“Alberta is recognized around the world as a leader in technical innovation and development of energy resources,” said Premier Ed Stelmach. “These changes support the Provincial Energy Strategy. They will help us use innovation to unlock our energy resources, create opportunities and jobs in communities large and small across our province and strengthen Alberta’s economic recovery.”

In recent years, new drilling technologies have unlocked sizable new reserves in other North American jurisdictions that are now competing for investment. “We can’t pretend that oil and gas investment levels haven’t eroded or that we don’t have a responsibility to current and future generations of Albertans to address that,” said Energy Minister Ron Liepert. “Being competitive has a positive impact far beyond the energy sector. It contributes greatly to our communities, our standard of living, and our prosperity as a province and as individuals.”

Currently almost one in seven Albertans are directly or indirectly employed by the energy industry. Changes to improve Alberta’s competitiveness are expected to create 8,000 jobs in 2011-12 and then 13,000 more jobs annually across the economy. Over the next 25 years conventional oil and gas development in Alberta has the potential to add $2.5 trillion in new economic activity.

“We need to do more to explain to Albertans the ways in which our energy sector drives our economy. Albertans need to have factual and balanced information about how energy development happens in Alberta and just how critical it is to meeting our economic goals,” said Liepert.

The changes being made by government are based on a Competitiveness Review that included an extensive technical analysis of Alberta’s competitive position. This resulted in a number of recommendations for improvement in specific areas.

Fiscal
The key recommendations for royalty adjustments will become effective on a permanent basis for the January 2011 production month.

• The current incentive program rate of five per cent on new natural gas and conventional oil wells will become a permanent feature of the royalty system, with the current time and volume limits.
• The maximum royalty rate for conventional oil will be reduced at higher price levels from 50 per cent to 40 per cent to provide better risk-reward balance to investors.
• Recognizing the fundamental changes to the North American supply/demand balance and increased competition from other jurisdictions, the maximum royalty rate for conventional and unconventional natural gas will be reduced at higher price levels from 50 to 36 per cent.
• All royalty curves will be finalized and announced by May 31, 2010.
• The transitional royalty framework for oil and gas introduced in November 2008 will continue until its original announced expiration on December 31, 2013. Effective January 1, 2011, no new wells will be allowed to select the transitional royalty rates.  Wells that have already selected the transitional royalty rates will have the option to stay with those rates or switch to the new rates effective January 1, 2011.

Innovation
Innovation will drive our future competitiveness. The government will therefore:

• explore additional ways to recognize and account for the higher costs of new and advanced technologies needed to develop mature fields; and
• ensure the development of technologies for enhanced oil and gas recovery remain a priority in the government’s research strategies with industry and academic partners.

Regulatory
The government also accepted recommendations to create a more efficient and effective regulatory system that is based on outcomes.

• Regulatory bodies will work to better coordinate compliance inspections by October 2010.
• The Energy Resources Conservation Board (ERCB) will develop new processes around well spacing and confidentiality of data.
• Parliamentary Assistant to the Minister of Energy, Drayton Valley-Calmar MLA Diana McQueen, will chair a cross-ministry task force to report within 90 days on:

• • implementation of near-term regulatory enhancements;
  • changes to support deployment of innovative, new technologies; and
  • the process for comprehensive review of the regulatory system, with specific milestones and measurable objectives.

“We need to take a high-level view of the whole regulatory system and keep what’s working, fix what isn’t and get rid of what we no longer need,” said McQueen. “We also want to assure Albertans that our regulatory system will continue to protect the health and safety of Albertans and our natural environment.”

The Competitiveness Review assessed ways that Alberta’s competitive position and share of energy investment have shifted, and identified contributing factors. It also considered how Alberta could improve its ability to attract conventional oil and natural gas investment, in light of market changes and marketplace realities. The unconventional oil sector—oil sands—was not included in the study given the province’s unique position in this area and continued success in attracting significant investment in new and expanding oil sands projects.

