Oil sands royalties challenged

The Pembina Institute, an independent Alberta-based research organization, says Alberta government revenues from the oil sands have dropped by almost one-third in the past decade despite heady oil prices, industry profits and production.

The report estimates the royalty return to the province dropped to C$2.29 per barrel in 2005 from C$3.39 in 1996, when a new royalty regime was introduced in an effort to spur investment.

Co-author Amy Taylor said the indications are that Albertans are receiving less than they were under a royalty system the institute has repeatedly said should be subject to a public review.

The conclusions are disputed by the Canadian Association of Petroleum Producers which said producers are forecast to pump C$2.5 billion into provincial coffers this year compared with C$800 million in 2005 and that doesn’t include more than C$1.5 billion from the sale of oil sands leases.

The royalty regime requires operators to pay 1 percent of gross revenues until project costs are paid out, when the rate rises to 25 percent.

—Gary Park