The government of Alberta is expected to decide within a week or so on possible changes to the oil and gas royalty regime, following recommendations from an independent panel that have become the subject of increasingly vocal protests from the industry. (The whole report from the Alberta Royalty Review Panel is available here.)

The review was commissioned as a result of pressure from politicians and campaign groups who argue that the massive oil reserves of the province - the largest anywhere in the developed world - have been more of a curse than a blessing. They say Alberta should at least be doing more to reap the benefits of its resources; the way, say, Russia or Algeria - or indeed the UK - have done.

Those pressures may yet be deflected; as the province’s energy minister told me a few months ago, it really does not want to kill off the development of the oil sands, one of the most important new frontiers for oil production. There is also local opposition to imposing higher taxes on the industry. Wood Mackenzie, the consultancy has suggested that implementing the report’s recommendations, in an area already plagued by high and rising costs, could have significant effects.

The real problems with the oil sands, however, have not yet hit bitten. Production is an energy-intensive business, and the greenhouse gas emissions caused by extraction are much higher than for conventional oil. The planned steep rise in production from the oil sands, to 4m barrels per day and beyond, would not be compatible with a serious attempt to reduce Canada’s emissions. Save the oil sands industry of save the climate? It may not be possible to do both.

October 7th, 2007 in Canada, Unconventional oil | Permalink