EDMONTON — The UCP government has introduced a new incentive program intended to attract investment and increase oil sands production, offering eligible projects a preferential royalty structure for their first 10 years of operation.“Alberta has the resources, the expertise and the ambition to remain a global energy leader,” said Premier Danielle Smith. “The Oil Sands Growth Program will make the province even more attractive for investment, help get new oil sands projects moving and grow production for the long term.”Alberta's existing royalty framework charges between 1% and 9% of gross revenue until companies recover their eligible project costs, after which royalties rise to whichever is greater: the applicable gross revenue rate or between 25% and 40% of net revenue, depending on the price of West Texas Intermediate (WTI) oil.Under the new Oil Sands Growth Program announced Friday, approved projects will receive a flat 2% gross revenue royalty rate for their first five years. The rate will then increase by one percentage point annually, reaching 6% in years nine and 10.If the regular royalty framework produces a lower rate during the 10-year period, companies will pay the lower rate. Once the incentive period ends, projects will return to Alberta's existing royalty framework..Companies will need to apply to participate in the program, with eligibility limited to new oil sands developments and expansions that generate at least 5,000 barrels per day in additional production and meet other program requirements.Expansion projects will be permitted to use existing shared infrastructure, but their project boundaries cannot include assets that were part of an oil sands royalty project approved before November 15. Further eligibility criteria and regulatory details are still being developed.“Oil sands projects require significant upfront capital and long-term certainty,” said Alberta's Energy and Minerals Minister Brian Jean.“By providing a predictable royalty framework during the critical early years of eligible projects, the Oil Sands Growth Program will help companies turn investment decisions into a new windfall for Albertans.”The program is expected to launch in spring 2027, and it will be open to existing oil sands producers and companies looking to enter the industry, rather than being restricted to members of the Oil Sands Alliance.“Today’s announcement is a positive step toward creating a globally competitive fiscal and regulatory environment in Alberta that attracts and incentivizes capital investment for growth in the oil sector that will benefit Albertans and Canadians for decades to come,” said Rich Kruger, CEO, Suncor. .The UCP government says the program is intended to stimulate investments and production that otherwise would not have happened. However, officials have not established how much additional production will be directly attributable to the incentive.Smith's government hopes to double Alberta's oil production to eight million barrels per day, estimating the production growth could generate approximately $205 billion in cumulative additional revenues by 2040 and more than $1.3 trillion by 2060. The government has not isolated the contribution the new royalty program will make toward those projections, which also assume investment in pipelines and emissions-reduction projects. “Alberta has set a goal of doubling oil production over the next 10 years, and Strathcona intends to do more than its share by growing from 125,000 barrels per day to 300,000 barrels a day by 2036," said Adam Waterous, executive chairman, Strathcona Resources Ltd."The program gives us the confidence to invest in new projects now, creating jobs and generating taxes and royalties for Albertans for decades to come." .Alberta collected approximately $14.1 billion in oil sands royalties in the 2025-26 fiscal year.Officials characterized the new program's fiscal impact as negligible relative to the government's existing revenue forecast, arguing that the incentive is intended to attract projects that otherwise would not proceed.However, the government has not provided a specific estimate of the royalty revenue participating companies could save or the additional royalties the program could generate.
