Alberta Oil Sands Resource Credit Regulation

(no amdt) alberta regulation 27/2025 Mines and Minerals Act Petroleum Marketing Act ALBERTA OIL SANDS RESOURCE CREDIT REGULATION Table of Contents 1 Definitions 2 Authority for royalty credits 3 Royalty credit contracts 4 Reassignment of credits to operator 5 Estimated royalty compensation 6 Application of royalty credits 7 Offset of royalty compensation owing 8 Reconciliation of royalty credits by Commission 9 Expiry of credits 10 Transfer prohibited 11 Indemnity 12 Recalculation Definitions 1 (1) In this Regulation, (a) “eligible supplier” means a person who has an ownership interest in a Project and who, at the point immediately downstream from the royalty calculation point for the Project, is an owner of a portion of the lessee’s share of an oil sands product for which royalty compensation is payable under the Oil Sands Royalty Regulation, 2009 (AR 223/2008); (b) “royalty credit” means a credit established under section 2; (c) “royalty credit contract” means a contract described in section 3; (d) “supplier” means an eligible supplier or a person the Commission has been directed to deal with under section 3(4). (2) In this Regulation, “lessee”, “oil sands product”, “operator”, “Project”, “royalty calculation point” and “royalty compensation” have the same meaning as in the Oil Sands Royalty Regulation, 2009 (AR 223/2008). Authority for royalty credits 2 (1) The Minister may establish royalty credits in respect of royalty compensation. (2) The Commission may assign royalty credits established under subsection (1) in accordance with this Regulation. Royalty credit contracts 3 (1) For the purposes of subsection (4), “person” has the same meaning as in the Oil Sands Royalty Regulation, 2009 (AR 223/2008). (2) The Commission may assign royalty credits under contracts that conform with this section. (3) A contract referred to in subsection (2) shall, as consideration for the supply and delivery of an oil sands product, allow the Commission to assign royalty credits to an eligible supplier as some or all of the consideration payable. (4) Notwithstanding subsection (3), if an eligible supplier has made arrangements with another person that include the transfer of the eligible supplier’s ownership interest in an oil sands product to that person, (a) the eligible supplier may direct the Commission to deal with that other person on behalf of the supplier, (b) the Commission shall deal with the other person on behalf of the supplier, and (c) a contract referred to in subsection (2) may, as consideration for the supply and delivery of an oil sands product, allow the Commission to assign royalty credits to that other person as some or all of the consideration payable, on the condition that the person reassign those royalty credits to the eligible supplier. (5) A royalty credit assigned under a royalty credit contract must be used to offset the royalty compensation owing in respect of the eligible supplier’s share of an oil sands product received from one or more Projects that the eligible supplier has an interest in and that are specified in the contract. (6) A contract under this section must (a) include provisions respecting the volume of an oil sands product to be supplied under the agreement, (b) include provisions respecting the pricing of the oil sands product to be supplied, (c) require the supplier to provide the Commission with an estimate of the royalty compensation, determined in accordance with section 5, that will be owing in respect of the eligible supplier’s share of an oil sands product received from one or more Projects specified in the royalty credit contract, and specify the time within which the supplier must provide the estimate to the Commission, and (d) authorize the Commission to determine the number of royalty credits to be assigned each month based on the estimate provided under clause (c) and any other information available to the Commission. (7) A contract under subsection (2) may, (a) in determining the consideration to be paid, account for both oil sands products supplied and delivered and related costs and expenses, (b) allocate royalty credits among cost and price components established in the contract, and (c) include any other terms, not incompatible with this Regulation, that the Commission considers necessary. (8) The Commission shall provide the Minister with notice of every royalty credit contract made and the assignment of royalty credits under those contracts, in a form satisfactory to the Minister. Reassignment of credits to operator 4 (1) If a royalty credit contract is entered into with a supplier who is not an operator of a Project specified in the royalty credit contract, the eligible supplier may reassign royalty credits assigned under the royalty credit contract to one or more operators of Projects specified in the royalty credit contract by providing notice in writing to the affected operator. (2) The royalty credits reassigned to an