The Alberta government’s response document, Energizing Investment, and the complete Project Committee Technical Report and appendix are available at www.energy.alberta.ca

The Provincial Energy Strategy and the Competitiveness Review are key components of the Alberta government’s plan for a strong economic recovery. The Way Forward will bring Alberta back into a surplus position in three years by trimming government spending; using cash reserves to protect key programs; continuing to invest in public infrastructure; and ensuring that our province’s industries are competitive and continue to attract investment to provide jobs and prosperity.

-30-

Backgrounder: Adjustments to improve Alberta’s competitive position

Media inquiries may be directed to:
Bob McManus, Alberta Energy Communications, 780-422-3667
David Heyman, Alberta Energy Communications, 403-297-4589

To call toll free within Alberta dial 310-0000.

Technical inquiries should be e-mailed to Response.Energy@gov.ab.ca

Adjustments to improve Alberta’s competitive position

The Competitiveness Review
In response to changes in the marketplace, Alberta Energy led a team that examined Alberta’s investment competitiveness, with a focus on upstream oil and natural gas development. A key element of this review was an extensive technical analysis of Alberta’s competitive position relative to other domestic and international jurisdictions. Measures of investment competitiveness included, but were not limited to:

• rate of return
• net present value
• profitability ratio
• price/cost ratio

The Competitiveness Review included considerable technical analysis and input from members of the investment community and large and small producing companies through their associations, including the Canadian Association of Petroleum Producers (CAPP) and the Small Explorers and Producers Association of Canada. Recommendations in the report include:

• a modification of conventional oil and natural gas royalty rates;
• steps to ensure improvements to the effectiveness and efficiency of Alberta’s regulatory processes, while protecting the environment;
• greater flexibility and support for the use of newer technologies in upstream development; and
• strengthening the productive partnership between Albertans and the resource industry.

Alberta’s competitiveness in oil and gas today
Overall, Alberta continues to provide competitive investment opportunities in the exploration and development of upstream oil and gas. Key advantages include an established industry, a highly skilled workforce, an open market, extensive infrastructure, and abundant oil and gas reserves.

However, Alberta’s position is not as strong as it was a decade ago. Domestic, continental and global factors have contributed to a shift of investment away from the province. The U.S., a major customer for Alberta’s natural gas, is increasingly becoming an aggressive competitor for natural gas investment, due in large part to technological advances. In recent years, investments in oil and gas in Alberta have waned while they have steadily increased in neighbouring jurisdictions.  Currently costs are higher in Alberta, our regulatory system is creating barriers and many of our reservoirs require more costly technology to explore and develop.

Economic benefits of a competitive energy sector
Albertans should realize the full economic benefits of their oil and gas resources.

• Energy developments account for 30 per cent of Alberta’s total GDP. This source of income will be more sustainable over the long term and therefore able to support programs and services that matter to Albertans.
• As of January 2009, Alberta’s mining oil and gas sector was responsible for approximately 147,000 direct jobs for Albertans.  Almost one in seven Albertans are employed in the energy sector and it is estimated that every job in this sector is supported by two additional jobs in support industries.
• Over the next 25 years, Alberta’s oil and gas sector is poised to contribute over $2.5 trillion to Alberta’s GDP and to create 13.74 million person-years of employment. (Source: Canadian Energy Research Institute 2009 Economic Impacts of the Petroleum Industry.)

The announced changes will enable:

• For every $1 in additional energy investment, an estimated $1.44 GDP increase; and
• 8,000 jobs created in 2011-12 and an estimated 13,000 more jobs annually. Fifty-eight per cent of this job growth would be in the service sector, 24 per cent in construction — and about eight per cent in the oil and gas sector.

Adjustments within the fiscal framework
To ensure Alberta remains competitive with other jurisdictions, graduated royalty rates, or curves, will be adjusted effective the January 2011 production month using current price and production variables. The new royalty curves will be announced by May 31, 2010 to enable investment decisions for the upcoming drilling season. In addition, the following changes are being made.

