Alberta royalty review modernises framework while leaving oil sands regime intact

After a five month review, Alberta's new royalty framework was announced on 29 January 2016. The review resulted in the existing framework for the oil sands sector to be retained, while an overhaul to the current non-oil sands framework will take effect 1 January 2017. The new framework aims to create a simplified and reactive structure based on an emulative revenue minus costs approach and is designed with the intention that industry makes the same rate of return (IRR) as under the current system. The Panel has clearly highlighted costs and competitiveness as a top concern for Alberta's energy industry and the changes to the royalty framework are designed to encourage cost reductions and increase public transparency. Industry reaction has overall been positive.