Alberta intends to take about $1.4 billion more from the province’s energy industry by the end of the decade. On Thursday, the province announced its decision to bump royalties 20% by 2010.
Actual revenues will depend on future prices and production levels in the province, the government said.
The new royalty framework is based on input received from the public, industry, international experts as well as the report of the Alberta Royalty Review Panel established earlier this year.
The new royalty regime includes the following components:
- simplified royalty formulas for conventional oil and natural gas that will operate on sliding scales that are determined by commodity prices and well productivity;
- a sliding scale will be implemented for oil sands royalty rates ranging from 1% to 9% pre-payout and 25% to 40% post-payout depending on the price of oil;
- no grandfathering will be implemented for existing oil sands projects. The government is in discussions with Syncrude and Suncor, whose Crown agreements expire in 2016, to transition to the new oil sands royalty regime; and
- substantial legislative, regulatory and systems updates will be introduced before changes become fully effective in January 2009.
The government said it will initiate a review of all systems, structures and resources related to the collection and reporting of energy royalties. The project will be led by former Auditor General Peter Valentine and it will be completed by March 31, 2008.