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ENERGY: Pembina Institute charges Stelmach’s oil royalty decision as “shortchanging” Albertans
        (AlbertaIndex, November 2, Friday) --- Environmental lobbyist Pembina Institute said Alberta’s new oil royalty regime will cost the province “billions of dollars” when it is effected on January 2009.

In blaming Premier Ed Stelmach for rejecting the report of the six-member panel, Pembina said its cost-benefit model showed his decision will inflict a heavy cost on Albertans for every oil sands project.

“The Premier rejected every one of the Royalty Review Panel’s expert recommendations on oil sands royalties and taxes - without providing any analysis to justify his decision,” said Chris Severson-Baker, director of the Pembina Institute’s Energy Watch program.

“It’s hard to believe, but there’s only one estimate of future royalties in the entire New Royalty Framework report - and it's for one year and one set of price assumptions. Albertans deserve more information and true transparency to understand the basis for Premier Stelmach's proposal.”

Pembina said its modelling shows that at oil prices of $60 per barrel, the Premier’s proposal would only increase Albertans’ share of oil sands revenues by two per cent.

By contrast, the Royalty Review Panel’s expert recommendations would increase Albertans’ share by 22 per cent. The difference between these options amounts to $4.8 billion in revenues over the life of a typical in situ project and $11.6 billion over the life of a typical mining project.

At oil prices of $80 per barrel, Pembina said the Premier’s proposal would generate eight to nine per cent in additional revenue, compared to 24 to 26 per cent under the expert recommendations. The differences in this case amount to $6.9 billion for a typical in situ project and $7.3 billion for a typical mining project.

With more than a dozen oil sands projects in operation and as many more in the approvals process, the cumulative losses to Albertans caused by the New Royalty Framework proposals could be in the hundreds of billions, claimed Pembina’s report. The revenues will instead end up in investors’ pockets as windfall profits.

“Premier Stelmach had the right idea when he appointed an independent, transparent expert panel to consult with Albertans,” said Severson-Baker. “But what's the use in soliciting expert advice, if the end result is a giveaway to industry?”

“The outcome of the royalty review sets a distressing precedent for overdue decisions on environmental impacts in the oil sands,” said Pembina senior policy analyst Jaisel Vadgama.

“Having rejected his own experts’ advice without apparent justification, it's hard to see how the Premier plans to make meaningful progress on any of these critical and complex environmental issues.”

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