Royalties unchanged for oilsands projects in Alberta

CALGARY -- Alberta's NDP government is introducing an industry-friendly royalty system that won't change the province's take from oilsands projects.

See Full Article

The province's royalty review panel did recommend, however, tweaks to the royalty framework for conventional oil and natural gas wells so that royalty rates better take into account the costs of drilling, instead of just production rates and commodity prices.

A flat five per cent royalty rate will be applied on those wells until their revenues equal a cost allowance, after which rates will go up.

The province will determine in the coming months how those cost allowance numbers will be crunched. The panel, led by ATB Financial's Dave Mowat, also says the system should be agnostic about what type of resource a well produces.

Today's system -- in which different rates apply to oil, natural gas and natural gas liquids -- has been criticized as being too complex and making companies reluctant to explore because they don't know what resource their drill bits will encounter.

The new system will take effect in 2017. Wells drilled prior to that will be subject to the existing rules for 10 years.

The panel's recommendations have been accepted by the Alberta government.

"Our new royalty framework recognizes the reality of our economy today," Premier Rachel Notley said in a speech Friday.

"It responds to the pain and the uncertainty that workers and families are feeling across our province. It is designed to encourage more investment and more jobs than we'd otherwise have."

For oilsands, the royalty rates structure will be unchanged, but the panel said there was room for changes. For instance, disputes between companies and governments over what costs can be deducted "generate uncertainty" and "breed cynicism."

In a statement, three industry players praised the new framework, saying it provides certainty for their businesses.

Kevin Neveu, CEO of Precision Drilling Corp. (TSX:PD), said it "ensures that Alberta remains a competitive jurisdiction." Pat Carlson, CEO of Seven Generations Energy Ltd. (TSX:VII), called the report "thoughtful and comprehensive."

Mowat said the focus of the panel was less on the rates charged to producers and more on how to make the system work better.

The panel recommends further examination into ways to encourage more "value-added" processing in the province -- making more lucrative products out of raw resources, like petrochemicals from natural gas liquids.

The framework aims to reward oil and gas drillers whose costs are better than average. A capital cost index will be calibrated every year, so that it reflects the latest business conditions.

Cost stemming from the province's new climate change policy will be baked into the cost allowance.



Advertisements

Latest Economic News

  • HSBC warns of risks to world economic growth as profit dives

    Economic CTV News
    HONG KONG -- London-based bank HSBC reported Tuesday that annual profit slumped by more than 80 per cent following a year of "unexpected economic and political events" that contributed to volatile markets and influenced investment activity. Source
  • Asian stocks move higher as Wall Street gets ready to open after holiday

    Economic CTV News
    BEIJING - Asian stock markets were mostly higher Tuesday as investors looked ahead to minutes from the U.S. Federal Reserve's latest meeting and Wall Street prepared to reopen after a three-day weekend. KEEPING SCORE: Tokyo's Nikkei 225 advanced 0.5 per cent to 19,338.63 and the Shanghai Composite Index added 0.1 per cent to 3,242.55. Source
  • Deadline looms for Dakota Access pipeline protest camp

    Economic CTV News
    CANNON BALL, N.D. -- As dawn breaks over an encampment that was once home to thousands of people protesting the Dakota Access oil pipeline, a few hundred holdouts rise for another day of resistance. They aren't deterred by the threat of flooding, nor by declarations from state and federal authorities that they must leave by Wednesday or face possible arrest. Source
  • Loblaw resets passwords for all PC Plus accounts after security breach

    Economic CTV News
    TORONTO - Loblaw has reset passwords for all its PC Plus rewards collectors' online accounts after points were stolen from some members' accounts. The company (TSX:L) posted a warning on its website saying it requires all members to create new passwords - regardless of whether or not they changed them following the recent security breach. Source
  • Tim Hortons and Burger King owner, Restaurant Brands, nears deal to buy Popeyes: report

    Economic CBC News
    Restaurant Brands International Inc. , owner of the Burger King and Tim Hortons fast-food chains, is nearing a deal to acquire Popeyes Louisiana Kitchen Inc., people familiar with the matter said on Monday. The deal, which will likely value Popeyes at more than $1.7 billion US, is a bet by Oakville, Ont,-based Restaurant Brands that it can use its international reach to introduce Popeyes' Louisiana-style fried chicken and buttermilk biscuits to more diners globally. Source
  • Canadian labour leader Bob White, instrumental in creating CAW, dies

    Economic CTV News
    TORONTO - Canadian labour leader Bob White has died. White was instrumental in creating the Canadian Auto Workers union, which broke away from its American parent in the mid-1980s. He was the CAW's founding president from 1985 until 1991 -- a period when the union was at the height of its power, representing most of the Canadian employees of the big U.S. Source
  • Bob White, 'true maverick' former president of Canadian Auto Workers, dies

    Economic CBC News
    Bob White, the Canadian union leader who founded the Canadian Auto Workers after splitting off from its American counterpart, has died at the age of 81. Unifor, the union which now encompasses the Canadian Auto Workers, tweeted that White was "a great union leader. Source
  • 'True maverick' former president of Canadian Auto Workers Bob White dies

    Economic CBC News
    Bob White, the Canadian union leader who founded the Canadian Auto Workers after splitting off from its American counterpart, has died at the age of 81. Unifor, the union which now encompasses the Canadian Auto Workers, tweeted that White was "a great union leader. Source
  • Founding president of Canadian Auto Workers Bob White dies

    Economic CBC News
    Bob White, the Canadian union leader who founded the Canadian Auto Workers after splitting off from its American counterpart, has died at the age of 81. Unifor, the union which now encompasses the Canadian Auto Workers, tweeted that White was "a great union leader. Source
  • Wholesale trade rise 0.7% in December for third straight monthly gain

    Economic CTV News
    OTTAWA -- Canadian wholesale trade grew 0.7 per cent to $57.3 billion in December, registering its third consecutive monthly gain. Statistics Canada says sales in categories such as machinery, equipment and supplies, as well as building material and supplies were the biggest contributors to the increase. Source