CALGARY, Alberta (Reuters) - Alberta expects oil and gas royalty revenue to plunge almost 90 percent next year to around C$1 billion ($761.73 million) from 2014 levels, the Canadian oil-producing province’s Premier Rachel Notley said on Thursday.
“This is the royalty roller coaster we’ve all been talking about,” Notley said in a televised address ahead of the release of the provincial budget next week.
“There’s no doubt that the oil price collapse is causing serious economic pain and anxiety,” she added.
Alberta depends on oil and gas royalties for one fifth of provincial revenues and the prolonged global oil price shock is the most serious in a generation, Notley said.
Two years ago the province collected almost C$10 billion from royalties but the government forecasts that will tumble by nearly 90 percent next year.
Since June 2014 the price of crude has plunged by around 65 percent to hover just below $40 a barrel, prompting oil producers in Alberta to cut tens of thousands of jobs and slash capital investment by around C$50 billion.
The province is the No. 1 exporter of crude to the United States and the slump in its dominant industry has caused financial difficulties for Notley’s left-leaning NDP government, elected last May after 44 years of Conservative rule.
The government expects the budget deficit in the 2016/17 fiscal year will be more than C$10 billion as a result of lower royalties and reduced tax revenue. Last year Alberta posted a C$1.1 billion surplus.
Notley said next week’s budget will contain more detail on the government’s five-year plans to spend C$34 billion on infrastructure investments and diversify the province’s energy markets and industry.
Editing by James Dalgleish