Alberta tweaks oil and gas royalties

EDMONTON — The government will release the results of its long-awaited oil and gas competitiveness review today, the latest tweak to the rules for an industry that supplies almost one-third of the province's revenue.

Premier Ed Stelmach and Energy Minister Ron Liepert will make the announcement in Calgary after the markets close in Eastern Canada.

The review is supposed to streamline regulatory processes in the oilpatch and make Alberta among the most competitive jurisdictions in which to do business.

It will also likely provide some incentives for technological innovation in the industry.

Stelmach announced the review last fall, two years after he made sweeping changes to royalties that angered many in the industry.

At that time, the province was riding a resource boom and Stelmach fulfilled a Progressive Conservative leadership campaign promise to ensure Albertans were getting their fair share of revenues.

Under the new plan, the province was supposed to collect an additional $1.4 billion a year in royalties.

The following year, the global economy collapsed and the oilpatch blamed the new royalty regime for compounding the industry's problems during a recession. Natural gas, in particular, was hard hit.

One Wednesday announcement offered some hope, with news the province has attracted $167.6 million in Crown land sales. That's less than the $1 billion some analysts had hoped for, but an improvement over a sluggish 2009.

Liepert brushed aside questions about details of today's review.

Former Nexen vice-president Roger Thomas and former RBC banker Chris Fong helped lead the review.

In early October, government officials held a breakfast meeting with a number of industry insiders, including representatives from the Canadian Association of Petroleum Producers.

Industry comments compiled by Alberta Energy reflect a deep skepticism about the government's tinkering with the royalty regime.

"There has been a loss of investor confidence in the stability of the Alberta market, and it is critical to engage the financial community," says a summary of the meeting, released by the department.

Opposition parties have been making political hay over what they say is the government's mismanagement of the province's key industry.

"They make one decision this month, they make a different one the next month," Liberal Leader David Swann said.

The Liberals released their energy policy in January. It calls for a royalty regime to "be determined in consultation with the industry, be based on fact and be competitive."

The Wildrose Alliance offered its own competitiveness review at a news conference on Tuesday. The upstart party accused the government of crippling the industry at the expense of thousands of jobs and billions in investment.

NDP Leader Brian Mason said he's skeptical about a review that leaned so heavily on industry input.

"They're basically letting the oil and gas industry write their own ticket."

amclean@thejournal.canwest.com