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Alberta out to lead North America
Gary Park For Petroleum News
The Alberta government is sending out ever-stronger signals that its controversial oil and natural gas royalties are headed for change no later than early March.
In a speech Feb. 4 to open a new session of the Alberta legislature, the government said the first bill on the order paper will be the Alberta Competitiveness Act that demonstrates the government’s “resolve to make Alberta the most competitive jurisdiction in North America.
“To do this we must reduce the cost of doing business here, including the cost of regulation, while at the same time providing world-class services that are the hallmark of competitive jurisdictions.”
The underlying message is being interpreted as a wholesale retreat from the average 20 percent hike in royalties introduced a year ago and which is being blamed for the loss of billions of dollars in upstream spending and thousands of jobs.
Gary Leach, executive director of the Small Explorers and Producers Association of Canada, said that reaching a more competitive level requires the government to make changes to “the royalty and fiscal framework and tackle the cost and complexity of the regulatory burden in the province.”
He said his association welcomed the government’s reference to the role played by its energy industry in contributing 50 percent of the Alberta Gross Domestic Product.
Attracting investment The speech said the government is “committed to ensuring that this industry remains vibrant and continues to attract investment and create new technologies.”
Leach said the central role of the energy sector, in underpinning the prosperity of Albertans, needs supportive government policy.
Chris Theal, an analyst with Macquarie Capital Markets Canada, expects positive changes, especially a more aggressive approach to the mid- and deep-gas side, with incentives to stimulate activity.
He said the tight oil plays, such as the emerging Cardium region, also need a more attractive and stable fiscal regime similar to the low initial royalties in Saskatchewan’s Bakken play.
Roger Soucy, president of the Petroleum Services Association of Canada, opted for a cautious view, but said the tone of the speech gave him some comfort that the government understands the industry better than it has previously.
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