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Via The Wall Street Journal

Oil- and gas-producing companies have been sharply critical of the effort, fearing an increase in payments

CALGARY, Alberta – The government of Canada’s oil-rich Alberta province on Thursday said it would delay the release of a controversial review of royalty rates paid by oil and gas producers until early next year.

Alberta’s left-leaning government had promised to reassess royalty rates on energy production as part of an election campaign that swept it into office earlier this year. Premier Rachel Notley’s administration has appointed a panel of outside experts to undertake the review, which her government had pledged to complete this month and use as the basis for a revision in royalty policies.

That effort is now expected to take more time to fine-tune, with the unveiling of the panel’s recommendations and the province’s new royalty plan pushed back to early January, said Brad Hartle, press secretary to Alberta’s energy minister. “We want to make sure we get it right and not put something out before it’s ready,” he said.

Oil- and gas-producing companies have been sharply critical of the effort, fearing an increase in payments. They say that would punish an industry already reeling from a prolonged slump in commodities prices and increase the cumulative cost burden arising from other new provincial regulations, including higher corporate and carbon emission taxes.

Energy policies in Alberta have nationwide implications for Canada because crude oil is one of the country’s largest export products.

Alberta Energy Minister Marg McCuaig-Boyd has said that any changes in royalty rates would not take effect before 2017, a move geared to ease the impact on the energy industry.

Late last month, one of four members of the royalty review panel said it was on track to release its policy recommendations by year’s end. He also suggested that some Canadian oil and gas producers won’t survive low prices and the rapid pace of regulatory change.

“Segments of the industry will remain competitive,” said panel member Peter Tertzakian, who also serves as chief energy economist at ARC Financial Corp. “Whenever you have change of this magnitude, there’s always elements in the industry that cannot be competitive.”

The province owns about 80% of oil and natural gas resource rights in Alberta, with the remainder held privately. Instead of a fixed rate that is common in other oil-producing regions, Alberta’s royalty rates are structured to move in tandem with crude prices.