Mr. Taylor: Thank you very much, Mr. Speaker. The competitiveness review confirms what we all knew, that within two years of taking office this Premier succeeded in eroding trust with the energy sector and in introducing a bucketload of uncertainty to what was one of the most stable oil and gas jurisdictions in the world. 

The effect was a less competitive oil and gas industry.

To the Premier: given this government’s track record for changing royalties again and again and again, what assurance can the Premier give that this time will be different and that this time he’ll stick with it?

Mr. Stelmach: Mr. Speaker, the changes that were introduced in terms of the drilling incentive and some of the other changes recently were in reaction to an ever-changing market, new finds of shale gas, and also to deal with the credit crisis and partly, of course, the economic recession. This last competitiveness review was done with months of consultation with the industry and having that information analyzed and the recommendations coming forward to government.

The Speaker: The hon. member.

Mr. Taylor: Thank you, Mr. Speaker. Since this competitiveness review doesn’t actually speak to Alberta having to have one of the three lowest combined royalty and tax rates compared to similar jurisdictions – this is to the Premier again – does performance measure 1(a) in this year’s Energy ministry business plan, which says just that, still hold?

Mr. Stelmach: Mr. Speaker, the changes following the competitiveness review are to put jobs back in Alberta, whether it’s the local tire shop, to put people back in motels across rural Alberta, and also to keep creating more jobs well into the future. Again, a third party analyzed the report and said that this is building a $2.5 trillion business over the next 10 years.

Mr. Taylor: Well, Mr. Speaker, so far two questions and no answers. I’ll try this again. How does the Premier intend to prevent his government’s new focus on competitive royalties and resource revenues from becoming just a race to the bottom?

Mr. Stelmach: Mr. Speaker, the competitiveness review analyzed all information coming forward in terms of the new geological data that’s out there: shale gas available not only in the United States but in B.C., Saskatchewan, and Alberta, some of the cardium plays for oil. Of course, this is about introducing innovation and also new technology, new technology that will significantly reduce the environmental footprint the oil industry has put on Alberta.

The Speaker: Second Official Opposition main question. The hon. Member for Calgary-Currie.

Oil and Gas Royalties

Mr. Taylor: Thank you, Mr. Speaker. I’ll try my luck with the Minister of Energy this time, and maybe I’ll get some answers this time. Maybe. While this report is four months late, it still remains short on details. To the minister: since the new royalty curves weren’t done when you released this review last Thursday, why weren’t they ready, and who’s designing them?

Mr. Liepert: Well, I would like to correct the preamble, as generally is the case. There were a number of initiatives that were announced last Thursday. What we did say, however, Mr. Speaker, was that we did want to get the report and the response to it out so that industry could make its decisions regarding investment. We wanted to also ensure, because of the situation involving natural gas and the low prices for natural gas, that we take a further look at, as the member said, the royalty curves. We’re not expecting significant changes, but we did want to have the extra 60 days to do that.

The Speaker: The hon. member.

Mr. Taylor: Thank you, Mr. Speaker. Now, when we consulted with industry, they were not opposed to paying higher royalties when prices were high, so what is the minister’s rationale for lowering the maximum for oil by 10 per cent and the maximum for natural gas by 14 per cent?

Mr. Liepert: Well, I can’t comment on the consultations that the Official Opposition had with industry, but if that was what they were told by industry, we were told differently, Mr. Speaker. We were clearly told that, especially in the area with the new deposits in shale gas, there’s huge investment up front, there’s high risk that’s being taken, and the high end of the curve, which was previously at 50 per cent, simply did not make the risk viable. We’ve made those adjustments, and they’ve been well received, I would say.

The Speaker: The hon. member.

Mr. Taylor: Thank you, Mr. Speaker. Since conditions change and since there’s nothing in the competitiveness review about how this government would review royalties in the future, what is the minister going to do, if there is a need to make changes, that doesn’t throw the industry back into turmoil? Do you have a process in place?

Mr. Liepert: Well, yes, we do, Mr. Speaker. The process we outlined very clearly was that it would be the process that we’ve gone through for the last year, which is consultative, collaborative, and working together. We have huge challenges outside our province. With our province being under attack, we need to ensure that as Albertans we are working together, that we trust one another, and I think the announcements of last week will go a long way to rebuilding that trust as Albertans.

Alberta Hansard, March 15, 2010

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