Information Letter: Filing of 2021 actual and 2022 estimated Gas Cost Allowance (GCA) applications

January 2022

You are encouraged to submit your GCA application as early as possible. Submission must be received no later than the deadline of May 31, 2022. IOGC 2020 GCA applications will be available to submit in Petrinex effective February 4, 2022. For applications not submitted in Petrinex by the May 31, 2022 deadline, no GCA deduction will be processed for 2021 IOGC royalties.

If there are extraordinary circumstances that delay your GCA submission, a written request for an extension from IOGC must be submitted for approval a minimum of 10 calendar days before May 31, 2022. Please send your request for an extension (with your reason for the delay) with GCA Deadline Extension Request in the subject line to aadnc.gca.aandc@canada.ca or fax to 403-292-5618. The Applicant is responsible to ensure receipt of approval for an extension from IOGC on or before May 25, 2022, or a zero rate will be approved if no submission is received by May 31, 2022.

IOGC requires all mandatory fields in the respective GCA1, GCA2 and GCA3 forms to be fully completed with attachments as required to process your submissions in Petrinex. The following information is required:

This information must be submitted for IOGC to accurately process your GCA application. If the above information is not included with your 2021 GCA application, your submission will be rejected. Applicants will be allowed up to 10 working days to resubmit the required information. If not submitted within the 10 working day timeframe, applications in a rejected status will be processed with a zero rate. IOGC will also reject submissions for non-allowable or unsupported costs, as per the GCA section of IOGC's Royalty Reporting Guidelines.

Costs that are operating in nature must not be included in capital additions; capital additions for replacement assets must reflect corresponding retirement book value. Further details can be found in the GCA section of IOGC's Royalty Reporting Guidelines.

Types of costs not to be included in your GCA application are:

• production function cost allocations
• accruals for operating and capital costs
• 13th month throughput adjustments (construction, ownership & operation (CO&O) agreements)
• costs related to oil production;
• wellsite and downhole related costs
• all non-allowable capital and operating costs detailed in the GCA section of IOGC's Royalty Reporting Guidelines; and
• costs for prior reporting and/or production periods.

Reminders:

• Ensure you have submitted the required GCA forms (GCA1 and/or GCA2 where applicable) for all facilities within 30 days from the start of production.
• Petrinex will not allow facilities to have the effective date earlier than one month prior to the submission date.
• GCA1 forms must be submitted for all facilities that have more than one receiving facility (swing gas).
• For all new and updated GCA1 facilities, a corresponding GCA3 form must be submitted.
• Ongoing improvements to the Petrinex IOGC GCA module will now allow submission of a current estimate using the estimate section of the GCA3 form.
• IOGC is not responsible for any email messages not reviewed due to outgoing IOGC emails being routed to a recipient's junk mail folder.
• Check your junk mail folders regularly for incoming emails with the extension @sac-isc.gc.ca in addition to @canada.ca extension.