Alberta's Oilsands Growth Program offers a guaranteed 10-year royalty schedule starting at two per cent for the first five years, rising to six per cent, with applications accepted until the end of 2029.
The Alberta government is introducing the Oilsands Growth Program, a new royalty payment program intended to encourage new oilsands investment and increase production as the province pushes for a new pipeline to the West Coast.
The program would offer companies a guaranteed 10-year royalty schedule for eligible new projects and expansions, beginning with a two per cent royalty rate for the first five years. The rate would then increase by one percentage point annually until reaching six per cent. After the 10-year period, projects would return to Alberta’s existing royalty framework.
The program would be available to new projects and expansions, and the government has set a deadline at the end of 2029.
Premier Danielle Smith said the program is intended to encourage new operations, spur growth in the oilsands and eventually increase production to help supply the proposed Pacific Link pipeline.
"Since the program’s deadline is set for the end of 2029, it will incentivize companies to make meaningful multi-billion-dollar investments in the oilsands and begin construction before that date," Smith said.
Richard Masson, a former chief executive of the Alberta Petroleum Marketing Commission and former director of oilsands policy at Alberta Energy, said the program makes it less onerous for companies in the early years of a new project.
"It’s likely to grow more investment," Masson said.
"What they’ve done is make it less onerous for companies in the early years of a new project. When companies have invested hundreds of millions — or billions — of dollars, they’re really keen to start to get their cash back early."
Under Alberta’s existing system, royalty rates vary depending on the benchmark price of oil and whether a company has recovered the capital invested in a project. During the pre-payout phase, companies pay between one and nine per cent of gross revenue depending on the price of West Texas Intermediate. The maximum rate takes effect when WTI reaches US$120 per barrel.
The Alberta government says the Oilsands Growth Program will not change existing regulatory requirements. New projects would still be required to meet environmental and Indigenous consultation requirements before they could receive approval.
The program is designed to reduce early royalty costs for companies investing in new or expanded oilsands projects, with the goal of attracting investment and supporting production growth tied to the proposed Pacific Link pipeline to the West Coast.
Sources
This article was drafted with AI assistance and checked against the sources above. Company claims are reported as claims. Cover image is AI-generated.
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