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The Globe and Mail

Alberta to cut royalty rates in effort to squeeze out more oil, gas production

An oil pump jack pumps oil in a field near Calgary, Alberta, July 21, 2014.

© Todd Korol / Reuters

The Alberta government is introducing two new royalty programs to encourage the energy sector to spend more on developments in their early stages and squeeze more oil and gas from underutilized existing operations.

Under the programs, companies would pay reduced royalty rates on those projects for a longer period.

CEO Tim McMillan of the Canadian Association of Petroleum Producers says the new royalty system recognizes the higher risks and greater costs of drilling associated with emerging developments and wringing out as much oil and gas from ongoing operations.

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The changes were recommended by the provincial royalty review advisory panel in January.

They are to take effect as of Jan. 1, at the same time as Alberta's overall new royalty framework.

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