CALGARY, Alberta (Reuters) - Alberta’s government hopes to mend ties with the Canadian province’s powerful energy sector by starting its new legislative session with a bill widely expected to cut back on oil and gas royalties.
Premier Ed Stelmach’s Conservative government, pilloried by oil companies for royalty changes it instituted last year to give residents a bigger share of energy wealth, has signaled such a move by conducting a “competitiveness review” to determine if its fiscal policies are driving away investment.
“Bill One of this legislative session, the Alberta Competitiveness Act, will signal our government’s resolve to make Alberta the most competitive jurisdiction in North America,” the government said in its annual policy agenda, delivered by Lieutenant-Governor Norman Kwong on Thursday.
“To do this, we must reduce the cost of doing business here, including the cost of regulation, while at the same time providing world-class services that are the hallmark of competitive jurisdictions.”
Alberta is one of the largest oil and gas suppliers to the United States. Its oil sands represent the biggest oil deposits outside Saudi Arabia. About half the gross domestic product is tied to energy.
Despite controlling a huge majority of the seats in the legislature, Stelmach’s Conservatives have looked vulnerable to criticism from the oil industry, which has complained that the royalty changes made producing natural gas especially unprofitable.
That view has helped bolster the rise in popularity of the Wildrose Alliance, a further-right party that has preached industry-friendly policies.
Stelmach has tinkered frequently with the new royalty structure to try to stave off a drop in drilling, but has said recently that the gas sector has suffered more from the recession and development of massive shale gas reserves in the United States and neighboring British Columbia. He launched the competitiveness review anyway.
Results of that review, being done under the eye of new Energy Minister Ron Liepert, are expected after the release of the provincial budget on Tuesday.
However, in its agenda, the government said the bill “aims to improve and increase partnerships between the government and industry, which will help enhance the province’s business environment and sharpen Alberta’s competitive edge in a global economy.”
Besides changes for energy, the Competitiveness Act, will feature moves to broaden export markets and promote value-added opportunities in agriculture, it said.
The budget is expected to include spending cuts following last year’s multibillion-dollar deficit, Alberta’s first in more than a decade.
Reporting by Jeffrey Jones; editing by Rob Wilson