Alberta Regulation 27/2025, titled “Alberta Oil Sands Resource Credit Regulation,” is a legal framework that outlines the conditions under which royalty credits can be applied to the oil sands industry in Alberta. It is established under the authority of the Mines and Minerals Act and the Petroleum Marketing Act. The regulation’s main goal is to create a system through which royalty compensation owed for oil sands products can be offset using assigned credits, which can be transferred between eligible suppliers and operators of oil sands projects. The regulation also provides detailed rules on how these credits are created, assigned, reassigned, applied, and reconciled.

The regulation begins by defining key terms such as “eligible supplier,” which refers to a person who has an ownership interest in a project and is involved in the royalty calculation for oil sands products. The term “royalty credit” is also defined as a credit established by the Minister to offset royalty compensation. These credits can be assigned to eligible suppliers and applied against the royalty compensation owed on their share of oil sands products. Furthermore, “royalty credit contracts” are agreements that govern the supply and delivery of oil sands products, which may allow the Commission to assign these credits as a form of payment or consideration.

The process for assigning and applying royalty credits involves several steps. Under section 2, the Minister has the authority to establish royalty credits, and the Commission is responsible for assigning them. These credits are not transferable without the Commission’s approval, and the process of assignment is detailed in section 3. Under certain conditions, an eligible supplier may reassign credits to operators of projects in which they have an interest. This reassignment must be done within six months of the credit assignment, and the credits must not exceed the estimated royalty compensation owed by the operator. When royalty credits are reassigned, the operator must apply them in the month they were reassigned, and they must be applied at a value of $1 per credit to offset the royalty compensation.

The regulation outlines the responsibilities of both suppliers and operators in managing the royalty credits. Suppliers are required to estimate the royalty compensation owing in respect of their share of oil sands products and provide this estimate to the Commission. The Commission, in turn, determines the number of credits to assign based on the provided estimates. Additionally, section 6 clarifies that the credits must be applied against the royalty compensation owing, but cannot exceed the amount necessary to fulfill the operator’s obligation under the Oil Sands Royalty Regulation.

Section 7 establishes the mechanism for offsetting the royalty compensation owing, while section 8 provides a process for reconciling royalty credits when they are not applied by the operator. If credits remain unapplied, the Commission will compensate the supplier, canceling the affected credits. The regulation also specifies that credits are invalid if they are not applied within six months of being assigned. Moreover, any transfer of credits is prohibited unless approved by the Commission, ensuring that the credits remain within the regulatory framework.

Alberta (27/2025) April 9, 2025
Disclaimer: Insights are for informational purposes only and do not reflect RRI’s official position or constitute legal opinion.