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To: Rocket Red who wrote (149765)	3/3/2009 8:11:04 PM
From: Rocket Red	Respond to of 314088

Oil patch applauds Alberta's incentives NATHAN VANDERKLIPPE Tuesday, March 03, 2009 CALGARY — Alberta made a dramatic effort Tuesday to halt the slide in oil patch activity in the province, offering a $1.5-billion temporary bundle of lucrative sweeteners to energy companies that work to bring new petroleum into the system over the next year. In a move that was quickly applauded by industry, Alberta Energy Minister Mel Knight said Tuesday his government will offer a substantial royalty credit to those who drill new wells in the 12 months starting April 1. It will also levy its lowest royalty rate – 5 per cent – over the first year of production of any well that begins producing during that period. Based on forecasts of drilling levels, the Alberta government said those two programs could amount to industry seeing a royalty bill that is $1.51-billion lower over the next year. The incentives apply to companies of all sizes. “Drilling forecasts for the coming year are down significantly and my colleagues and I are concerned about the impact that this is having on Alberta,” Mr. Knight said in a Calgary press conference Tuesday afternoon. Burned by falling commodities prices, pinched credit and the new royalty scheme enacted by the Alberta government this year, energy explorers in the province have dramatically chopped their spending plans. In February, the Canadian Association of Oilwell Drilling Contractors slashed its annual drilling forecast by 22 per cent to 11,176 wells. It was the first time in 20 years the association made such a mid-season forecast adjustment, a move that illustrated the speed with which the oil patch was succumbing to the economy. Mr. Knight predicted the program could completely make up for that decrease. CAODC president Don Herring was less optimistic, saying it should help stop the rapid slide, and “will probably increase some drilling activity that wouldn't take place.” Still, some think the incentives come too late. In recent weeks, a growing number of junior companies – including Tusk Energy Corp., Poplar Point Energy Inc. and IROC Energy Services Corp. – have been driven by the current downturn to sell themselves or their assets. It “would appear that this is trying to feed a golden goose who was or nearly was dead,” said Michael Wuetherick, president and chief executive officer of Seaview Energy Inc. Others called it a huge boost. Glenn Carley, the executive chairman of junior oil and gas producer Galleon Energy Inc., said he is planning a “significant” increase in drilling under the program, and hopes the incentives will also allow him to borrow more from banks. © Copyright The Globe and Mail -------------------------------------------------------------------------------- Copyright © 2009 CTVglobemedia Publishing Terms of Service \| Privacy Policy \| Legal Policy