July 28, 2015 / 5:58 PM / 3 years ago

Alberta open to including incentives in review of oil and gas royalties

CALGARY, Alberta (Reuters) - The new left-leaning government of oil-rich Alberta is open to the idea of offering economic incentives to oil and gas companies as it undertakes a review of the royalties they pay, Energy Minister Marg McCuaig-Boyd said on Tuesday.

Marg McCuaig-Boyd, Alberta's Minister of Energy and member of Alberta New Democratic Party (NDP), signs as a member of the executive council during the official swearing-in ceremony in Edmonton, Alberta, Canada May 24, 2015. REUTERS/Topher Seguin

The review by the New Democratic Party (NDP) government, elected in May, was an campaign promise. Combined with the government’s move to raise the levy on industry carbon emissions, it has unsettled investors and energy companies in the Western Canadian province, the largest source of U.S. oil imports.

Executives have warned uncertainty and higher costs could stall projects and spur capital flight at a time when a fresh plunge in crude prices has hit the industry hard.

McCuaig-Boyd said she has taken calls from companies asking about incentives, and she has encouraged them to discuss their ideas during the review.

“Maybe there’s some credits upfront, maybe not,” she said in an interview. “But at the end of the day, we can’t give everybody incentives or we’d have no royalties coming in. So there has to be that balance.”

The government appointed Dave Mowat, chief executive of provincially owned financial services agency ATB Financial, to lead the review. It also appointed Andrew Leach, an economics professor at the University of Alberta, to lead a separate review of the province’s climate change policies.

McCuaig-Boyd said the climate change review could examine whether renewable energy companies such as wind and solar power firms need incentives as the government pursues another campaign promise, to phase out coal-fired power plants.

Alberta has not set a target date for the phase-out, but it wants more renewable energy, she said.

“We’re going to need something to fill that (coal) void and so I see renewables as part of that,” she said.

After a visit last week to the site of a big spill from a Nexen Energy pipeline in the oil sands of northern Alberta, she said the incident was unacceptable, but that she was impressed by efforts to clean up and investigate.

“We need to learn from it and do better in the future,” she said.

McCuaig-Boyd also said she was reviewing the role of the province’s energy regulator to ensure it is providing balanced oversight of industry without conflicts.

“I know there were concerns at one point about whether (the) environment was being addressed properly when there’s a development component (in the regulator’s mandate),” she said.

Editing Peter Galloway

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