Alberta jacks up oil and gas royalties

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CALGARY, Alta. – Oil industry fears that Alberta would hike up royalties were realized recently when Premier Ed Stelmach announced it would increase its take by $1.4 billion (about 20%) beginning in 2009. That’s about 25% less than recommended by a government panel.

Trucking companies serving Alberta’s oilpatch have voiced concern about the royalty revision in recent weeks. Mullen Transportation has laid off employees and TransForce announced that if the province went through with its threat, it “will take the appropriate action possibly including layoffs.”

A proposed tax on oilsands production was not adopted by the province and about half the panel’s other recommendations were also dismissed. However, Stelmach said it was important Albertans benefit from the province’s resources.

“I made a commitment and I delivered. Future generations of Albertans will receive a fair share from the development of their resources. I offer stability and predictability to those in the oil and gas industry, and the time to adjust to royalty changes. And I can also assure investors that Alberta will remain an internationally competitive and stable place to do business,” said Stelmach.

The province said the increased royalties are required to upgrade infrastructure such as highways.

Pierre Alvarez, president of the Canadian Association of Petroleum Producers, told the Globe and Mail he had “tremendous concern.”

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