Information letter - Replacement of the Alberta natural gas price index

Introduction

The purpose of this Information Letter is to describe Indian Oil and Gas Canada’s (IOGC) intention to replace the current Alberta natural gas pricing index for First Nation leases due to its discontinuance.

Background

In the early 2000s, IOGC implemented a standard Alberta natural gas pricing index for First Nation leases. IOGC settled upon what is now known as the monthly ICE NGX AB-NIT Day Ahead price index. On April 24, 2020, S&P Global Platts gave notice that, as of June 1, 2020, the monthly ICE NGX AB-NIT Day Ahead price index will no longer be published.

IOGC will be using the monthly ICE NGX AB-NIT Same Day Index (1) , published by S&P Global Platts in the monthly Canadian Gas Price Reporter, as a replacement natural gas price index for Alberta.

Expectations for companies

Certain IOGC leases may provide a mechanism for companies to negotiate a replacement reference price provision with IOGC, within 90 days after June 1, 2020. If this applies to your agreement, and you wish to negotiate a different index, you are requested to notify IOGC as soon as possible through IOGC email aadnc.iogccompliance.aandc@canada.ca (subject line: Request for Consideration of Alternative Gas Price Index).

IOGC expects companies to continue to submit and pay natural gas royalties – for production months starting June 2020 - based on the monthly ICE NGX AB-NIT Same Day Index (1).

Notification to First Nations

IOGC remains committed to ensuring appropriate indexing of gas prices as well as accepting and processing payments to First Nations. IOGC will notify a First Nation if a different index is proposed by a contract holder and IOGC agrees.