Alberta's energy sector is nervously awaiting changes to the province's royalty structure, which are due later this morning, with the hope there will be some clarity for oil and gas producers in a world where very little is certain right now.
- CBC News will bring live coverage of the royalty review announcement starting at 11 a.m. MT.
"The one thing I don't need is more questions," said Rafi Tahmazian, a senior portfolio manager with Canoe Financial in Calgary.
"We need an understanding, so that we can start to get on with the business, so we can start to get on with explaining to the international community what we have to do and what we can do to get the business back on its feet."
The royalty review stemmed from an NDP campaign promise last spring.
In August, the provincial government appointed a panel of four people, led by ATB Financial chief executive Dave Mowat, but also including energy economist Peter Tertzakian, Beaverlodge Mayor Leona Hanson and Annette Trimbee, a former Alberta deputy finance minister.
The current royalty system, which was most recently revamped in 2011, is complex, with a sliding scale of royalty rates ranging from 0 to 40 per cent, depending on the price and product:
- Oilsands bitumen, oil or natural gas.
- The age, type and production level of the well.
- Whether an oilsands project has paid back its original investment.
Every conventional oil well in the province pays a different monthly royalty rate.
Royalties collected in Alberta in the last fiscal year. The number will be much lower this year. (Alberta Energy/Let's Talk Royalties)
In the months that the panel worked on the review, energy prices have continued to fall to the point that virtually no oilsands projects were economic — the oil service sector was barely hanging on, and many junior explorers were failing.
Any changes to royalties won't take effect until 2017, but there is not much optimism that energy prices will have made a significant recovery by then.
Earlier this month, Premier Rachel Notley told reporters the review would do no harm.
"We're very, very conscious of the situation that we're in here in Alberta," she told a legislature news conference.
"What we're going to do is bring forward a process that is predictable ... and in no way should undermine the situation they're in now when all the dollars are added up."
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