CAPP seeks 4-point royalty plan to make Alberta more competitive

CALGARY, Alberta -- The Alberta government should consider four principles to make the province more competitive for oil and gas investment as it proceeds with its royalty review, the Canadian Association of Petroleum Producers (CAPP) said Friday.

“An appropriate royalty structure attracts investment, creates jobs, generates government revenue and builds Alberta communities,” said CAPP president Tim McMillan. “The current royalty structure, put in place just five years ago, has helped achieve those goals by being responsive to the ups and downs in the industry—and that’s been good for Alberta and Albertans.”

According to CAPP, the industry would like to see the following four principles included as part of the Alberta government-led royalty review:

1. A government commitment to a vibrant and competitive oil and gas industry;
2. Confirmation any royalty changes will be forward looking;
3. Be stable and predictable to minimize uncertainty and maximize investment in Alberta; and
4. Consider royalty changes in the context of all the mounting costs from new government policies, such as climate change and corporate taxes.

“We are pleased to see the Minister of Energy commit to looking at all factors affecting our energy industry,” McMillan said. “The cost of new government policies is adding to the growing concern about the future competitiveness of our industry.”

The royalty review may provide the opportunity to review the overall competitiveness of Alberta’s oil and gas industry, especially if considered in partnership with enhanced market access to move more Alberta oil and gas to more markets where it can fetch higher prices.

“The public owns the resource, the government stewards it, and our industry develops it responsibly,” McMillan said. “We have a responsibility to work together to develop the resource for the maximum benefit of all of Alberta.”

“Congratulations to Dave Mowat on his appointment. We look forward to working with him and his panel in the months ahead.”

However, the new climate change rules and price on carbon plus Alberta’s recently announced corporate tax increase have the potential to add almost $800 million to industry costs over the next two years, which puts investment and jobs at risk.

“Our industry competes for investment, labor and capital in an increasingly globalized world, and our competitiveness on the world stage is important to keeping Albertans working,” McMillan said. “Future growth depends on a foundation of environmental sustainability, fiscal competitiveness, regulatory efficiency and enhanced market access.”