CAPP and SEPAC Release Report on Alberta's Oil and Gas Royalty Regime



    CALGARY, June 11 /CNW/ - The Canadian Association of Petroleum Producers
(CAPP) and the Small Explorers and Producers Association of Canada (SEPAC) are
jointly releasing a new report on Alberta's oil and gas royalty regime. This
report, entitled "Alberta's Oil and Gas: Benefits to Alberta and Canada, Today
and Tomorrow" provides information on the royalty system in regards to
conventional oil and gas and unconventional gas. This is a companion piece to
the report on Alberta's oil sands royalty structure previously released by
CAPP.
    CAPP and SEPAC are pleased to contribute this information to the current
public review on Alberta's oil and gas royalties, taxes and fees. It is
important that Albertans have confidence in the system - a system that
provides fair benefits from the development of natural resources while
maintaining an internationally competitive fiscal regime. This is critical to
future growth and prosperity. Through the royalty review process, CAPP
welcomes the opportunity to share its perspective and listen to those of
others.
    The report details the current state of resource potential and
development in Alberta; the benefits to Alberta and Canada; the costs of
operation; and the importance of investment certainty.

    
    -   Resource Potential - The historical success of Alberta's oil and gas
        industry has been based on the development of conventional oil and
        gas. Enhanced recovery technology is being used to extend the life of
        maturing conventional oil and gas fields. As these resources mature,
        investment and interest is moving to less conventional resources such
        as deep gas, coalbed methane, and tight sands and shale gas. These
        vast unconventional sources are more challenging and costly to
        produce and require innovative approaches for development.

    -   Benefits to Alberta and Canada - The benefits are more than just
        royalties, lease sales and taxes. There are new jobs in technical,
        trades and professional fields, and new business opportunities to
        provide goods and services from pipelines and equipment to research,
        trucking, restaurants, environmental and accounting services. All of
        these contribute to Alberta's economic growth. The challenge for the
        province of Alberta, as the owner of the resource, is to ensure that
        this growth continues into the future and that the full scope of
        benefits continues to be shared fairly.

    -   Prices and Costs - While prices have risen over the past few years so
        have costs; this trend seems unlikely to change in the short-term.
        Similar to most commodities, oil and gas prices are unpredictable and
        rise and fall frequently. Alberta's conventional royalty structure
        automatically adjusts for price and productivity but it does not
        adjust for escalating costs. It is important to look at both costs
        and prices together as it is revenues less costs that drive economic
        development.

    -   Investment - The existing fiscal regime - with its combination of
        upfront lease bonuses, production royalties and corporate income
        taxes - has produced growth, jobs and continuing benefits for the
        province. These factors, combined with Canada's political stability
        and sound fiscal policies, are what make Alberta an attractive place
        to invest.
    

    The Alberta Royalty Review is examining all of these factors to determine
fairness. The current royalty regime needs to be robust enough to accommodate
both the maturity and shifting nature of the resource in Alberta. CAPP and
SEPAC are providing this information to Albertans to assist in understanding
the details and benefits of the conventional fiscal regime.
    A copy of the report is available at www.capp.ca.

    The Canadian Association of Petroleum Producers (CAPP) represents 150
companies that explore for, develop and produce natural gas, natural gas
liquids, crude oil, oil sands, and elemental sulphur throughout Canada. CAPP
member companies produce more than 95 per cent of Canada's natural gas and
crude oil.

    The Small Explorers and Producers Association of Canada represents
"Canada's Oil and Gas Entrepreneurs" with 450 member companies, 80% being oil
and gas producers and the rest suppliers of products and services to the
upstream petroleum industry. SEPAC's members operate almost 20% of the
conventional oil and gas wells drilled each year in Western Canada.





For further information:

For further information: or to schedule an interview, please contact:
Renée Kelly, CAPP Public Affairs, (403) 267-1152, renee.kelly@capp.ca,
www.capp.ca

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Canadian Association of Petroleum Producers

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