CALGARY — The UCP government is preparing a new royalty framework aimed at convincing energy companies to invest billions of dollars in expanding oil production.Premier Danielle Smith told a Calgary Chamber of Commerce event Tuesday that her government expects to announce the framework by mid-November as it attempts to rebuild investor confidence and revive projects shelved following years of regulatory uncertainty.“We have to put a little skin in the game to show them that we’re serious about getting them rolling,” Smith told Chamber president and CEO Deborah Yedlin during a Q&A session.The premier added that companies may require financial incentives before committing between $10 billion and $30 billion to expand oil production.However, Smith didn't disclose how the framework would change royalty rates, or how much revenue Alberta could forgo. She said producers had spent years being told by the Liberal government that oil and gas constituted a “sunset industry,” causing them to focus on paying down debt and returning money to shareholders instead of developing major projects..Smith says Alberta is looking to Saudi Aramco’s AI technology to improve pipeline safety.“Telling them now, ‘We’d like you to spend $10 or $20 or $30 billion expanding your production,’ that’s a hard pill to swallow, because they had a different mode that they were in,” she said, adding that convincing companies to change course will require governments to demonstrate that policies will not shift again after producers have committed billions of dollars to projects.“It’s a lot to invest if you’re going to end up seeing governments change and switch gears,” she said.“This is a sort of a trust exercise. And so we know that we have to do our part to earn their trust.”Smith said discussions are underway with industry representatives and that the resulting framework could extend beyond major oil sands producers.“We also do want to talk to the conventional guys too, because conventional used to be our bread and butter before oil sands was,” she said.The premier said proposed projects representing approximately two million barrels per day of production had been shelved at various stages.“Some of those can probably be dusted off and, under our new economics, might make sense. Some might not,” she said.Smith expressed confidence that producers could fill additional pipeline capacity if governments approve export infrastructure and establish conditions that encourage investment.“If we do build it and we can get that industry confidence back, they’ll be able to fill it,” she said.