• The current five per cent front-end rate on natural gas and conventional oil will become a permanent feature of the royalty system.
• The maximum royalty rate for conventional oil will be reduced to 40 per cent, down from the current level of 50 per cent.
• The maximum royalty rate for conventional and unconventional natural gas will be reduced at higher price levels from 50 to 36 per cent. Additional analysis of natural gas programs is underway and will conclude prior to finalizing the royalty curves at the end of May.
• The transitional royalty framework for oil and gas introduced in November 2008 will continue until December 31, 2013 as originally announced.  Effective January 1, 2011, no new wells will be allowed to select the transitional royalty rates.  Wells that have already selected the transitional royalty rates will be allowed an option to switch to the new rates effective January 1, 2011.
• Alberta’s broader fiscal regime, including taxes, will also be monitored. As part of this effort, the government will continue to monitor the fiscal regimes of competing North American jurisdictions to ensure Alberta remains an attractive place to invest and do business.

Changes to the royalty structure do not affect government’s commitment to be back in the black in 2012-13.

• In 2010-11 and 2011-12, the impact to the fiscal framework is minimal and positive.
• In 2010-11, a projected slight decline in royalty revenue of $27 million is more than offset by an increase of $55 million in land sales. The net impact on revenues therefore is an increase of
  $28 million.
• In 2011-12, the decline of $16 million in forecast royalty revenue due to the changes is more than offset by an increase of $49 million in royalty revenues generated by increased activity. Additionally, there will also be an estimated increase of $76 million in revenue from land sales and $31 million in tax revenue.  The net impact on revenues therefore is an increase of $140 million.
• In 2012-13, decreases in royalty revenue resulting from the change will be partially offset by increases in land sale revenue and tax revenue generated by additional activity and employment.
• The net result will be a decrease in revenue in 2012-13 of $363 million. This includes a decrease of $785 million in forecast royalty revenues, directly attributable to the changes, partially offset by an increase of $131 million in royalty revenues generated by increased activity, $143 million in land sale revenue and $148 million in tax revenue from increased tax revenue.

Improving the regulatory regime
Over the next six months, changes to the regulatory regime for upstream oil and gas development will include:

• a shift to a results-oriented view of regulation, based on achieving better performance outcomes, with less burdensome process, will be accelerated;
• regulatory bodies will work to put coordinated compliance inspections in place by October 2010;
• the Energy Resources Conservation Board (ERCB) will streamline processes for harmonization of well spacing in northwest Alberta development entities, and consider what further changes may be required for unconventional gas development using horizontal wells;
• the ERCB will work with industry to develop provisions for confidentiality of data better suited to unconventional gas development; and
• a government-industry working group, chaired by the Parliamentary Secretary for Energy, will be formed to address regulatory enhancement. The working group will be required to report within
  90 days on near-term enhancements, changes to support the deployment of new technologies and the process for a more comprehensive review with milestones for progress.

Driving innovation

• Improvements to provide greater flexibility for the use of new technologies in upstream development will be identified as part of the review of Alberta’s entire regulatory regime. Considerations will include how to better support pilot projects, and how to better assess the real risks of new technologies and approaches.
• The Alberta government will continue to place a high priority on the development of technologies to support enhanced oil and gas recovery through its successful model of partnership with industry, the research community and post-secondary institutions.
• As part of examining Alberta’s broader investment competitiveness, options will be explored to recognize and account for the higher costs of new and advanced technologies needed to develop mature conventional oil and gas plays and unconventional natural gas.

Related posts:

1. Alberta Energy Competitiveness Study
2. Alberta announces three-point incentive program for energy sector
3. Alberta Budget 2010

Engaging in a dynamic emerging market of 45 million people and an economy with high growth potential

(No. 98 – March 10, 2010 – 3:45 p.m. ET) The Honourable Peter Van Loan, Minister of International Trade, and the Honourable Jean-Pierre Blackburn, Minister of Veterans Affairs and Minister of State (Agriculture), today followed through on a commitment made in last week’s Speech from the Throne by tabling legislation to implement the Canada-Colombia Free Trade Agreement. At the same time, the government is also tabling parallel labour and environment agreements with Colombia.

