Alberta's NDP government aims to encourage investment in underdeveloped conventional resources
Alberta's NDP government has introduced two new programs to help encourage investment and production from its underdeveloped conventional oil deposits:
- The Enhanced Hydrocarbon Recovery Program which aims to increase production through enhanced recovery methods. This program replaces the existing Enhanced Oil Recovery Program.
- The Emerging Resources Program which aims to encourage development of new oil and gas resources in higher-risk and higher-cost areas that have large resource potential.
The new regimes take into account the higher costs associated with developing conventional deposits with low recovery rates and those that are in the early stages of development. These types of conventional oil deposits are inherently higher risk and require more investment to get off the ground.
The new regulations are part of the government's Modernized Royalty Framework and take into effect January 1st, 2017. The government hopes to put more rigs into service and move more Albertans off the unemployment line.
The new royalty regime was well received in the energy patch. CAPP president Tim McMillan released a statement noting "These programs serve to recognise the higher risks and greater project costs of drilling in emerging resource plays and implementing secondary recovery schemes".
Full details on Alberta's Modernized Royalty Framework can be found on their website (www.energy.alberta.ca).