Some more info on Alberta Taxpayers rescue plan for O&G sector.

Is this a conservative province or what?



February 5, 2009 at 4:12 PM EST

CALGARY — The Alberta government will provide incentives to junior energy companies struggling to deal with the economic downturn, Premier Ed Stelmach said Thursday.

Energy Minister Mel Knight has been asked to look at the cash flow situation facing junior energy companies because they are finding it difficult to access capital, Mr. Stelmach said in a speech to the Calgary Chamber of Commerce.

That has led to halted rigs and put people out of work, he said.

The Premier pledged to provide an “incentive program” to provide “short-term targeted assistance” for junior and mid-cap companies.

The plan will encourage banks to do their part and, it is hoped, will address abandoned well reclamation, Mr. Stelmach said.

Mr. Knight will consult with industry and announce more details.

“As a government we can't control our global financial markets or the price of commodities, but there are things we can do,” Mr. Stelmach said.

Steve Moran, president and chief executive officer of Bellamont Exploration Ltd., said the possibility of relief is welcome for companies facing “capital markets that have gone to all hell.”

“[Mr. Knight] should look at royalties, and take a lot less,” he said. “There should be some short-term incentives for royalty relief on just about anything that anybody puts capital into.”

Alberta's introduction of a new royalty regime, designed to increase the province's take on windfall profits, has been widely blamed for scaring energy investment dollars away to British Columbia and Saskatchewan.

“[Mr. Knight] needs to stimulate activity, and to stimulate activity he's got to give incentives for investment,” Mr. Moran said. “Because nobody's going to invest without some sort of sense that near-term profitability is going to improve.”

In an interview, Mr. Knight said the province is not planning to re-examine royalties. Instead, it hopes to deliver juniors a tax benefit that will be in place within about a month's time.

Mr. Moran said it is difficult to see how such a plan could help since junior companies swimming in losses aren't paying tax in the current environment.

“The main tax on the industry is royalties,” he said.

Mr. Stelmach also announced a three-year economic plan to help the province survive the recession.

That includes keeping tabs on spending, drawing on emergency savings fund, investing in the province and promoting the province internationally.

With files from Nathan Vanderklippe