A recent article on jwnenergy.com highlights the announcement by the Alberta government releasing two new oil and gas royalty programs. The programs are aimed at encouraging the exploration of new production areas and boosting production in other areas, and form part of Alberta’s new Modernized Royalty Framework.
The Enhanced Hydrocarbon Recovery and Emerging Resources programs take effect on January 1, 2017, and were recommended by the Royalty Review Advisory panel following months of consultation with the industry.
The programs are designed to increase royalties for Albertans and improve the economic viability of investments in the industry. They take into consideration the higher costs associated with enhanced recovery and risks associated with the development of emerging resources when determining royalty rates.
Eligible producers will benefit from reduced royalties on a wider array of hydrocarbon products under the Enhanced Hydrocarbon Recovery program, and a will receive a program specific cost allowance under the Emerging Resources program.
Margaret McCuaig-Boyd, minister of energy, said: “We can get more rigs out there drilling, create jobs and help generate greater long-term returns for Albertans by promoting production in underdeveloped or yet-to-be-developed areas.”
So far, the programs have been well received by industry. Tim McMillan, president and CEO of CAPP, said that the programs “serve to recognize the higher risks and greater project costs of drilling in emerging resource plays and implementing secondary recovery schemes.”