Five months after a review into Alberta’s royalty program was launched, the results have been released in Calgary.
Premier Rachel Notley spoke about the Review this morning and announced that there were little changes to the rates for oilsands projects.
“What Albertans need us to do is to help improve their industries returns by removing distortions and disincentives in the system and, quite frankly, to work as partners with industry to grow the pie. Since existing wells were developed under today’s royalty system, that system will continue to apply to all existing wells for 10 years and the modernized framework will apply to wells drilled after 2016.”
The current system includes different rates on oil, natural gas and natural gas liquids but in the new system there will be a flat 5% royalty rate applied on new wells drilled in 2017. Once costs are recovered, the rates will then go up but the Province is expected to work out how those costs will be determined in the coming months.
Notley explains that the second point of the review will allow for clarity on development of Alberta resources and government regulation.
“We will provide an unprecedented level of transparency. Not only about the cost of drilling, with the publication of a new drilling cost index but also… about the prices, the production volumes and the allowable costs used to determine Royalty payments in oilsands operations. Detailed reports on all these costs will be disclosed and tracked on an accessible, easy to navigate website so that legislators and citizens can monitor this new system as it is implemented and managed.”
Along with these changes, the new system will reward the most efficient drillers and develop Alberta markets for the use of natural gas.
The royalty review panel held 65 stakeholder meetings across the province as part of the consultation process. The royalty report was delivered by 4 a person panel and accepted by the Premier.