EDMONTON, Alberta, July 13 (UPI) -- The provincial government of Alberta said oil and gas companies can opt in to a new royalty scheme it said may be a boost to regional energy momentum.
The government said it was updating royalty schemes at the industry's request. Producers can now join a framework initially set to go into force early next year that sets royalties at a flat 5 percent rate until companies start to recover costs.
"By speeding up implementation of our new royalty framework, we will get rigs running in the fields and Albertans working," Alberta's Energy Minister Margaret McCuaig-Boyd said in a statement.
Data published by oilservices company Baker Hughes show 81 rigs actively exploring for or producing oil or natural gas in Canada for the week ending July 1, a 52 percent decline from the same week in 2015.
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Lower oil prices means less capital is available for companies to spend on drilling. In April, the Canadian Association of Petroleum Producers estimated capital spending in the sector was on pace to decline 62 percent from 2014 levels to $24 billion, the largest two-year decline since record-keeping began in 1947.
CAPP President and CEO Tim McMillan said the new royalty scheme ensures drillers can ease into the era of lower crude oil prices.
"This is an opportunity to start some projects sooner and allow companies to put Albertans back to work rather than delay drilling plans," he said.
Canada's economy relies heavily on the energy sector and nearly all of its oil and gas exports target a U.S. market less dependent on foreign reserves because of the shale boom.
The provincial government in early 2016 said the economy is facing serious headwinds because of the downturn in the energy sector. While the government can't control oil prices, it said it could control spending and take steps to stabilize its budget to protect vital services like healthcare and education.
