New Alberta oil and gas royalty framework accepting earlier applications

CALGARY – The Alberta government is now allowing oil and gas producers to make applications for new projects under its modernized royalty framework that had been scheduled to begin next January.

Provincial energy minister Marg McCuaig-Boyd says the decision to speed up implementation has been made because the industry wants to be able to begin working on new projects under the new system without having to wait until the end of the year.

She says some wells might not be drilled if forced to wait for the new system to kick in, noting that applicants will have to prove that the activity for which they are applying is beyond what they had previously planned.

Gary Leach, president of the Explorers and Producers Association of Canada, says the option will appeal to many operators whose development plans are better suited to the new royalty framework. CEO Tim McMillan of the Canadian Association of Petroleum Producers says the earlier adoption will make the transition smoother for the industry.

Under the new system, companies are to pay a five per cent flat rate royalty on oil and gas production until costs are recovered, after which those rates will range between five per cent and 40 per cent depending on energy prices. Details were revealed in April.