“International trade is critical to our economic recovery,” said Minister Van Loan. “As we move beyond stimulus spending and diversify opportunities for Canadian business abroad, this free trade agreement will help Canadians prosper. At this time of global economic recovery, Canadians can count on our government to oppose protectionism and defend free and open trade on the world stage. Canadian businesses and workers can compete with the best in the world, and this agreement will help them do it.”

The Canada-Colombia Free Trade Agreement will provide greater market access for Canadian exporters of goods such as wheat, pulses, barley, paper products and heavy equipment. An increasing number of Canadian investors and exporters are entering the Colombian market, and it is also a strategic destination for Canadian direct investment, especially in mining, oil exploration, printing and education.

“The Free Trade Agreement, along with its parallel agreements on labour and the environment, is but one of several Government of Canada instruments that support Colombia’s efforts toward greater peace, security and prosperity,” said Minister Van Loan.

Under the Labour Cooperation Agreement, Canada and Colombia agree to respect and enforce internationally recognized labour standards and principles, such as freedom of association, the right to bargain collectively, and the elimination of child labour, forced labour and workplace discrimination. The Agreement on the Environment commits Canada and Colombia to pursuing high levels of environmental protection as the two countries intensify their commercial relationship, and to avoid weakening their environmental laws to encourage trade or investment.

This free trade agreement is part of a broader international trade strategy to improve Canadian companies’ access to key international markets and to enhance opportunities for Canadian exporters and investors. Canada has free trade agreements in force with Chile, Costa Rica, the European Free Trade Association countries, Israel, Peru, and Mexico and the United States together. It has concluded free trade negotiations with Jordan and Panama. Canada is continuing trade talks with the Caribbean Community, Central America, the Dominican Republic, the European Union, India and the Republic of Korea.

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3. FREE TRADE AGREEMENT OPENS DOORS FOR CANADIAN BUSINESS IN ICELAND, LIECHTENSTEIN, NORWAY AND SWITZERLAND

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March 8, 2010 2:00 PM

Government Sees Jobs And Opportunity In Water Expertise, Higher Education

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1. Alberta Throne Speech
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YELLOWKNIFE (March 1, 2010) – Finance Minister J. Michael Miltenberger today launched public discussions on a proposed Heritage Fund.

“The NWT is blessed with a vast treasure of non-renewable resources,” said Minister Miltenberger. “However, once these resources are taken out of the ground they are gone forever. Our challenge is to ensure that the transformation of our non-renewable resources to dollars provides a lasting legacy for NWT residents.”

Once devolution of the NWT’s non-renewable resources is achieved, royalty revenues currently flowing to Canada will be paid to NWT governments. Although part of the revenues will be offset by lower federal transfer payments, the GNWT will face a number of choices and opportunities for the use of the net fiscal benefit.

“A Heritage Fund will allow us to protect the net revenues from resource development and make them available for investment in long-term assets for future generations,” Minister Miltenberger said.

With broad support for the concept of a heritage fund from public discussions, Minister Miltenberger says he believes the GNWT can have legislation in place to create a Heritage Fund by the end of the 16th Legislative Assembly.

The Heritage Fund discussion paper is available on the Department of Finance’s web site at www.fin.gov.nt.ca.

Comments on the creation of a Heritage Fund should be submitted by April 30, 2010 to:

Heritage Fund Discussions
Fiscal Policy Division, Department of Finance
Government of the Northwest Territories
PO BOX 1320 L-5
YELLOWKNIFE, NT X1A 2L9

Or by e-mail to: Heritage_Fund@gov.nt.ca

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Labour and Workforce Development

The Nova Scotia Pension Review Panel filed its final report last year and the department has accepted about 90 per cent of the recommendations. The department wants more input on the review panel’s proposed funding formula and whether there should be more flexibility for private-sector pension plans, based on risk, funding arrangements and governance.

