One of Alberta's top bankers will be chairing a review of the royalties charged on oil and natural gas producers in the province, a key NDP election promise that has fuelled worry in an already shaky oil patch.
Dave Mowat, CEO of provincially-owned ATB Financial, was appointed to chair the province's nascent royalty review advisory panel on Friday morning by Energy Minister Marg McCuaig-Boyd. The appointment came a day after the NDP revealed plans for a climate change policy panel and announced a doubling of the province's carbon tax over the next two years.
Facing concerns from the energy industry about both reviews, Ms. McCuaig-Boyd said that producers "want to have a sense of stability moving forward and what the whole picture will look like," she said. "They're excited about knowing the outcomes from this and they're willing to wait."
The sole member of the panel so far, Mr. Mowat has been tasked with recruiting members and crafting the group's purpose, with a preliminary report due before the end of the year.
"As one of four-million-plus owners of Alberta's natural resources and bringing my understanding of just how important this industry is to Alberta, I want the best possible system for all of us," he said Friday morning.
Opposition parties in the provincial legislature were quick to pounce on the lack of details in Ms. McCuaig-Boyd's long awaited announcement and the lack of charter to guide Mr. Mowat's work, with one opposition leader going so far as calling for her resignation.
"I've listened closely to McCuaig-Boyd's statements since she became Energy Minister and I've given her a chance, but based on the haphazard and incomplete plan for a royalty review I have lost confidence in her ability to do the job," Alberta Party leader Greg Clark said in a statement.
Brian Jean, the leader of the official opposition Wildrose, said that the announcement only added uncertainty during a time when a plunge in oil prices has seen a wide slowdown in the energy sector. Alberta is shedding jobs and the provincial economy is expected to enter recession this year. The province's unemployment rate inched up to 5.8 per cent in May, the highest since January 2011.
"Ongoing delays in providing any framework or timelines for a royalty review will hurt confidence and investment in Alberta's economy which is already rattled by tax increases and other policy changes," Mr. Jean wrote in a statement.
"We don't support this review, especially given the low price environment, but we were at least hoping today's announcement would provide clarity for our energy and job creation partners."
Ms. McCuaig-Boyd said the review would listen to Albertans on what level of royalties the province should collect. The review was a key NDP promise, coming after Premier Rachel Notley tabled a private members bill in the last days of the Progressive Conservative government calling for the establishment of a permanent review panel.
"I think there was a concern from Albertans, 'Are we getting our fair share? Could it be different? Could it be better?' So we are delivering on that promise and reviewing. I think there should be a review every few years on something like that," said Ms. McCuaig-Boyd.
The Canadian Association of Petroleum Producers applauded the appointment of Mr. Mowat and asked the government to consider four principles during the review.
"An appropriate royalty structure attracts investment, creates jobs, generates government revenue and builds Alberta communities," wrote CAPP President Tim McMillan. "The current royalty structure, put in place just five years ago, has helped achieve those goals."
The province's previous royalty review in 2007 was deeply unpopular with the energy sector and was implemented at a time of falling oil prices. Facing criticism, the government of then Premier Ed Stelmach rolled back most of the recently announced royalty increases.
Unlike that review, Mr. Mowat will be looking at royalties at the same time as the government reconsiders its approach to pricing carbon. Ms. Notley has said that both panels must make recommendations that work together. Environment Minister Shannon Phillips has said that she would like to see new climate change rules that eventually reduce the province's carbon emissions.
"I think there's an element of tension in this," he said of both the royalty and climate panels. "You have to bring an optimization rather than maximizing one or the other."
Mr. Mowat has been CEO of ATB Financial since 2007. About 10 per cent of the bank's loan book is held by the energy industry, about $4-billion at this point. When asked if there was a conflict between running a bank heavily invested in the province's energy sector and chairing a review that could impact the profitability of the sector Mr. Mowat told The Globe and Mail that he is "going to do the best thing for the province."
"Nobody is out to wreck an economy, the goal is to make it better and stronger, so I don't think there is any conflict there," he said. "I think they're mostly looking for someone who can draw people to common ground."