$200 million pledged toward new energy technologies

Calgary, AB – June 21, 2004 – The development of innovative technologies to maximize recovery of Alberta’s oil and natural gas reserves will get a boost through an expanded royalty reduction program in partnership with industry. The strategy provides the impetus for the energy industry to develop new technologies that increase resource recoveries and improve project economics while supporting Alberta’s commitment to seeking solutions to critical environmental issues.

Under the program, announced by energy minister Murray Smith, the Alberta government will make available up to $200 million over five years in royalty offsets. The funds will be used to offset 30% of eligible costs from approved innovative pilot and demonstration projects in the energy sector. Approved projects must also be supported by industry funding for 70% or more of costs, meaning that up to $667 million could ultimately be made available to support development of important new technologies. If industry were to invest its full 70% or $467 million, the program would be fully subscribed with the Alberta government’s contribution of its $200 million.

“The Innovative Technologies Royalty Program will improve environmentally responsible conventional oil, natural gas and in situ oil sands recovery, providing Albertans with extended economic opportunity,” Smith said. “Increases in economically recoverable reserves mean more royalty revenue to fund priority program areas such as education and health care.”

Alberta Energy will be formulating a process and criteria for producers to apply for royalty reductions in cooperation with the Alberta Energy Research Institute (AERI), the Canadian Association of Petroleum Producers (CAPP), the Small Explorers and Producers Association of Canada (SEPAC) and the Petroleum Services Alliance of Canada (PSAC). Applications will be available in late fall of 2004.

The Innovative Technologies Royalty Program is part of Alberta’s energy innovation strategy and builds on a $15-million commitment to royalty reductions to four projects using CO2 to enhance oil or gas recovery announced April 30, 2004. Today’s announcement increases and widens the scope of the province’s commitment to sustainable and environmentally responsible development by $185-million. Criteria considered for the new funding includes increased oil and gas recoveries, lower operating costs, improved environmental protection, and optimal co-production of bitumen and natural gas.