The Canadian province of Alberta should see new oil sands investment “immediately” following changes to its royalty regime for new projects, Finance Minister Jason Nixon said on Friday at a press conference in Calgary.
Canada’s main oil-producing province is reducing the fees it charges oil sands producers in an effort to spur companies to invest in new projects and boost oil output to fill a new proposed crude pipeline to Canada’s west coast.
* Starting in 2027, companies will be eligible to submit projects for consideration for the new rate, which will only apply to brand-new oil sands developments or expansions of existing projects of at least 5,000 bpd capacity.
* Under the new regime, companies will pay a 2% royalty rate (based on gross revenue) for the first five years, increasing by 1% each year until reaching 6% in years 9 and 10.
* This compares to Alberta’s existing approach, through which companies pay a royalty of between 1 and 9% until costs of the project are recovered, and then 25% to 40% of net revenue after that.
* Projects approved under the new royalty regime will revert to the existing framework after 10 years.
* Officials said the cost savings for industry will vary depending on the project, but the aim is to make it more attractive to build and expand oil sands projects.
(Reporting by Amanda Stephenson in Calgary; Editing by Caroline Stauffer, Liz Hampton and Edward Tobin)