Don’t fret over royalty review, Calvert says
Former Saskatchewan NDP premier Lorne Calvert says oil and gas companies shouldn’t panic or lash out over the new Alberta government’s plans to review royalty rates.
Calvert, who led Saskatchewan from 2001-07, reviewed that province’s royalty regime in 2002.
“We lowered the rates somewhat and we simplified them — which is what the industry hoped we would do — and we followed through on that,” Calvert told The Canadian Press. “In terms of mining, we shifted the emphasis to the development of new exploration and mine development.”
Incoming NDP premier Rachel Notley has indicated she wants an independent review of Alberta’s royalty framework to ensure the province is getting a fair return for its non-renewable resources.
Royalties are paid to the government by energy companies to develop the province’s oil and gas resources.
The government of former Alberta premier Ed Stelmach increased royalty rates in 2007, but rolled them back after criticism from the industry and a loss of investment in the province. Pro- ducers argued royalty increases compounded the effects of low prices during the 2008 economic downturn.
Working with industry is a key step, said Calvert.
“We didn’t do a formal public consultation, but, clearly, whenever we worked on royalty structures we worked closely with industry,” he said. “We didn’t endeavour to use the doctrine of surprise.”
Calvert expects Notley won’t be looking for a quick fix for plunging revenues from low oil prices.
“Ms. Notley and her government understand well the importance of the oil and gas sector in Alberta’s economy,” he said. “They’ll be very cautious and very sensitive to current realities, but also to be looking at the future of the industry.”
Calvert is principal at St. Andrew’s College at the University of Saskatchewan.