Making Alberta more competitive

CAPP has said that the Albertan government should consider four principles to make the province more competitive for oil and gas investments as it proceeds with a royalty review. Tim McMillan, CAPP President said, “an appropriate royalty structure attracts investment, creates jobs, generates government revenue and builds Alberta communities. 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.”

The four principles

The industry would reportedly like to see the following four principles included as part of the Alberta government led royalty review:

  • A government commitment to a vibrant and competitive oil and gas industry.
  • Confirmation any royalty changes will be forward looking.
  • Be stable and predictable to minimise uncertainty and maximise investment in Alberta.
  • Consider royalty changes in the context of all the mounting costs from new government policy such as climate change and corporate taxes.

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

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

Money talk

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

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

Edited from press release by Claira Lloyd

Published on 30/06/2015

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