Alberta royalty plan trashed across US; Canada

Alberta's energy market raises questions Published: June 26, 2009 at 8:34 AM

The government in the southwestern Canadian province of Alberta changed its gas royalty laws to encourage productivity, but volatility may prove unattractive. Mel Knight, the energy minister in the provincial government, said Alberta would extend royalty rates in order to encourage gas productivity and maintain static employment levels.

Knight's decision is the fifth time the provincial government has modified its rules in less than two years in a move that some analysts say could push investors away from an uncertain energy sector, the National Post newspaper reports.

Alberta trails other Canadian provinces in terms of investment potential, and Knight said fluidity in the royalty structures for the oil and gas sector was a reactionary effort."We will monitor the programs that we have in place," he said. "We'll see what effect it has had on the industry (and) how it works for them."

But Laura Lau, who manages energy funds with Toronto's Sentry Select Capital Corp., said predictability, not fluidity, creates attractive investment climates."You need a stable regime, and we don't have a stable fiscal regime. No other regime has changed so often," she said. "Not even Libya has changed five times."© 2009 United Press International, Inc. All Rights Reserved.