Canada: Alberta's Royalty Review

Alberta's NDP Government is proceeding with its review of the Province's oil and gas royalty system, fulfilling a promise made during last spring's election campaign.

The Government's stated objective in this review is to design a royalty system that Albertans can trust. It hopes to do this through "an open, frank discussion about how our royalty system can better serve Albertans, industry and the good jobs industry creates for generations to come."

In June the Government appointed Dave Mowat as the chair of a panel to be formed to conduct the royalty review. Mr. Mowatt is the President and Chief Executive Officer of Alberta Treasury Branches. ATB is a bank-like financial institution owned by the Province that provides financing for Alberta-based enterprises.

On August 28th Energy Minister Marg McCuaig-Boyd announced the other members of the Royalty Review Panel and commented on the Panel's mandate, process and the timetable for implementing any changes that may result from the royalty review.

The Royalty Review Panel

Joining Mr. Mowatt on the Royalty Review Panel are:

  • Peter Tertzakian, the chief energy economist and managing director at ARC Financial Corp. in Calgary, Canada's leading energy focused private equity company;
  • Annette Trimbee, President and Vice Chancellor at the University of Winnipeg. Ms. Trimbee is a former Deputy Minister of Finance for the Alberta Government; and
  • Leona Hanson, a small business consultant and Mayor of Beaverlodge.  Beaverlodge is a rural Alberta community whose economy is heavily dependent on energy industry activity in the area.

Reaction to these appointments has been generally favorable, particularly with respect to Mr. Tertzakian. He is highly respected by the energy industry and others for his extensive knowledge of the Canadian oil and gas business, and his creative and practical approaches to industry problems.

The Mandate

Ms. McCuaig-Boyd said that the Panel's mandate is to get a better understanding of the current royalty system, its impact on private investment and revenues generated for the Province, as well as how Alberta's royalty system compares to other jurisdictions. In particular the Panel is to look at ways to:

  • optimize the return to Albertans, as the owners of the Province's oil and gas reserves;
  • boost industry investment and diversification opportunities such as through processing and refining; and
  • encourage responsible development of the Province's resources.


The Panel will conduct two parallel processes:

  • a public consultation that will allow Albertans to participate via submissions to a Government website ( Collecting feedback from Albertans in this manner is in place of holding public hearings as part of this review. This public participation process will occur over a 60 to 90 day period; and
  • consultations with experts, which may involve a second panel, based on three energy streams:  crude oil and liquids, natural gas and oil sands.  The expert consultation part of the process will proceed over the next several weeks.

The Timetable

The consultation process is to be finished by the end of 2015 following which the Panel will present its report to the Government.  It was not clear however when the Panel's report, which will be made public, will be filed and released.

The Panel's report is intended to aid the Government in developing a royalty system that "everybody feels they can have trust and faith in".

The Government has however said that they have no preconceived notions about what results will come from the study.

The Government's conclusions on the Panel's review and any changes to the current royalty system that may result from that review will likely be announced during 2016.

Maintaining the Status Quo

The Energy Minister pledged that until 2017 the current royalty regime will remain unchanged to allow companies and investors to operate with certainty during that period. This is intended to be a clear signal that the Government is committed to be a reliable partner in supporting the success of the energy industry in Alberta. Maintaining the status quo for this period will help Alberta's oil and gas companies prepare their budgets for the upcoming winter drilling season.  The hope is that increased drilling activity will result from eliminating uncertainty about applicable royalty rates during that period.  That result would also benefit the drilling companies and other service providers to the oil and gas industry whose levels of activity will be determined by these exploration and development budgets.

The Government may however need to provide industry further clarification as to whether current royalty rates on wells drilled during the coming winter drilling season will be grandfathered from or get favoured nations treatment in respect of any changes to royalty rates that may occur as a result of the royalty review.

Incremental Revenues

The Government has pledged that any incremental revenues earned from royalty changes will go to the Heritage Fund, Alberta's long-term savings fund, rather than into the province's general revenues.  This was another NDP campaign promise.

The Heritage Fund was conceived in the early 1970s.  At that time the goal was to deposit up to 30% of Alberta's annual resource revenues into an investment fund that would provide a lasting legacy for future Albertans. 

But contributions to the Fund ceased when oil prices fell in the mid-1980s. Since that time the Government has not only used most of its resource revenues for general expenses, but it has also skimmed off earnings from the Heritage Fund into general revenues.  As a result the Heritage Fund has not grown much over the past 30 years.

This is the second major review of Alberta's royalty system in eight years. In 2007 Progressive Conservative Premier Ed Stelmach conducted a review to ensure that Albertans were receiving their fair share from energy development through royalties, taxes and fees. The Stelmach review resulted in a New Royalty Framework that made significant changes to royalties in respect of conventional oil and gas and in respect of oil sands developments. The industry's response to these changes was overwhelmingly negative. When oil and gas prices fell as part of the Great Recession in the fall of 2008 the Alberta Government conducted a Competitiveness Review and gradually eliminated the New Royalty Framework's changes to conventional oil and gas royalties in response to that review.

There is concern that this is not the right time for another review of Alberta's royalty system as the industry struggles with low oil prices, higher provincial taxes and increased environmental costs.

But the NDP Government seems to have learned from the mistakes of the past. And members of the Royalty Review Panel have said that their approach will be all encompassing with the objective of coming up with a royalty system that will position Alberta to be competitive in a rapidly changing world.

Hopefully any changes that result from the royalty review will be for the better for all concerned.

The Canadian Association of Petroleum Producers has said that it wants the government to move quickly and complete the review to resolve any uncertainty created by the prospect of changes to royalty rates.

That uncertainty may be affecting decisions on whether M&A transactions, financings and projects requiring long term capital investment will proceed in the near term.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.