Raise oilsands royalties - Pembina: Low rates put 'economy on steroids'

Albertans deserve a larger return on their vast oilsands, a provincial committee seeking input on how to best develop the resource heard Wednesday.

The Pembina Institute for Appropriate Development argued that it's time for the province to revamp its royalty rates for oilsands even though oil companies warn changes could mean that Alberta could lose out on projects.

"Government leaders need to take a long-term approach to resource development and recognize that despite threats to reduce investments in the oilsands if fiscal policies are changed they are unlikely to walk away from the second largest oil deposit in the world," said Pembina spokeswoman Amy Taylor at the first day of hearings in Calgary.

The 19-member committee has been travelling the province to hear from Albertans on oilsands development. The hearing continues today at MacEwan Conference Centre at the University of Calgary before heading to northern communities next week.

A report on the panel's findings is expected in November.

The institute is advocating an immediate increase in royalty rates for new oilsands projects and a phase-in for existing ones. Currently operators pay one per cent of gross revenues until capital costs and a return allowance are recovered, after which the rate jumps to 25 per cent.

Originally designed to spur oilsands investment, Taylor said the royalty program should be reviewed with public input considering the level of investment currently being poured into the projects in Northern Alberta, where production is slated to triple to three million barrels a day by 2015.

"Oilsands are no longer considered a marginal resource," she said.

Gil McGowan, president of the Alberta Federation of Labour, likened the oilsands royalty regime to "putting the economy on steroids."

He said the province will continue to lose out on revenue as project costs continue to soar due to high demand for labour and equipment.

"The more expensive a project gets the longer we have to forego revenues," he said.

Other speakers who registered for a 15-minute opportunity to address the community said the government should slow development to curb the growth of carbon dioxide emissions and other negative environmental impacts.

Industry representatives also raised the point that the province must invest in the communities to help support the growth in the oilsands industry. Bill Clapperton, a vice-president with Canadian Natural Resources Ltd., said oilsands operators do their part by providing revenue through royalties and taxes as well as more jobs for the economy.

"The needs for infrastructure in the municipality are urgent in municipality of Wood Buffalo and Canadian Natural believes the government must maintain their traditional as helper and operator of public infrastructure," he said.

Calgary Herald, Thurs Sept 28 2006
Byline: Lisa Schmidt

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