Alberta royalty panel to deliver 'measured' recommendation by year-end

Thu Jul 16, 2015 6:13pm EDT
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By Mike De Souza

CALGARY (Reuters) - A review of royalty rates in oil-rich Alberta will focus on whether the Canadian province is adequately protecting its economy and revenues, regardless of whether commodity prices rise or fall, said the newly appointed head of the panel on Thursday.

Dave Mowat, the chief executive of the provincially-owned financial services agency ATB Financial, was appointed in June by the province's newly-elected left leaning New Democratic Party government to lead the review of oil and gas company royalties.

The review, an election campaign promise, has unsettled oil and gas industry representatives who warned it could lead to higher costs and job losses in Canada's energy heartland.

Mowat, who has been an advocate of Al Gore's views on climate change, said there was a sense of urgency coming from both investors and the population to deliver "measured" recommendations by the end of 2015.

Oil and gas companies in Alberta, home to vast oil sands deposits and the largest source of U.S. crude oil imports, have laid off thousands of workers in recent months, due to slumping global prices.

Canada's biggest oil and gas industry lobby group estimates recent government moves to increase carbon levies and corporate income tax rates would increase costs by about C$800 million ($618.33 million) over the next two years.

AltaCorp Capital analyst Jeremy McCrea said some U.S. investors might welcome efforts to simplify the complex formulas in Alberta's royalty regime. But he said the government should protect incentives in the regime to help new projects get started.

Mowat said some existing incentive programs were an important part of a "dynamic" system that also adjusts to cycles when the price of oil rises and falls.   Continued...