News Releases

$200 million pledged toward new energy technologies

Calgary...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 Alberta 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 per cent 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 per cent 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 per cent 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.

(See attached Backgrounder for more information).

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For further information, contact:

Gordon Vincent
Alberta Energy Communications
Tel: (780) 422-3667 Cell: (780) 719-7279

http://www.energy.gov.ab.ca/



Backgrounder

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June 2, 2004
Alberta Energy is taking action to accelerate implementation of new technologies that enhance Alberta's competitiveness in world markets and ensure our continued economic prosperity through environmentally responsible development of conventional oil, oil sands and natural gas resources.

Background
The Innovative Technologies Royalty Program is part of Alberta's $200-million Energy Innovation Strategy.

Areas of activity are expected to align with both provincial and federal energy strategies, and may include applied research, demonstration and commercialization of new technologies. Approved projects will qualify for up to 30 per cent of eligible capital and operating costs to a maximum of $10 million per project. Projects must show potential to:

- Improve the economics of conventional oil, in situ oil sands and natural gas development

- Expand the prospects for sustainable resource development

- Result in incremental royalties to the Province of Alberta

- Further the development, application and commercialization of technologies, processes and systems to meet the need for cleaner energy sources

Supporting innovation and technology to ensure the sustainable development of the province's abundant energy resources is of economic and social benefit to all Albertans. If recoverable resources in Alberta can be increased by even one per cent it would mean an additional 600 million barrels of conventional oil, 17 billion barrels of bitumen, and 2 trillion cubic feet of natural gas.

The Innovative Technologies Royalty Program includes the five-year, $15-million program announced April 30, which encouraged industry to undertake four pilot projects demonstrating the use of CO2 to pressurize oil and gas reservoirs. Through increasing recoverable reserves, the CO2 Projects Royalty Credit Program is expected to generate at least $30 million in incremental royalties over 20 years and could also result in CO2 storage of a minimum of 22 million tonnes, equivalent to an average of 1.1 million tonnes per year.

For further information, contact:

Gordon Vincent
Alberta Energy Communications
Tel: (780) 422-3667 Cell: (780) 719-7279