Alberta Royalty System Revamp Needs Incentives, Opposition Says

Alberta’s royalty payment system for its oil and natural gas industry needs to include incentives for long-term development of enhanced oil recovery and conventional drilling, according to a report by a provincial opposition party.

Drilling incentives should match those in neighboring Saskatchewan, according to the report published Tuesday by the Alberta Party. Narrowing the allowable write-offs for oil-sands projects would also improve the system, the report said. The new royalty regime should include an annual resource review to gauge industry performance.

“The goal should be to grow the pie by encouraging investment in innovative technologies rather than trying to take more royalties from the same production,” said Greg Clark, who heads the Alberta Party, in an e-mailed statement. 

Alberta’s oil industry is suffering from plummeting crude prices. Companies have slashed budgets and reduced workforces in a bid to stay afloat.

Alberta Premier Rachel Notley said Tuesday the government wants to “minimize the disincentives to growth” in the current royalty regime and plans to release details of the review by the end of the month. A panel was appointed last summer by the provincial government as part of an election promise to consider ways to improve the system and provide Albertans with more benefits.

“This is a very complex set of issues,” Notley said in a briefing from Edmonton. “We’re very, very conscious of the situation here in Alberta.”

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