Thursday, June 25, 2009

Alberta Feels the Heat

In a move to counter the declining economics of drilling in Alberta, the provincial government extended a program of natural gas drilling incentives to make drilling north of the border more competitive with the shale plays in the U.S. The incentives had been set to expire in March 2010 but were extended to March 2011.

The incentives include charging producers a flat rate of 5 percent during the first year of output from new wells and giving a royalty credit of C$200 ($172.64) for each meter of new well depth drilled. There had been some criticism last summer of Alberta jacking its royalty rates. I guess the decline of gas prices caused reality to sink in quickly.

This news comes as EnCana, Canada's largest gas producer, announced that it will shut in wells in Canada and the U.S. while natgas prices remain low.

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