January 22, 2008 / 12:04 AM / in 10 years

No plan to cut Saskatchewan oil royalties: premier

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.

Saskatchewan produces about 17 percent of Canada’s oil.

However, Wall was careful to avoid saying he is offering the industry an alternative to Alberta.

“We want to make the case for investing in the province, not as an either-or proposition, but our message here today is, ‘Include Saskatchewan in your expansion plans’,” he said.

He mentioned his desire to become part of a pact that now includes Alberta and British Columbia aimed at removing interprovincial trade barriers and co-operating on health care and other initiatives.

Wall also said his government wants Saskatchewan’s role in the world’s nuclear industry to increase.

It is now one of the largest uranium producers -- and home to No. 1 miner Cameco Corp. -- but the province would like to expand into refining, enrichment and, eventually, electricity production.

Reporting by Jeffrey Jones; Editing by Renato Andrade

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