The first wells approved under the new royalty framework in the province are located in the Peace Country.
Although it was not set to take effect until 2017, the Alberta government announced that companies could apply earlier. Encana is drilling east of the city of Grande Prairie about 40 minutes sout of Wembley and Minister of Energy Marg Mcuaig-Boyd explains that it is good news not only for the area but the province as well.
“We are going to monitor and make sure we are always competitive. The idea of this framework is to make Alberta competitive with the world. We have to keep looking at it and make sure we are competitive but right now we feel once the price is up, we are putting Alberta in pretty good shape for the global market.”
The old framework had different royalties on differing liquids like gas or oil but the new one has any approved new wells drill with a flat 5 per cent rate on any liquid.
This was created to give incentives to companies to lower operating costs as well as trigger innovation in the industry.
“We have over 50 applications that are being processed but from what I understand, there are around 35 applications approved and should be starting up very soon. The factor is 135 to one rig so that’s very good news.”
Encana spokesperson Brian Lieverse explains that the new framework is very significant.
“It was a well that we would have liked to have done but with the change to the framework, it allowed for us to move it ahead to at least 6 months. It allowed for us to have people working now rather than later.”
The Canadian Association of Petroleum Producers’ Vice President of Western Canada Operations Brad Herald gave props to the government.
“The government realized there was an opportunity here, hopped on it very quickly and opened the window for this activity ahead of January and they’re to be commended for that.”
The Alberta government says more jobs and investment will increase for the remainder of the year due to the early start to some drilling work with the royalty framework.