By Julie Gordon
CALGARY, Jan 29 (Reuters) - Alberta's left-leaning
government unveiled a new oil and gas royalty framework on
Friday that left rates unchanged on existing oil wells and the
oil sands project, alleviating fears that costs would rise to
punishing levels amid the worst oil price slump in decades.
The western Canadian province, which is home to huge oil
sands deposits, along with conventional and unconventional oil
and natural gas, said its new framework following a review that
began in June will drive innovation by rewarding producers who
reduce drilling costs below the industry average.
The government said the new royalty framework, aimed at
bolstering provincial finances over the long-term, would take
effect in 2017, with existing royalty rates remaining in place
for 10 years on wells drilled before 2017.
Royalty rates for oil sands projects will not change, but
the government pledged more transparency and accountability on
costs producers are allowed to deduct when paying royalties.
Under the new framework, crude oil, liquid and natural gas
wells will all be covered under a single royalty structure, with
new rates to be unveiled in the coming months. Currently, there
are different rates depending on what is produced.
The review, an election campaign promise by the left-leaning
New Democrat government that swept to power in Alberta last May,
had concerned oil and gas executives who warned it could lead to
higher costs and job losses at a time when Canada's energy
heartland is already reeling from the collapse in oil prices.
(Additional reporting and writing by Euan Rocha in Toronto;
Editing by Alan Crosby)