Alberta’s energy sector is showing optimistic signs on the first anniversary of the royal review.
Rig counts across Alberta have risen substantially compared with this time last year as economic activity and jobs return in the energy sector, states a Government of Alberta news release Jan. 30.
“We’re now seeing better prices, new pipeline approvals, and a royalty system that’s more competitive than before,” says Energy Minister Margaret McCuaig-Boyd, MLA for Dunvegan – Central Peace – Notley.
“The result is companies are putting rigs back to work and that means getting Albertans back to work.”
Activity has increased one year after the Alberta government announced its modernized royalty framework, which encourages industry to innovate and reduce costs, making Alberta companies more competitive and encouraging more investment in Alberta.
Government adopted the Royalty Review Advisory Panel’s recommendations in January 2016 and the modernized royalty framework for oil and gas took effect at the start of this year.
According to industry figures, 247 rigs were active rigs in Alberta in mid-January, a 50 per cent increase compared to 165 in Alberta at the same point in 2016.
It’s estimated that each active drilling rig creates 135 direct and indirect jobs.
“We reviewed our royalty system when prices were low so we’d be able to hit the ground running when prices went back up,” McCuaig-Boyd says.
Oil and gas producers had the opportunity to opt in to the modernized royalty framework before Jan. 1, 2017.
That allowed industry to make new investments or keep existing investments in Alberta, creating jobs for Albertans.
Government approved 158 new wells as part of the early adoption as more than 40 companies applied.
“When we started this process we committed to listening to Albertans and industry,” says Dave Mowat, president and CEO of ATB Financial and past chair of Alberta’s Royalty Review Advisory Panel “Seeing our recommendations brought to life means Albertans can know their views are reflected in the Modernized Royalty Framework.
“This is a system that is built to last and I’m pleased to see the positive reaction to it, one year after delivering our report.” Applications for two new strategic royalty programs also opened in 2017 as part of the new framework.
The Enhanced Hydrocarbon Recovery Program and Emerging Resources Program will help projects get more oil and gas from existing pools before they are abandoned.
The initiatives will also encourage development of higher-cost and higher-risk areas with large resource potential.
Government is moving forward with the panel’s recommendation to explore more value-added developments in Alberta.
The Energy Diversification Advisory Committee, appointed last fall, is engaging with stakeholders to examine opportunities in partial upgrading, refining, petrochemicals and chemical manufacturing.
Recommendations will be announced in the fall.