Chair of Alberta’s royalty review panel, Dave Mowat, and Energy Minister McCuaig-Boyd announced in a press conference today that royalty rates will remain unchanged until at least December 31, 2016.
That is not to say however that no changes will be made. The idea put forth is to give industry the assurance that nothing will be changed for the next 16 months. According to Mowat, this will give energy executives sufficient time to plan capital allocation decisions and provide stability in a shaky economic environment for the oil and gas industry.
Energy economist Peter Tertzakian, former Alberta deputy minister of finance Annette Trimbee, and Mayor of Beaverlodge Leona Hanson will work alongside panel chair Dave Mowat.
Two major themes were communicated throughout the press conference: optimization and maintaining no preconceived notions. Mowat, from the beginning of his appointment, has stressed that the ideal outcome for the royalty review is to optimize the royalty structure for both government and industry. Key to achieving that goal, is to go into the review process with no preconceived notions on what should or should not be done.
Mowat’s goal is to have a royalty framework that works just as well at $30 or $100 oil.
When asked how closely the climate review and royalty review panels will be working together (no mention was made of the climate review panel in the official announcement), McCuaig-Boyd assured that the two panels will be working as “two parallel processes”. McCuaig-Boyd pointed out that she has been in constant conversation with Environment Minister Shannon Phillips, and that Mowat has been talking with climate review panel chairman Andrew Leach.
Mowat likens the end goal of the panel to a chair metaphor. Mowat would like to see a chair that is as tall as possible but, crucially, who’s legs are equal length. The legs of course being the stakeholders in the royalty review; namely government, industry, innovation, and resource development at large.