No plan to cut Saskatchewan oil royalties: premier

Mon Jan 21, 2008 6:13pm EST
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By Jeffrey Jones

CALGARY, Alberta (Reuters) - Saskatchewan is promising the oil industry a stable and predictable royalty structure, but the Canadian province's new premier said on Monday he has no plans to cut rates as neighboring Alberta raises its own.

Brad Wall made the comments during his first official trip as Saskatchewan's premier to Calgary, Alberta, Canada's oil headquarters, to promote investment. The two-day trip includes meetings with oil companies and industry associations.

"In oil and gas, we're comfortable with the royalty structure the way it is now," Wall told reporters after giving a speech to a business audience at the Calgary Petroleum Club.

He stressed that royalty hikes are not in the cards.

Wall said he aims to provide a regulatory environment that will help build the fledgling unconventional oil and gas sector in Saskatchewan, and that may include government help with research and development or other aspects of development outside the royalty structure.

"Maybe there's a role on the power side, on the infrastructure side," said Wall, whose Saskatchewan Party ended 14 years of New Democratic Party rule with its November general election win. "We see this as an opportunity and we want to pursue it."

At least two companies are studying the economics of developing oil sands deposits near the Alberta-Saskatchewan border, where the reserves are too deep for mining.

Saskatchewan is Canada's second-largest oil producer after Alberta, and some in the oil industry have said it will be the beneficiary of much more investment at the expense of its neighbor to the west after Alberta Premier Ed Stelmach announced higher royalty rates in October.   Continued...