gas Cost Allowance (GCA)

  • Gas Cost Allowances are still being reviewed by the Alberta Government. Until there is clarification provided, WellSpring continues to use the existing GCA calcualtion.
  1. If "Include Eligible Opex in GCA Deducts" is set in the Well's royalty settings (or its inherited node), WellSpring will include all operating costs marked as "Royalty Deduction" in the Operating Cost Set definintion as an eligible cost offset against royalties owed.

    Eligible OCA deductions are calculated at each node between the Well and the Sales Point.

    These operating cost deductions are reported as OCA in the royalty report.

    Under the Global Alberta Fiscal Model used by most of our clients, "Facility Fixed" and "Facility Gas" are deductible against gas royalties. "Facility Fixed", "Trucking (Oil)" and "Trucking (Water)" are deductible against Oil royalties.

  2. If "Include Eligible Capex in GCA Deducts" is set in the Well's Royalty settings, WellSpring will calculate, using a Jumping Pound formula, an eligble GCA deduction for all nodes along the path between the Well and the Sales Point.

    Eligible CCA deductions are calculated at each node between the Well and the Sales Point.

    Under the Global Alberta Fiscal Model used by most of our clients, the only Eligible Capital Cost is "Facility" capital. These capital cost deductions are reported as CCA in the royalty report. Oil royalties are not reduced by CCA.

  3. If "Deduct GCA From Freehold Royalties" is checked in the Well's royalty settings, the above costs will also be used to reduce Freehold royalties owed.

  4. If you create a "Manual GCA" entry(s) in the Well's royalty settings, WellSpring will also use this amount as an eligible cost deduction for Gas royalties.

    Only Manual deductions defined at the Well level are used as a royalty deduction.

  5. If you set an "AEUB Facility / Plant Designation" facility at the Sales Point royalty settings, WellSpring will use EUB Facility /Plant costs entered for the plant as eligible costs. See the section below titled "EUB Facilities / Plant Types" to learn how to create UOCR Facilties.

  6. Under the new regime, WellSpring does not including any deductions for NGL transportion and processing.
EUB Facilities / Plant Types

  1. WellSpring supports EUB Plant and Plant Type UOCR deductions.

  2. To maintain applicable EUB Plants and Plant types deduction, click on the "Edit UOCR Facilities" button at the top of the Alberta Royalty Settings.

  1. There are 5 predefined Plant Types. In addition, you can create and maintain any number of EUB Plants

  2. Enersight does not maintain current Plant and EUB Facility costs. You will need to maintain these yourself.
Otherwise Flared Solution Gas Holiday (OFSG)

  1. Check the "Is Eligible" check box if this well is eligible for the Otherwise Flared Solution Gas royalty reduction.

  2. This program has a maximum life for 10 years. If this well is already operating under the program, enter the number of months remaining.

  3. A-Factor is the factor controling the amount of reduction in gas royalties owed. An A-Factor of 1 results in a 100% reduction in gas royalty owed.

  4. If the well produces more than 15e3m3/month for 3 consecutive months, WellSpring will terminate the program.
Alberta Royalty Detailed Reports

  1. A new detailed report called "New Alberta Royalty Regime" is available

  • Note: These detailed reports are only available at the Well level;
New Royalty Framework

Details on the new Alberta Royalty Regime can be found at http://www.energy.gov.ab.ca/About_Us/1293.asp.
Enersight Corp.
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Website: www.enersight.com Email: info@enersight.com
Support: support@enersight.com Phone: +1 403.246.7447