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Alberta auditors disagree over royalties Report refutes claims by Auditor-General that province could rake in $1B more a year in oil and gas royalties without harming industry Gary Park For Petroleum News
A 32-page report brushes off claims by the Alberta Auditor-General Fred Dunn that the province could rake in another C$1 billion a year in oil and gas royalties without harming the industry.
And who says so?
Why, none other than Dunn’s predecessor Peter Valentine.
His findings, delivered to Alberta Premier Ed Stelmach, said the government is collecting all that it can and should from the industry.
Stelmach ordered the review of procedures for collecting and reporting royalties in response to claims as Alberta prepares to introduce a new royalty framework on Jan. 1, 2009, that includes a 20 percent average hike in royalties and aims to collect another C$1.4 billion a year.
As part of the royalty review last year, Dunn suggested that failings in the royalty system were costing the government and pointed the finger at the government’s failure to listen to its own officials.
He said the energy department “estimates that it could collect an addition C$1 billion or more per year without stifling industry profitability.”
Disagreement over C$1 billion Valentine’s report, entitled Building Confidence, did find some fault with the government, the royalty review panel and Dunn, but left the industry unscathed.
However, he could “find no evidence that the government missed collecting over a billion dollars in royalties.”
He said that if there was a discrepancy, the review panel and Dunn should be asked for an explanation.
Energy Minister Mel Knight, praising Valentine’s work, said the government collected the royalties it was entitled to under the policies that were in place at the time.
Valentine, as part of recommending 13 changes to procedures, said existing systems and processes within the energy department ought to be “fail-safe,” but fall short because there are no standardized procedures to validate data being used in the department’s economic models.
Report calls for changes Among his proposals, Valentine called for:
• An inter-ministry committee to consult on the impact of the royalty system;
• New ways to help Albertans find the information they need to understand the royalty system; and
• An audit of currently available information about the royalty system.
Hugh MacDonald, energy spokesman for the opposition Liberal party, suggested the government, in “shopping around for a report,” had shown a “total lack of confidence” in Dunn, his office and legislation governing the auditor-general.
New Democratic Party leader Brian Mason said the government “got a much easier ride” when Valentine was auditor-general, whereas Dunn “calls it the way it is.”
Knight said the government will adopt all of the measures recommended by Valentine.
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