operator under subsection (1) must not exceed the amount of the royalty compensation estimated, in accordance with section 3(6)(c), to be owing by the operator in respect of the eligible supplier’s share of the oil sands product produced from that Project in the month for which the credits are applied. (3) An eligible supplier must reassign royalty credits to an operator under subsection (1) within 6 months of the date that they are assigned by the Commission to the supplier. Estimated royalty compensation 5 For the purposes of section 3(6)(c), the estimate of royalty compensation must be based on a calendar month and be determined in respect of the royalty compensation owing on the eligible supplier’s share of an oil sands product produced from the Projects specified in the royalty credit contract. Application of royalty credits 6 (1) An operator to whom royalty credits are assigned or reassigned under this Regulation must apply the royalty credits at a value of $1 per credit in accordance with this section. (2) For the purposes of subsection (1), if royalty credits are reassigned to an operator by a supplier, the royalty credits must be applied, in the month in which the credits are reassigned to the operator, against the royalty compensation owing in respect of the eligible supplier’s share of oil sands product produced from a Project specified in the royalty credit contract under which the credits are assigned. (3) Royalty credits applied under this section offset the payment of royalty compensation owing to the Crown in right of Alberta under the Oil Sands Royalty Regulation, 2009 (AR 223/2008). (4) For greater clarity, an operator must not apply credits that exceed the number required to fulfil the operator’s obligation, in respect of the eligible supplier’s share of oil sands product produced, to pay royalty compensation under the Oil Sands Royalty Regulation, 2009 (AR 223/2008). (5) On submission of a report under section 38 of the Oil Sands Royalty Regulation, 2009 (AR 223/2008), an operator to whom royalty credits are assigned or reassigned in accordance with this Regulation must (a) specify any credits the operator intends to apply to offset the royalty compensation owing in respect of the applicable month, and (b) notify the Commission and the eligible supplier, if the eligible supplier is not the operator, of (i) the royalty compensation payable in respect of the eligible supplier’s share of the oil sands product delivered for the applicable month, (ii) any credits applied by the operator to offset the royalty compensation owing in respect of the eligible supplier’s share of oil sands product delivered in the applicable month, and (iii) any credits that exceeded the royalty compensation owing in respect of the eligible supplier’s share of the oil sands product delivered for the applicable month. Offset of royalty compensation owing 7 The Minister shall, on receipt of the information required under section 6(5), offset the royalty credits specified against the royalty compensation owing by the operator. Reconciliation of royalty credits by Commission 8 (1) On receipt of a notification under section 6(5)(b)(iii) indicating that royalty credits were not applied by the operator, the Commission shall (a) pay the eligible supplier an amount equal to the value of the unapplied credits under the royalty credit contract, and (b) notify the Minister, in a form satisfactory to the Minister, of the number of credits affected. (2) If the Commission pays an eligible supplier compensation under subsection (1)(a), the credits in respect of which the compensation is paid are cancelled and not eligible for offset of royalty compensation owing by any person. Expiry of credits 9 A royalty credit is invalid if not applied by an operator under section 6 within 6 months of the date it is assigned by the Commission to the supplier. Transfer prohibited 10 No person shall transfer a royalty credit except with the written approval of the Commission. Indemnity 11 If a supplier has been assigned or has reassigned a credit under this Regulation, the supplier to whom the royalty credits have been assigned, or any further assignee or transferee of the credits, must indemnify and hold harmless the Government of Alberta and the Commission against all third party claims, demands, actions or costs, including legal costs on a solicitor‑client basis, related to, occasioned by or attributable to the supplier or the assignee, as the case may be, arising from any matter in relation to this Regulation, including the use and application of royalty credits. Recalculation 12 For greater certainty, nothing in this Regulation restricts the ability of the Minister to make any calculation authorized under section 38 of the Mines and Minerals Act , and any recalculation on a matter for which royalty credits were applied will not result (a) in a change to the credits assigned or applied, or (b) in any additional compensation being paid to or by the Commission.