“Currently, we work under a one-size-fits-all system of regulation,” said Minister of Labour and Workforce Development Marilyn More. “We want to move to a system that supports improved governance and accountability of private-sector pension plans.”

Government has responded to pressures created by a weak investment market and low interest rates over the past few years, and, in November, amended the Pension Benefits Act regulations to address solvency pressures.

Input from employers, unions, members, plan administrators and pension committees is needed because hard decisions may have to be made for some plans to continue to meet the needs of their members and provide benefits promised to retirees.

“We want to be proactive to assist pension plans in meeting the challenges they face,” said Ms. More.

The discussion paper is available on the department’s website: www.gov.ns.ca/lwd .

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Canada has returned to economic growth following the deepest global economic recession since the 1930s. The global recovery, however, remains fragile.

Budget 2010 aims to contribute to this recovery and sustain Canada’s economic advantage now and for the future. The budget plan has three broad aims.

First, it confirms $19 billion in new federal stimulus under Year 2 of Canada’s Economic Action Plan to create and maintain jobs, complemented by $6 billion from provinces, territories, municipalities and other partners.

Second, it invests in a limited number of new, targeted initiatives to build jobs and growth for the economy of tomorrow, strengthen Canadian innovation, and make Canada a destination of choice for new business investment.

Third, Budget 2010 charts a course to bring Canada’s finances back to balance over the medium term and well before any other Group of Seven (G7) country.

By making timely investments that fit firmly within the Government’s long-term economic vision for Canada, and thanks to the resilience and ingenuity of Canadians, our country will emerge from the recession with a stronger economic advantage than before.

The Canadian brand will be based on competitive taxes, renewed infrastructure and skills, a strong head start in clean energy, a tariff advantage, less red tape, and a more prominent voice as a global financial sector leader.

Together, we will create a stronger Canada and a stronger economy, now and for the future.

Delivering Year 2 of Canada’s Economic Action Plan

Actions taken under Canada’s Economic Action Plan have helped ensure the worst of the global recession lies behind us.

However, while a recovery has begun, it remains fragile and too many Canadians remain out of work. This is why the Government will follow through on its commitment to Canadians and its G7 and G20 partners to deliver Year 2 of the stimulus plan.

Over the next fiscal year, Year 2 of the Economic Action Plan will continue to maintain and create jobs, and help Canadian workers and families manage through still difficult economic conditions, including:

• $3.2 billion in personal income tax relief. This includes allowing Canadians to earn more income before paying federal income tax and before being subject to higher tax rates. It includes the enhanced Working Income Tax Benefit to strengthen work incentives for low-income Canadians. Tax measures for 2010–11 also include higher child benefits for parents and lower taxes for low and middle-income seniors.
• Over $4 billion in actions to create and protect jobs. This includes additional Employment Insurance (EI) benefits and more training opportunities to help unemployed Canadians through this difficult period, and help ensure they are equipped to re-enter the workforce and prosper in the future.
• $7.7 billion in infrastructure stimulus to create jobs. This will modernize infrastructure, support home ownership and improve social housing across Canada. This builds on the $8.3 billion investment in infrastructure and housing delivered in 2009–10.
• $1.9 billion to create the economy of tomorrow. This investment will help develop and attract talented people, strengthen our capacity for world-leading research, improve commercialization, accelerate private sector investment, enhance the ability of Canadian firms to participate in global markets, and create a more competitive business environment.
• $2.2 billion to support industries and communities. This will support adjustment and provide job opportunities in all parts of Canada that have been hit hard by the economic downturn. It provides support for affected sectors, including forestry, agriculture, small business, tourism, shipbuilding and culture. In addition, the proposed elimination of tariffs on manufacturing inputs and machinery and equipment will encourage investment in the manufacturing sector.

Canadians in all regions have already benefited from the implementation of Canada’s Economic Action Plan in Year 1:

• Commitments are in place for almost 16,000 projects across the country. Over 12,000 of these projects have begun or have been completed.
• One objective of the Economic Action Plan was to maintain or create 220,000 jobs. The Action Plan is on track. It has contributed to the creation of over 135,000 jobs recorded in Canada since July 2009.

