[Flash Walken]

Originally Posted by Locke

What? They didnt do anything.

One moment Albertans werent getting their 'Fair Share' and the next "Nope, all is well here.'

You're letting hysterics get in the way.

http://www.cbc.ca/news/business/oilp...ties-1.3424045

What did change in the review is the manner in which conventional oil and gas drillers calculate their royalties Currently there is a hodgepodge system that resulted in every well in the province paying a different royalty rate.

Alberta royalty review pleases oil industry but draws fire from opposition
Alberta NDP warns that oil's continued slide could delay campaign promises
While that system will continue for existing wells for a decade, for new wells that begin drilling in 2017, it will be much more straightforward. They will pay a five per cent royalty rate until they have paid off the capital costs of drilling the well. Once that happens, a higher royalty rate will kick in.

What's key here is that the government will determine what the capital costs of drilling the well should be, based on an industry average. That means that companies that can drill wells cheaper than average get to pay a lower royalty rate for longer, while those who are less efficient will start to pay higher royalties before earning back the cost of drilling the well.

'"I think it's sobering for people who might have the impression of an industry that is always raking in lots of money," said Gary Leach, executive director of Explorers and Producers Canada, which represents junior energy companies.

Leach said he is glad the report was done during an economic downturn.

"Doing this review against this backdrop is very sobering for governments," Leach said. "In fact, the panel report shows that this industry actually has a very low rate of return on capital invested."

According to one member of the royalty panel, Alberta's energy sector is in an existential crisis — prices are low, the province has no tidewater access, costs are high and the U.S. is producing its own oil and gas and starting to export. The world does not need to come to Canada to get oil anymore.

That existential crisis was heightened by the election of a government that was thought to be antagonistic to the industry.

But that perceived antagonism seemed to have been trumped by data. Most energy companies came out of the royalty consultations feeling good.

Here’s a conclusion many people didn’t see coming.

The NDP government’s royalty changes next year “will make Alberta significantly more attractive for investment,” says a laudatory new report from economist Jack Mintz at the University of Calgary’s School of Public Policy.

Mintz, a tax expert who has previously criticized the NDP over some of its fiscal policies, says the changes will drop Alberta’s marginal effective tax and royalty rate on conventional oil and gas below many of its key competitors.

When the new rules take effect Jan. 1, it will make Alberta more competitive than neighbouring Saskatchewan and British Columbia, as well as U.S. states such as Colorado, North Dakota and Texas, he said.

“I don’t think anyone really expected that would be the outcome of the royalty review,” Mintz told reporters Monday. “So I would say, great, I think that’s one thing they’ve done very positively.”

It’s worth remembering the royalty review was a political creation, one of the cornerstone promises made by the NDP during the 2015 election campaign that saw Rachel Notley topple the four-decade-old Tory regime.

At the time, the NDP accused the ruling Progressive Conservatives of failing to earn for Albertans “full and fair value for their oil and gas by maintaining one of the world’s lowest oil royalty rate structures.”

After the election, Energy Minister Marg McCuaig-Boyd assembled a royalty panel led by ATB Financial president Dave Mowat to examine the issue.

But if the NDP’s suspicion was the province was getting a raw deal, it turned out that wasn’t the case. Instead, the panel concluded earlier this year that Albertans were getting an “appropriate share” of royalties.

Acting on the report, the government left oilsands royalties intact, but revamped rates on conventional oil and gas production.

New wells will pay a flat royalty of five per cent until payout, and then face a higher rate once these costs are recovered.

Mintz, who is also a director at Imperial Oil Ltd., and report co-author Daria Crisan examined the new fiscal regime and say it will lower the marginal effective tax and royalty rate from about 35 per cent today to 26.7 per cent next year.

That compares to 28.7 per cent in B.C. and 32.6 per cent in Saskatchewan.

http://calgaryherald.com/business/en...n-report-finds