Royalty programs to help boost production and create jobs

Two new royalty programs will encourage oil and gas producers to explore new areas, boost production in other areas and keep Albertans working.

Following months of work with leaders in the energy industry, the government is releasing details of the new Enhanced Hydrocarbon Recovery Program and the Emerging Resources Program.

When determining royalty rates, these programs will take into account the higher costs associated with enhanced recovery methods as well as the higher costs associated with developing emerging resources. The intent of these strategic programs is to make difficult investments economically viable and increase royalties for Albertans. These programs are part of Alberta’s new Modernized Royalty Framework and were recommended by the Royalty Review Advisory Panel.

“We can get more rigs out there drilling, create jobs and help generate greater long-term returns for Albertans by promoting production in underdeveloped or yet-to-be-developed areas. I want to thank everyone who was at the table, helping to make sure these strategic programs do what we need them to do — keep our energy industry globally competitive and well-positioned for a prosperous future.”

- Margaret McCuaig-Boyd, Minister of Energy

“CAPP welcomes the Emerging Resources Strategic Overlay and the Enhanced Hydrocarbon Recovery programs within the Modernized Royalty Framework. These programs serve to recognize the higher risks and greater project costs of drilling in emerging resource plays and implementing secondary recovery schemes.”

- Tim McMillan, President and CEO, Canadian Association of Petroleum Producers

Enhanced recovery involves the injection of approved gas or liquids into wells to help stimulate increased production from a site. The emerging resources program will apply to wells drilled in areas with large resource potential that are in an early stage of development. Both programs are application-based and companies will need to meet established criteria. They will take effect January 1, 2017 with the overall Modernized Royalty Framework.

Wells operating under existing programs will continue under them until those programs expire, or for up to 10 years.