Premier Smith unveils new subsidies for oil companies

Alberta wants more oil production and now the province is offering financial incentives to attract new oil sands investment. Our government expects this program to generate a tremendous amount of new investment and growth in our oil sands and this means hundreds of thousands of new jobs and contracting opportunities for small businesses. The government has a new royalty rate system, which is a better deal for new projects. The oil sands growth program offers a steady framework for 10 years. Companies would pay a 2% royalty rate for the first five years. That would increase 1% annually until reaching 6% for the final two years. The province says the goal is to lower upfront costs to help expand production for projects like the proposed Pacific Link pipeline to the West Coast. What we can control is things like predictable royalty rates for the first 10 years of a project. Those are the things that allow us to make the decision that's forward-looking like that. And so we're not making these decisions based on today's oil prices. But the Alberta government already gives a break on royalties on new projects during the first few years of operation. Energy companies are also enjoying near-record profits with strong oil prices because of the conflict in the Middle East. The industry is also forecast to generate more than $200 billion in revenue this year. I don't think the case has been made that royalty incentives need to be put on the table to incentivize more production from oil sands firms. The province wants to attract producers reluctant to launch new projects under the current system. But attracting investment may require a change in what shareholders expect. Many investors prefer that oil companies continue to produce hefty profits rather than spending billions to invest in new projects. What we expect to see is more of a shift to investor base that is growth oriented. And it's sort of like a synergistic relationship between investor, corporation. and resource owner, and you want to get the balance right. The program is set to launch next year and will be reviewed in 2029. Companies will have to apply and meet certain criteria. Ines Sidhu, CBC News, Calgary.