New Royalty System A Compromise Of A Compromise

However, royalties will increase for conventional oil, natural gas and oilsands projects, with Stelmach promising a simpler framework that reflects fluctuations in market prices. "We recognize energy is a volatile industry. There is risk and there is reward. So when oil prices go up, the royalty goes up," Stelmach said in a news conference in Calgary. .... Despite Stelmach's rejection of some of the panel's recommendations, the president of the Canadian Association of Petroleum Producers expressed shock and disappointment over the higher royalties announced by the premier. .... Pierre Alvarez said it appears the province didn't take into account the soaring costs the industry is facing when it decided to increase royalties. He called the move "a very, very serious day in town and there is a lot of concern about how this announcement's going to unfold as we go forward." But the energy industry leader expressed some relief that the royalty changes won't take effect for 14 months. A group that represents small energy producers is also expressing disappointment over the government's decision to hike royalties by roughly $1.4 billion starting in 2009. Gary Leach, executive-director of the Small Explorers and Producers Association of Canada, said the changes will hurt production and investment in the energy sector. Political observers believe the royalty decision is a defining issue for the premier, who has had the top job for just 10 months and is rumoured to be gearing up for a fall election. http://www.cbc.ca/canada/calgary/story/2007/10/25/stelmach-response.html

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