Sask. rules out royalty review for more than a decade

Last Updated: Friday, April 11, 2008 | 9:36 AM MT

CBC News

Drawing a distinction between itself and Alberta, the Saskatchewan government said it will not consider hiking royalty rates for at least 12 years.

Energy Minister Bill Boyd made the pledge Thursday after announcing that the province is breaking records for oil and gas exploration.

In April, the sale of oil and gas rights brought $265 million into government coffers. Sales for the right to explore and drill for petroleum and gas are held every two months. Last year, the sales for the entire year reached $250 million.

In this year's provincial budget, oil and gas revenues are expected to top $1.1 billion, about 15 per cent more than what was budgeted last year.

Despite the high price of oil — above $110 US a barrel in recent days — the government is ruling out charging any more rent for the natural resources for more than a decade.

"We don't want to damage that kind of confidence that we see that's at an unprecedented level," Boyd said.

According to Boyd, part of the reason for the big surge in land sales revenue is that companies know Saskatchewan isn't going to hike its royalty rates, the way Alberta did recently.

An independent report found Albertans weren't getting enough for their natural resources. Alberta Premier Ed Stelmach later announced royalties would go up, prompting oil and gas companies to say they were cutting back their activities in the province.

There will be no similar study in Saskatchewan, Boyd said. A Saskatchewan Party government won't consider the matter for at least three or four four-year terms, he said.

On same page with premier

Boyd indicated he and Premier Brad Wall are on the same page about royalties.

"I guess you'd have to ask him after three or four terms of his administration whether he would consider it, but certainly in the very near term, medium term and long term I don't think we would want to see something like that," he said.

NDP MLA Len Taylor said while Boyd has a right to crow about what's happening with the Saskatchewan economy, it was the previous New Democrat government that lowered royalty rates and that decision is paying off now.

He too referred to the Alberta royalty rate review.

"Just a few months ago, the government of Alberta [was] talking about a new royalty review ... and the oil and gas sector says, 'If you do that review, we're moving our money to Saskatchewan,'" he said, adding it appears that is indeed what happened.

The Opposition's deputy leader, Pat Atkinson, said it appears the government is picking and choosing which issues it will let its new agency, Enterprise Saskatchewan, deal with. The agency was supposed to be put in charge of economic development policies.

"In this case, clearly they've determined that Enterprise Saskatchewan will not be dealing with royalty structures for at least 12 years," she said.

Things can change quickly in politics and it's a mistake to promise to maintain the status quo for such a long time, she said.