As 2017 dawns, Alberta's oilpatch will begin paying the government under a new royalty system that took five months and cost $3 million to review — but basically looks the same as it did before.
The NDP government of Premier Rachel Notley had vowed before their election victory to make sure oil companies would pay more to taxpayers for pulling the resource out of the ground. After the review, however, the government admitted it changed its stance.
With growing unemployment and the oilpatch bleeding red ink during the downturn, Notley conceded to reporters, "it is not the time to reach out and make a big money grab, because that is just not going to help Albertans."
The review panel found existing royalty rates charged in Alberta were comparable to other jurisdictions. In 2017, oilsands rates will not change and the new royalty structure for oil, liquids and natural gas will only apply to new wells, while old wells stay under the existing system for 10 years.
The oilpatch was fearing the worst, but ended up overwhelmingly supporting the results of the review. The Canadian Association of Petroleum Producers, the Petroleum Services Association of Canada and the Explorers and Producers Association of Canada all endorsed it.
Some companies were so enthused about the new policy that they applied for early access. For instance, Encana spent $25 million to drill new wells in the Duvernay-Montney basin in northeast Alberta. The company says that spending would not have happened without the royalty changes.
Critics had wanted a better deal for Albertans, instead of catering to the oilpatch. One consulting firm chief and a former royalty advisor for Alberta Energy, said some of the royalty reductions in the past could have been eliminated, and there was no need to give companies incentives for drilling new wells in the province.
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