Alberta’s oil boom is already over

In the midst of this energy-driven boom, it’s hard to imagine that the gravy train is already slowing down.

But the truth is the provincial government faces a 33 per cent drop in oil and gas royalties over the next three years, and Albertans should take a close look at the reasons behind it.

First, the supplies of easy-to-get conventional oil and gas have declined to the point that almost 90 per cent of wells are permanently paying lower royalty rates, many as low as 5 per cent.


The highest royalty rate is about 30 per cent, but with so many wells now at the “low productivity rate,” the average royalty from conventional oil and gas is down to 20 per cent.

Natural gas, the biggest money spinner for years, which pumped $8.3 billion into the treasury in 2005-06, will bring in only about half that amount, $4.6 billion, by 2009-10.

Conventional oil royalties will also come down. They’ll bring in $1 billion this year, one-third less than two years ago, and drop to just $815 million in 2009-10.

Without the oil sands, Alberta would already be in the midst of those unthinkably dark days when the oil runs out, a time most Albertans imagine is still a long way off.

Toronto Star