WATCH ABOVE: This morning, the energy minister unveiled some of the plans but says it’s still early on. Fletcher Kent has reaction.
EDMONTON – Alberta’s NDP government has taken a first step toward fulfilling its promise to determine whether taxpayers are getting a fair portion of profits from development of their oil and gas resources.
Energy Minister Marg McCuaig-Boyd announced Friday that Dave Mowat, the head of Alberta’s Crown-owned bank ATB Financial, will lead a panel review of oil and gas royalties. Preliminary findings are to be filed by the end of the year.
Mowat said the goal is to find a royalty environment where “the province is successful, the companies are successful, and ultimately the communities of Alberta are successful.”
McCuaig-Boyd said the findings will be made public.
“We’ve said (all) along with industry and to Albertans that we’re going to be clear in this process and transparent,” she said.
The terms of reference for the panel have not been decided. That prompted reporters to ask Mowat why he would accept a job without knowing exactly what he can explore.
“We’re finalizing the terms of reference. We’ve talked about the outcomes we’re trying to get,” he replied.
Mowat said he will work on the panel while continuing duties at ATB.
The review is one of a number of business-related initiatives the NDP has introduced since taking office.
On Thursday, it announced stricter rules on carbon emissions for large industrial producers, along with a doubling of the carbon levy on those who exceed the limits.
The government has also hiked taxes on corporations to 12 per cent from 10 per cent and is contemplating splitting up Alberta’s energy regulator, saying it has a conflicting role as both watchdog and promoter of energy development.
Opposition Wildrose Leader Brian Jean said Friday’s announcement, with its paucity of detail, adds another layer of uncertainty to an energy industry already struggling with low oil prices.
“We were at least hoping today’s announcement would provide clarity,” said Jean.
Alberta Party Leader Greg Clark, went further, calling on McCuaig-Boyd to be replaced.
“The chaos caused by a half-baked review will drive even more investment capital out of Alberta, which means even more job losses for Albertans,” Clark said.
But Martin Pelletier, portfolio manager with TriVest Wealth Counsel in Calgary, said ATB Financial is a big lender to the energy industry, meaning Mowat has a solid understanding about the impacts of royalty changes.
“I think that’s a great selection and certainly a positive message is being sent toward the industry,” he said.
Gary Leach, president of the Explorers and Producers Association of Canada, added that Mowat is a well-respected business leader. “EPAC believes his appointment lends credibility to the royalty review process.”
It will be the second royalty review in less than a decade.
In 2007, former premier Ed Stelmach commissioned a review that recommended a 20 per cent hike in royalties to bring in an estimated $2 billion more a year to the treasury. However, oil companies disputed the data and analysis, and the changes were eventually rejected or watered down considerably.
Non-renewable resource revenues were forecast to bring in almost $9 billion in the fiscal year that ended this past March, to help pay for government spending that is approaching $50 billion a year.
The 2015-16 budget – introduced this spring by the Progressive Conservatives but never passed – projected those revenues will plunge to less than $3 billion due to the worldwide oil glut.
With files from Lauren Krugel in Calgary