The B.C. Oil and Gas Commission will be implementing an industry gas production levy increase from $.071 per 1,000 cubic metre of marketable gas produced, to $.085 to raise funds for orphan site restoration.
The oil levy will also increase from $1.30 to $1.58 per cubic metre petroleum produced. The new rates take effect beginning with October 2018 production.
Beginning April 1, 2019, a new liability levy will replace the existing orphan tax ($.03 per 1,000 per cubic metre marketable gas and $.06 per cubic metre petroleum).
The production levy increase will also continue to support the orphan site restoration fund over a three-year period, while the liability levy is phased in. By 2021/22, the liability levy will provide the entire estimated $15 million per year required to sustain the orphan fund.
Oil and gas well sites, test holes, production facilities and pipelines may be deemed as orphan sites when the operator is insolvent or cannot be located.
Recent amendments to the Oil and Gas Activities Act enable the OGC to develop regulations, policies and tools to ensure industry is retiring inactive assets in a timely and responsible manner. The OGC has been consulting with industry regarding orphan site funding and asset retirement and those discussions will continue.
Due to an increase in orphan sites in recent years, spending on orphan treatment has tripled to almost $15 million in 2018/19.