Royalty Administration
The Royalty Administration group of Indian and Northern Affairs Canada administers the oil and gas royalty regime for petroleum production on frontier lands north of 60° latitude, including the Northwest Territories, Nunavut, and the northern offshore.
The Canada Petroleum Resources Act governs the setting and collecting of royalties in respect of petroleum produced from frontier lands. The Frontier Lands Petroleum Royalty Regulations prescribe the royalty rates, the calculation, reporting and associated interest or penalties.
The frontier lands regime is a generic profit sensitive regime that is robust, competitive and provides industry with full cost recovery. As a profit sensitive regime it takes a higher share from the most profitable developments and a lower share from less profitable developments. It is robust as it adjusts automatically to changes in the price or quality of the resources. It is competitive with other jurisdictions, and with other investment options, providing an attractive return that encourages northern investment.
A combination of "resource rent" royalty (royalty as a share of net revenue after payout) and a minimum ad valorem royalty (royalty as a share of the value of the resource) allows risks and profits to be shared.
It is a regime truly built for the North.