Industry wary of call for Alberta tax review

OREANDA-NEWS. Plans by Alberta, Canada's new left-of-center majority government to review corporate tax and royalty rates are a concern to the province's oil and gas industry.

Among premier-elect Rachel Notley's campaign promises is to revisit Alberta's complex royalty regime when commodity prices become more favorable. Notley, whose NDP party was the surprise winner in elections this week, has also promised to increase corporate taxes to 12pc from 10pc.

Alberta, where the bulk of Canada's oil and gas is produced, lost billions of dollars in tax revenue over the past year when crude prices dropped below \$50/b from highs of \$104 in June 2014.

The prospect of the provincial government claiming a higher take raised red flags in the energy sector, which has already slashed billions of dollars in capital projects because of the price downturn.

"It's our perspective that a review is not required at this time," the Canadian Association of Petroleum Producers (CAPP) said today. "And it would in fact create uncertainty at the very time that it would destabilize jobs in Alberta."

The last royalty review, in 2007, led companies to focus investments in British Columbia and Saskatchewan rather than Alberta in protest. A similar investor chill could see energy stocks and production decline on policies which could "crimp" growth.

Alberta currently boasts the lowest corporate tax rate in Canada, however, and has a low royalty regime compared to other top global petroleum provinces.

Notley also said her government would not promote TransCanada's Keystone XL pipeline to the US. While she supports the Energy East oil pipeline project from Alberta to Quebec, she openly opposes Northern Gateway, the Alberta to British Columbia oil pipeline touted by Enbridge and industry as a key to open Canadian crude markets.

With a near doubling of oil sands production predicted by 2030, industry is concerned about securing pipeline capacity and accessing markets.