LAKE LOUISE, Alta. – The chairman of one of Canada’s biggest oil and gas companies says there’s room for improvement in Alberta’s royalty system.
Rather, the prominent oilpatch financier says it’s more about the way the regime is designed.
Speaking to reporters at a conference in Lake Louise, Alta., Edwards said there is an opportunity to make the system simpler.
Peter Tertzakian, a well-known energy economist and a member of the province’s royalty review panel, says to expect an announcement before year end.
Tertzakian says virtually everyone he’s met with acknowledges change is in order.
The royalty panel was working in tandem with another group that recently recommended an overhaul of Alberta’s approach to tackling climate change.
Among other things, the climate plan aims to cap oilsands emissions at 100 megatonnes annually — about 30 megatonnes more than the industry now emits. The plan also includes a $20-a-tonne price on carbon emissions that will cover about 90 per cent of the economy in 2017, increasing to $30 the next year.
Edwards was one of four oilpatch leaders to speak out in favour of the plan and share the stage with Alberta Premier Rachel Notley on Sunday when she made the announcement.
He said Friday he’d like to see the royalty system used to drive better performance on the climate front.
For instance, he said conventional oil and gas producers are going to be “challenged” to reduce their emissions between now and 2023 under the new climate policy.
“The government can use the royalty system as a carrot to encourage those kinds of investments. So I think you can use the royalty system as a tool to drive efficiencies in the province, to drive simplicity in the province and hopefully get a better result in terms of investment opportunities.”
Tertzakian said when the royalty panel first embarked on its work he was “disturbed” by the gap between reality and perception of the system.
He likened the discussion at the time to a car full of people bickering about whether it should be going faster or slower when there are bigger issues at hand.
“I’m sitting there thinking some fundamental questions like ‘has anybody changed the oil in this thing?… And actually the most fundamental question: ‘where’s this thing taking me?'”
He said he’s consulted with some 300 people about royalties, 30 of whom were involved in detailed discussions.
“There’s not one person after those consultations that didn’t think we need to change this thing for the better. It’s way too complicated. It’s got distortions. It doesn’t give incentives to go after the highest-value products,” he said.
“It’s not transparent. It’s ephemeral; the programs expire. How’s that supposed to be something that breeds any sort of certainty into what we’re supposed to be doing going forward?”
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