|
Released October 25, 2007, the long-awaited
government response adopted about half of
the government-appointed royalty panel's
26 recommendations.
The "new royalty framework" as
the government calls it, will:
- Increase total royalties from oil and
gas by $1.4 billion or 20 per cent above
projected revenue in 2010. This is 25%
less than the government's own review
panel recommended.
- For oilsands, introduce price-sensitive
formulas before and after capital costs
are paid out. The payments will slide
between 1 percent and 9 percent of revenues
with increases starting at an oil price
of $55 a barrel and a cap set at $120
a barrel. Post-payout, royalties will
be 25 to 40 percent of net profits.
- For natural gas, set rates on
a formula using price and production volume.
New royalty rates will range from 5 percent
to 50 percent with rate caps at C$17.50
per million British thermal units. Royalties
for natural gas liquids will be set at
40 percent for pentanes and 30 percent
for butanes and propane.
- For conventional oil, link rates
to well production and price with the
government's take rising as high as 50
percent. Rates to be capped if the oil
price hits $120 per barrel.
- Reject the royalty panel's recommendation
for an oilsands severance tax on bitumen
that established producers would pay in
2008.
- Allow oilsands producers to pay royalties
with bitumen rather than cash.
- Attempt to re-negotiate a new price-sensitive
royalty formula with Syncrude and Suncor.
Has no plan in place of the two companies
do not want to negotiate their long-term
agreements in place until 2015.
- Increase the existing one-per-cent oilsands
royalty companies pay until project costs
are recovered to just over four per cent.
It increases up to nine per cent if oil
reaches $120 per barrel on a sliding scale.
- Not grandfather or allow exemptions
for existing oilsands projects.
- Continue its deep gas drilling incentives
to encourage activity. Will also apply
lower royalty rates for lower productivity
wells.
- Launch a review by former auditor general
Peter Valentine to look into the billions
auditor general Fred Dunn said has been
knowingly missed. Review is to be completed
by March 31, 2008.
In rejecting the oilsands severance tax (OSST):
Government take from energy revenues
| |
Current
rate |
Stelmach's
plan |
Royalty
panel recommendation |
| Natural Gas |
58% |
60% |
63% |
| Conventional oil |
44% |
49% |
49% |
| Oilsands |
47% |
57%
to 66% |
64% |
Government take from energy revenues
(In Millions of dollars)
| |
Current
rate |
Stelmach's
plan |
Royalty
panel recommendation |
| Natural Gas |
$4,670 |
+$470 |
+$742 |
| Conventional oil |
$807 |
+$460 |
+$456 |
| Oilsands |
$1,739 |
+$470 |
+$666 |
| TOTAL: |
$7,216 |
+$1,400 |
+$1,863 |
Assumes oil price at $56.44US per barrel, and natural gas at $6.34 per gigajoule. Based on the Alberta Royalty Review Panel and The New Royalty Framework reports.
Source: Edmonton Journal
Government royalty changes outlined October 25, 2007
The province's
current energy take:
For 2007-2008, oil and gas royalties, as
they are currently calculated, are forecast
to bring $10.5 billion to Alberta this fiscal
year -- about a third of the province's total
revenues. |
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