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Alberta expects oil sands investment "immediately" following new royalty regime changes, finance minister says

By Reuters News

By Amanda Stephenson

CALGARY, Nov 13 (Reuters) - The Canadian province of Alberta should see new oil sands investment "immediately" following changes to its royalty regime for new projects, Finance Minister Jason Nixon said on Friday at a press conference in Calgary.

Canada's main oil-producing province is reducing the fees it charges oil sands producers in an effort to spur companies to invest in new projects and boost oil output to fill a new proposed crude pipeline to Canada's west coast.

  • Starting in 2027, companies will be eligible to submit projects for consideration for the new rate, which will only apply to brand-new oil sands developments or expansions of existing projects of at least 5,000 bpd capacity.

  • Under the new regime, companies will pay a 2% royalty rate (based on gross revenue) for the first five years, increasing by 1% each year until reaching 6% in years 9 and 10.

  • This compares to Alberta's existing approach, through which companies pay a royalty of between 1 and 9% until costs of the project are recovered, and then 25% to 40% of net revenue after that.

  • Projects approved under the new royalty regime will revert to the existing framework after 10 years.

  • Officials said the cost savings for industry will vary depending on the project, but the aim is to make it more attractive to build and expand oil sands projects.

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