ALBERTA CUTS SOME ROYALTIES

Alberta has cut royalty rates as an incentive for horizontal drilling. A royalty reduction formula will rate each horizontal well as equal to as many as three conventional wells with an adjustment factor. The provincial energy department called the 2 year program an experiment to determine the value of horizontal drilling technology. It said there is not enough data to evaluate the economics of the technology in Alberta.

April 15, 1991

Alberta has cut royalty rates as an incentive for horizontal drilling.

A royalty reduction formula will rate each horizontal well as equal to as many as three conventional wells with an adjustment factor.

The provincial energy department called the 2 year program an experiment to determine the value of horizontal drilling technology. It said there is not enough data to evaluate the economics of the technology in Alberta.

Horizontal drilling has been used in Alberta mainly to increase production from heavy oil wells. About 100 wells have been drilled to date. The Independent Petroleum Association of Canada welcomed the royalty move but said changes also are needed in allowables and well spacing.

Saskatchewan recently changed its royalty structure to help horizontal drilling.