No going back on gas royalties: Alberta minister

Mon Jun 15, 2009 5:31pm EDT
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By Jeffrey Jones

CALGARY, Alberta (Reuters) - Alberta is standing firm on its newly changed oil and gas royalty regime but it is still willing to talk to the energy industry about ways to prevent further drops in drilling, the Canadian province's energy minister said on Monday.

Energy Minister Mel Knight made the comments as some industry executives said the controversial royalty framework, which came into effect at the start of this year, repelled capital, even with incentives put in place since.

"I don't have any ability to go back and we're not going back," Knight told reporters after speaking to an industry conference.

"What we're going to do is we're going to go forward, and as we go forward we will continue to work with industry players."

Alberta, Canada's largest producer of oil and gas and a major supplier to the United States, made a high-profile series of changes to its system of charging economic rent to energy companies, moves that won the ire of the industry that is the largest contributor of government revenue.

Those changes came into effect just as oil and gas prices tumbled amid the recession and as vast shale gas resources in locales such as Texas, Louisiana and British Columbia began to change the North American gas supply picture.

In March, Knight brought in C$1.5 billion ($1.3 billion) worth of incentives to bolster drilling and protect jobs as oil and gas prices drooped.

John Dielwart, chief executive of ARC Energy Trust, one of the country's largest energy income funds, said he had planned to direct C$30 million more into Alberta operations after Knight announced the incentives.   Continued...