While there’s no hard evidence that the province’s new royalty framework has boosted oil and gas activity since announced a year ago, experts say there are positive signs. Oil and gas companies started paying under the new system on January 1st, but ATB Financial president and CEO Dave Mowat says they saw confidence building far before that.
“It encourages innovation and encourages people to get their costs down. We saw more than 150 wells drilled before the program even started, which was industry anxious to get on with things, and we’re seeing more and more innovation going forward.”
Chief Energy Economist Peter Tertzakian says the changes were needed to compete with the U.S. However, he argues government policy can only help to a certain extent.
“It is incumbent upon industry to respond and be competitive and all the peripheral businesses around the industry,” he says. “I am seeing really positive indications; it’s very early days. Are we nimble enough? Probably not quite yet but we’re definitely on the right trajectory.”
There were 247 active rigs in the province in the middle of January, up 50 per cent from the year before. Noting each well is estimated to create 135 direct and indirect jobs, Energy Minister Marg McCuaig-Boyd says the industry is looking encouraging. Still, she understands things could be much better.
“There’s still many people out of work; companies are still struggling; we don’t know everything that the future holds, however, we’re optimistic about things getting better. This means jobs for Albertans and optimism from the smallest towns to the office towers here in Calgary.”