Indian Oil and Gas Regulations — 97
Compensatory royalty 97 (1) The monthly compensatory royalty that is payable by a subsurface contract holder is (a) in the case of a vertical triggering well or deviated triggering well that is producing from a single spacing unit, an amount equal to the amount that would have been payable by the holder as a royalty for that month if the triggering well were producing from the adjoining First Nation spacing unit that is in their contract area; and (b) in the case of a horizontal triggering well, multilateral triggering well or deviated triggering well that is producing from more than one spacing unit, an amount equal to the percentage, calculated in accordance with the following formula, of the amount referred to in paragraph (a): (L/T) × 100 where L is the length of the section of the triggering well that is located in the adjoining external spacing unit and is capable of producing oil or gas from the offset zone, and T is the total length of the section of the well that is capable of producing oil or gas. Prorated amount (2) If the triggering well is located in an external spacing unit that contains First Nation lands, the monthly compensatory royalty that is payable is an amount calculated in accordance with the formula C × (100 – I)/100 where C is the amount of the compensatory royalty that is payable under subsection (1); and I is the area of the First Nation lands in the spacing unit, expressed as a percentage of the area of that spacing unit. Calculation of compensatory royalty (3) For the purpose of calculating the monthly compensatory royalty, (a) the volume of oil, gas or condensate to be used in the royalty formula is the volume of oil, raw gas or condensate that was produced in the month by the triggering well, as shown by the records of the provincial authority; and (b) the price to be used, in respect of that month, is (i) in the case of oil, in Saskatchewan, the price indicated in the Monthly Crude Oil Royalty/Tax Factor History , published by the Ministry of Energy and Resources, and, in the other provinces, the monthly par price for light, medium, heavy or ultra heavy oil, as the case may be, published by Alberta’s Department of Energy, (ii) in the case of gas, in Saskatchewan, the price indicated in the Monthly Natural Gas Royalty/Tax Factor History , published by the Ministry of Energy and Resources, and, in the other provinces, the Gas Reference Price in the monthly information letter Natural Gas Royalty Prices and Allowances , published by Alberta’s Department of Energy, and (iii) in the case of condensate, the Pentanes Plus Reference Price in the monthly information letter Natural Gas Royalty Prices and Allowances , published by Alberta’s Department of Energy. Compensatory royalty — confidential well (4) In the case of an offset notice sent under paragraph 94 (3)(b), the month referred to in paragraph (3)(a) for the first monthly compensatory royalty is the month whose first day follows the period that begins on the day on which the information sent under paragraph 94 (3)(a) is received and ends on the 180th day after that day. For each subsequent monthly compensatory royalty, the month is each subsequent month. Heating value (5) If the royalty calculation requires the conversion of a price in dollars per gigajoule (GJ) into a price in dollars per 1000 m 3 , the heating value is 37.7 GJ/1000 m 3 . No deduction (6) No deduction for costs or allowances is to be made in the calculation of the compensatory royalty. Transitional provision (7) This section does not apply to a compensatory royalty owing under the Indian Oil and Gas Regulations, 1995 .