Understanding the total value Alberta’s energy industry delivers to Albertans beyond just royalties and creating policy that attracts investment even in challenging times is key to creating sustained prosperity in Alberta, says Alberta Party Opposition Leader Greg Clark.
“It is critical that Albertans receive optimal value for the energy assets we own and that we have trust in our royalty system,” said Clark. “Done properly, this review offers an opportunity to move beyond polarizing rhetoric and helps educate Albertans about our energy industry, how investment decisions are made and the significant structural challenges our province faces.
“In the current low commodity price environment, and in a world seeking to reduce greenhouse gas emissions, it is fair to ask whether Alberta can — or should — continue to grow our oil and gas industry,” said Clark.
“My answer is an unequivocal yes.”
Clark said a vibrant energy industry creates prosperity and social good for our province, and that the Government should work to ensure the new carbon tax creates an environment where Alberta entrepreneurs can create companies and technologies to address greenhouse gas emissions while still growing oil and gas production.
“The right policies allow Alberta to succeed in the new economy without abandoning the old,” said Clark. “The goal should be to ‘grow the pie’ by encouraging investment in innovative technologies rather than trying to take more royalties from the same production.
“In today’s market that simply won’t work. Increasing royalties today would scare away investment and mean less for Albertans.”
Clark called on the Government to release the Royalty Review Panel’s report now to put an end to uncertainty and unlock investment in Alberta’s oil and gas assets.
“The Royalty Review created tremendous uncertainty and this led to companies deferring investment decisions,” said Clark. “This compounds the problems created by low commodity prices and has likely cost thousands of Alberta jobs.
“I have a lot of faith in the Panel, and I hope the Government listen to their advice even if what the panel reports doesn’t fit their political ideology.”
The key features of Clark’s plan include:
Ensure Alberta’s royalties are globally competitive, simplified, predictable and encourage innovation, especially with regard to reducing the industry’s carbon footprint
Drilling incentives to match Saskatchewan’s plan, which would get people back to work, generate investment and tax revenue for the province
Change strategic unconventional resource royalties to a cash flow based system like the oil sands to targeting emerging, strategic liquids rich resources like Alberta’s Montney and Duvernay plays
Advocate for market access for Alberta energy products
Narrow allowable writeoffs against oil sands project costs and improving the auditing process to ensure oil sands projects reach payout sooner and allow these projects to generate higher royalties
Add incentives to maximize the long-term development of Alberta’s resources, encourage enhanced oil recovery and enhanced gas recovery by re-using existing infrastructure and re-starting abandoned vertical wells; this reduces the number of abandoned wells and increases activity
Create and annual Resource Owners Report that quantifies industry performance, direct and indirect economic benefits, royalty rates, surface land rentals and other government revenues, environmental and social impacts and benefits
Evaluate Alberta’s overall position on an ongoing basis to ensure we have a competitive fiscal regime that takes into account all aspects of a project, from political stability and the scale of the resource to the total cost of doing business — including corporate taxes, royalties, fees, property taxes, land leases etc.
The complete Sustaining Prosperity recommendations are available here.