Alberta Royalty Review
The Alberta Royalty Review was an independent panel established by the government of Alberta to review the level of resource royalties collected by the provincial government from petroleum and natural gas companies. It released its final report on September 17, 2007.
In areas surveyed and homesteaded early in Alberta's history all sub-soil resource rights belong to the land owner, but in the areas surveyed later or in the massive crown land areas of the northern half of the province where the current productive oil fields are located, the Crown, represented by the provincial government, owns all sub-soil resources.
Unlike many other oil-producing jurisdictions such as Saudi Arabia or Norway, Alberta does not have a government oil company that owns and exploits all petroleum resources. Instead privately owned oil companies of various sizes, from inside and outside Canada are encouraged to drill for oil and gas or mine oilsands on Crown land, and in exchange pay a royalty. Royalty rates have fluctuated widely over Alberta's history, but they were most recently lowered during the early 1990s to encourage investment despite the low price of oil at that time. Internal government reviews since then have maintained that the royalty rate was appropriate. However, growing public pressure led Premier Ed Stelmach of the Alberta Progressive Conservatives to call for an external review in 2007.
The Chairman of the review, Bill Hunter, said "Albertans do not receive their fair share from energy development and they have not, in fact, been receiving their fair share for some time."
The panel's report not only recommended increased royal rates for all three major resources (conventional oil, natural gas, and oilsands) but also insisted that the government had failed to collect royalties already owed.
The recommended rate increase amounted to a 20% increase or an extra $2 billion per year.
The government partially implemented the panel's recommendations. This coincided with a fall in oil prices during 2008 economic crisis. Oil and gas companies, especially juniors, complained that this hurt their bottom line, and threatened to move out of the province or shut down.
The political response was highly polarized, with the parties of the left, the Alberta Liberals and Alberta New Democrats, criticising the government for failing to get Alberta's "fair share" and, in effect, subsidizing oil companies at the expense of the public purse. They failed to make any gains against the Conservatives during the Alberta provincial general election of 2008, however, despite a record low turnout caused primarily by traditional Tory supporters staying home.
The Conservatives then "rolled back" many of the royalty increases in 2010. Those on the right criticized the government for raising royalties and damaging profits in Alberta's most important industry, which they likened the "killing the The Goose That Laid the Golden Eggs". Junior oil companies were instrumental in funding the upstart Wildrose Party which emerged in the Alberta provincial general election of 2012 as the major challenger to the governing Tories, and became the Official Opposition.
The repercussion for royalties was that in 2009/2010, the Alberta government collected 6.1 billion dollars in royalties for the oil and gas sector.