by Morinville News

The provincial government is hoping two new royalty programs will encourage oil and gas producers to explore new areas, boost production, and keep Albertans working while getting others back to work.

The new Enhanced Hydrocarbon Recovery Program (EHRP) and the Emerging Resources Program (ERP) are the results of several months of working with energy industry leaders.

Enhanced recovery involves the injection of approved gas or liquids into wells to help stimulate increased production from a site. The emerging resources program will apply to wells drilled in areas with large resource potential that are in an early stage of development.

Royalties will take the higher costs associated with enhanced recovery methods as well as those associated with developing emerging resources take into account.

The province says the intent of the two new programs, both part of the Modernized Royalty Framework, is to make difficult investments economically viable and increase royalties for Albertans.

“We can get more rigs out there drilling, create jobs and help generate greater long-term returns for Albertans by promoting production in underdeveloped or yet-to-be-developed areas,” said Minister of Energy Margaret McCuaig-Boyd.

Tim McMillan, President and CEO of the Canadian Association of Petroleum Producers, said his association welcomes the two new programs.

“These programs serve to recognize the higher risks and greater project costs of drilling in emerging resource plays and implementing secondary recovery schemes,” McMillan said.

The government says both programs are application-based, and companies will need to meet established criteria.

The EHRP and ERP take effect Jan. 1, 2017 with the overall Modernized Royalty Framework.

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