Report Highlights: The Recommendations

Alberta Auditor General annual report Fred Dunn's full report, released Oct. 01, 2007.

Alberta's Auditor General Fred Dunn, in releasing his annual report on October 1, 2007, came down hard on former energy ministers and their staff, saying the process for collecting royalties needs to be more transparent and accountable to Albertans. The report was the second blow in as many weeks to the government's handling of Alberta's energy royalties. In releasing the report, the Auditor General says:

• Alberta can take an even higher royalty rates of 70% than the government's royalty review panel's recommendation of 49-64 per cent for oil, gas and oilsands. Dunn says a 70% royalty rate would still keep Alberta’s royalty rate competitive.
  
  
• A review of internal reports showed the government itself had identified roughly $1 billion per year in royalties that were owed by energy companies but were never collected.
  
  • An internal government report in December 2004 concluded royalties for oil, gas and oilsands should be lifted to reflect higher prices.
    
  • A 2005 report said royalties could increase "by an absolute minimum" of $1 billion to $2 billion annually with gas prices above $5 per thousand cubic feet.
    
    
• The energy department failed Albertans by not making public the results of its analysis of the royalty regime, saying the principles of "transparency and accountability" were not followed.
  
  
• A lack of political leadership meant the government missed out on the additional $1 billion or more in royalties annually.
  
  
• The Alberta government knew at least three years ago that it was losing royalties from energy projects such as the oilsands, and that the energy minister knew, but "chose not to act".
  
  
• The royalty holiday for new oilsands projects achieved its objectives years ago and is no longer necessary.
  
  
• The department must make three key changes:

  1. clearly describe and publicly state objectives of Alberta royalty regimes;
  2. improve planning, coverage and internal reporting of royalty review work;
  3. periodically report publicly on royalty regimes to inform the public and show the department's capacity and methodology to analyze royalty changes.