Friday, May 28, 2010

Alberta Catches On To The Benefits Of Shale Gas Development

This is good news, in a somewhat small way. It is amazing how much government involvement (obstruction?) there is in this vital industry that produces jobs, energy security and tax revenue. Fortunately there is competition between Alberta and other shale gas producing areas. If Alberta wants to benefit from its shale gas resources they must play fair.

UPDATE 1-Alberta moves to lure shale gas investment

Thu, May 27 2010 (source)

* 5 percent royalty rates on shale gas, other resources

* Finalizes conventional royalty price curves

* Net C$59 mln benefit seen this year

By Jeffrey Jones

CALGARY, Alberta, May 27 (Reuters) - Alberta handed the oil industry the final breaks in its rejigged royalty regime on Thursday, offering up incentives for shale gas and other unconventional resources for which spending has lagged.

The incentives, along with finalized price curves on royalties for conventional oil and gas, bring to a close the Western Canadian government's backtrack on such payments, after its previous efforts to wring more money out of its main industry were met with bitter complaints.

Alberta, Canada's largest energy-producing province, has been left out of the rush to develop shale gas reserves, which has boomed in Texas, Louisiana and Pennsylvania in the United States and in British Columbia in Canada.

The royalty incentives are aimed at bolstering such activity, which requires higher up-front spending on such things as horizontal drilling and rock fracturing technology, Alberta Energy Minister Ron Liepert said.

"Industry and the investment community have asked for stability and predictably and that is what is being provided today," he told reporters.

The moves -- which were applauded by the industry -- follow changes to the fiscal regime announced in March by Conservative Premier Ed Stelmach, who had raised royalties after years of study.

Companies had threatened to spend most of their capital outside Alberta, putting jobs and Stelmach's political future in jeopardy.

The lower royalties and new incentives stem from a "competitiveness review" launched last year in concert with the oil industry.

New breaks include a 5 percent royalty cap on shale gas and coalbed methane, as well as horizontal gas and oil wells.

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