Making the Case for a Fair Oilsands Royalty Regime for Albertans

Calgary-Today, Amy Taylor, an economist speaking on behalf of the Pembina Institute will make the case for reforming the oilsands royalty regime to ensure Albertans are fairly compensated for the development of oilsands resources that they own.

The session in Calgary today is the 5th in a series of seven oilsands public consultation sessions being held across Alberta until October 4 to give citizens a chance to share their vision for oilsands development.

The Pembina Institute wants to ensure that the development of the oilsands occurs at a pace and scale that:
- respects the capacity of regional ecosystems to be sustained,
- addresses global climate change by achieving deep reductions in greenhouse gas emissions towards a net-zero emissions target,
- continuously improves the quality of life of all Albertans today and for future generations and,
- optimizes financial benefit to the owners of the resource.

"Unfortunately, in the case of Alberta's oilsands, the low royalty rates currently in place mean that industry is getting more than its fair share. Instead of a win-win in which companies make a fair return on their investments and the citizens acquire maximum value for their resource, today we have a win-lose system where the interests of oil corporations are trumping those of Alberta citizens," says Taylor.

A recent poll revealed that 63% of Albertans feel they are not getting maximum revenue from oilsands developments and 84% of Albertans support a public review of the royalty regime.

The current regime has accomplished and even exceeded its objectives of spurring oilsands developments. In addition to significant increases in capital investments and production, the price of oil has also increased substantially since the generic royalty regime for oilsands was established in the mid 1990s. Oilsands developments are no longer considered a marginal resource with underlying technological and economic disadvantages.

Despite this, Albertans received less royalty revenue for each barrel of oil from oilsands in 2005 than they did in 1997. Between 1997 and 2005, royalty revenue per barrel of oil declined by 39% from $2.85 to $1.74.

The royalty regime applicable to Alberta's oilsands needs to be adjusted to reflect today's economic reality and ensure that the citizens of Alberta are obtaining maximum revenue from the development of their non-renewable resource. Leaving excess profits in the hands of multi-national corporations is not in the best interest of Albertans.

The correct this, the Pembina Institute will advise the Panel that:
1. The Alberta Minister of Energy needs to increase the royalty rates applicable to the oilsands sector.
2. The new rates should be determined through a comprehensive and public review and should be set to ensure maximum compensation to the citizens of Alberta.
3. Changes to the royalty rates should be applicable to new projects immediately and older projects over time according to a defined and well communicated timeline.
4. Alberta Energy should suspend new tenure allocations and the Energy and Utilities Board and Alberta Environment should suspend new project approvals until the review has been completed and the royalty rates have been increased to ensure that they apply to all new projects.

The Pembina Institute urges Albertans to attend the consultation sessions and/or file their comments online at www.oilsandsconsultations.gov.ab.ca/.
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For more information:

Amy Taylor, Director, Ecological Fiscal Reform
Cell: 403-996-0510

For information on the environmental, climate change, and economic impacts of oilsands visit www.pembina.org/pubs & download Oilsands Fever: The Environmental Implications of Canada's Oilsands Rush.

Amy Taylor's presentation to the Panel can be downloaded from www.pembina.org/pdf/publications/Oilsands_PCP_Amy_Calgary.pdf

Click here for a discussion of Alberta's outdated oilsands royalty regime.

For more on the public consultation process visit http://www.oilsandsconsultations.gov.ab.ca/

The Multi-stakeholder session in Calgary today is at the following location:
MacEwan Conference & Event Centre, MacEwan Student Centre
3rd floor - MacEwan Ballroom Room
2500 University Drive NW