Alberta cuts oil sands fees with new 10-year royalty regime for new projects
USO•Alberta will introduce a 10-year royalty regime for new oil sands projects, starting in 2027. Rates will begin at 2% of gross revenue and rise to 6% in years nine and 10 before projects revert to the existing framework.
1. New royalty terms
Alberta is reducing fees for new oil sands development to encourage investment and oil production. Starting in 2027, companies can submit projects for consideration if they involve brand-new developments or expansions with at least 5,000 barrels per day of capacity.
2. Rates and existing rules
Under the regime, companies will pay a 2% royalty on gross revenue for the first five years, with the rate rising by one percentage point annually until it reaches 6% in years nine and 10. Alberta’s existing approach charges 1% to 9% until project costs are recovered, then 25% to 40% of net revenue. Projects approved under the new regime will return to the existing framework after 10 years.
3. Investment context
Officials said savings will vary by project and the aim is to make oil sands construction and expansion more attractive. Suncor’s Fort Hills, which began operating in 2018, was the last major new oil sands project; companies have since focused on smaller expansions.
