August 21, 2016
The Alberta government claims drilling investment and jobs will increase in the
province through the rest of 2016 now that drilling has started on the first wells under the Modernized Royalty Framework.
In a release, the NDP government noted it has received dozens of drilling applications since companies were allowed to apply for early access to the new framework. Thirty-five new wells were approved as of Aug. 15. The Canadian Association of Oilwell Drilling Contractors estimates that each drilling rig in operation creates roughly 135 direct and indirect jobs.
Encana is the first company to have its wells approved after demonstrating
increased drilling activity beyond what was anticipated for 2016. Its two new wells have begun operation in the Duvernay-Montney basin near Grande Prairie, Alta.
“Our new royalty framework is good news for all Albertans,” said Alberta Energy Minister Margaret McCuaig-Boyd. “It’s putting more rigs out in the field, creating jobs and increasing revenue for our province.”
Added Canadian Association of Petroleum Producers vice-president of Western Canadian operations BradHerald: “The modernized royalty framework is a long-term solution that promotes a stable investment environment for continued growth in the sector.
The Modernized Royalty Framework will not take full effect until Jan. 1, 2017.
It harmonizes the way oil, gas and liquids drilled in the province are treated, which
removes previous distortions and improves investment certainty.
The new framework includes a drilling and completion cost allowance that creates an
incentive for companies to lower operating costs, helping to spur innovation in the sector and optimizing royalty returns for Albertans.