At the same time, the Action Plan will advance the objectives set out in our long-term economic plan, Advantage Canada.

New Investments in Jobs and Economic Growth

In addition to delivering Year 2 of Canada’s Economic Action Plan, Budget 2010 introduces a limited number of new and targeted actions to protect Canadians from the global recession and create the jobs and economy of tomorrow.

Jobs Protection and Youth Employment Measures

Budget 2010 invests in measures that will directly protect jobs. This includes extensions to work-sharing and investments in training and skills development for youth.

Creating Economic Growth and Jobs Through Innovation

Budget 2010 builds on earlier investments with over $600 million over three years to help develop and attract talented people, to strengthen our capacity for world-leading research and development, and to improve the commercialization of research.

Encouraging Investment and Trade to Create Jobs and Growth

Budget 2010 takes action to improve the environment for investment, enhance competition and reduce barriers for businesses. This includes making Canada a tariff-free zone for manufacturers, by eliminating all remaining tariffs on productivity-improving machinery and equipment and goods imported for further manufacturing in Canada. This initiative, when fully implemented, will provide $300 million in annual duty savings to Canadian business.

Proposed improvements to the international tax system to attract new investment, cuts to red tape for businesses and increased competition for telecommunications will also foster investment and create jobs for Canadians.

Related posts:

1. Alberta Budget 2010
2. BC 2010 Budget
3. Government of Canada Launches Consultations on the Second Phase of Canada’s Economic Action Plan

Today, Her Excellency the Right Honourable Michaëlle Jean, Governor General of Canada, delivered the Government’s Speech from the Throne to open the Third Session of Canada’s 40th Parliament and outline the broad agenda of the Government of Canada.

Canada is poised to emerge from the recession powered by one of the strongest economies in the industrialized world.  Under the leadership of Prime Minister Stephen Harper, jobs and growth will remain the top priority.  The Government will focus on:

• Completing Canada’s Economic Action Plan to protect incomes, create jobs, ease credit markets, and help workers and communities get back on their feet.

• Returning to fiscal balance by winding down stimulus spending as economic activity rebounds and by restraining federal program spending overall while protecting growth in transfers that directly benefit Canadians, such as pensions, health care and education.

• Continuing to work on job creation and job protection, recognizing that too many Canadians are still looking for work, the Government is helping young Canadians entering today’s job market for the first time make the transition to work.

• Building the jobs and industries of the future by investing in Canadians’ skills and education, keeping taxes low, opening markets to Canadian goods and services, and creating the conditions for continued success of industries that are the foundation of Canada’s prosperity.

In addition, the Speech from the Throne sets out the Government’s broader agenda, one that reflects Canadians’ values and focuses on what matters most to Canadians:

• Making Canada the best place for families by strengthening the Universal Child Care Benefit, protecting consumers, ensuring that the law protects everyone while those who commit crimes are held to account.

• Standing up for those who helped build Canada by strengthening Canada’s retirement income system and supporting legislation to establish Seniors Day, continuing to stand up for Canada’s military and its veterans,  and continuing to recognize the contributions of Canada’s Aboriginal people.

• Strengthening a united Canada in a changing world by pursuing democratic reforms, further strengthening Canada’s Francophone identity, improving the immigration and refugee systems, helping the North realize its vast potential, and protecting and preserving our natural environment.

The Government will also continue to stand up for what is right in the world including global security, human rights, maternal and child health, financial market regulation and international climate change.  This year, as we host the G-8 and G-20 summits, the Government will use its international leadership to advance these goals.

To realize the hopes Canadians hold for themselves and their families, the economy must remain the Government’s single most urgent priority.  That is why tomorrow the Government will present a Budget focussed on jobs and growth.

Related posts:

1. Alberta Throne Speech
2. Ontario Throne Speech
3. BC Throne Speech

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