Alberta announces three-point incentive program for energy sector
alberta.ca
ALBERTA
Resourceful. Responsible.
March 3, 2009
Province announces three-point incentive program for energy sector
Short-term initiative to stimulate new and continued economic activity
Edmonton... The Government of Alberta has announced a new three-point incentive program designed to help keep Albertans working in the province’s energy sector during the current global economic slowdown.
“The oil and gas industry remains the lifeblood of Alberta’s economy and communities throughout the province,” said Premier Ed Stelmach. “We cannot directly influence the global economic climate. However, we can introduce measures to encourage new investment and help keep Albertans at work. This will benefit families and local businesses, while generating provincial revenues we can invest in programs that are important to Albertans.”
The highlights of the province’s three-point plan include the following.
- A drilling royalty credit for new conventional oil and natural gas wells. This one-year program will provide a $200-per-metre-drilled royalty credit to companies on a sliding scale based on their production levels from last year. This will ensure that the maximum benefits will be available for small and mid-sized producers, while freeing up available capital for all companies.
- A new well incentive program, which offers a maximum five-per-cent royalty rate for the first year of production from new oil or gas wells. This one-year program is intended to help free up cash flow, and in turn, help provide access to the capital necessary for reinvestment by Alberta’s oil and gas industry.
- To encourage the clean-up of inactive oil and gas wells, the province will invest $30 million in a fund committed to abandoning and reclaiming old well sites. This will reduce the environmental footprint of the energy sector by returning well sites to their former states, while also helping to keep industry service crews at work.
“While we cannot make up for the impact that global financial markets are having on Alberta, we are doing what we can,” said Energy Minister Mel Knight. “This short-term incentive program introduces innovative ways to help spur activity in our energy drilling and service sector during this economic downturn.”
The introduction of the package follows consultation with representatives from the energy industry and the financial community about the current challenges facing investment and oil and gas activity in Alberta. The province will monitor the impact of the incentive program, and at the end of the year, assess whether it is necessary or appropriate for it to be continued.
Backgrounder: Additional details on the three-point stimulus plan and drilling activity in Alberta
Media inquiries may be directed to:
Jason Chance
Director of Communications
Alberta Energy
780-422-3667
To call toll free within Alberta dial 310-0000.
NOTE: Technical questions from industry or the financial community regarding these programs can be emailed to response.energy@gov.ab.ca |
