Senate Welcomes Former Alberta Energy Minister for Special Presentation
Senate Resources Committee presentation focused on experiences with declining oil revenue
JUNEAU-Today, members of the Alaska State Senate welcomed former Alberta Energy and Sustainable Resource Development Minister Mel Knight for a presentation to the Senate Resources Committee titled “The Alberta Experience.”
Knight, who served for four years as Alberta’s Energy Minister, discussed his experiences as the province struggled to find a tax structure which incentivized production while still generating fair value for Alberta’s natural resources. Knight focused on the decisions made by Alberta’s government over the past ten years, and how those decisions changed the industry investment picture.
“It was really exciting to have the opportunity to speak with one of our friends from a government that has gone through something very similar what Alaska is going through right now,” said Senator McGuire, R-Anchorage. “Mr. Knight was on the inside as Alberta had to make difficult decisions that are now bringing industry back.”
Alaska and Alberta have followed very similar paths when it comes to natural resource development. During his testimony, Knight told committee members that in 2004 Alberta’s economy was robust, flowing with money from oil and gas development. At that time, the royalty rate was a mere one-percent.
“One-percent royalty became a lightning rod for us in Alberta,” said Knight. “It began to be portrayed by the media as the government of Alberta selling our natural resources for pennies on the dollar. So, we decided to do a royalty review.”
After the royalty review, Alberta’s government changed the tax structure to collect more revenue. However, as Knight testified, that approach backfired, and the province saw a big drop in investment starting in 2006.
“The energy industry is a global industry. They move the money to the places where they have the best opportunities for their shareholders,” said Knight. “So we restructured our royalty structure over 2007, 2008 and 2009. We worked through various incentive programs and as you can see in 2011 and 2012, the industry came back.”
“There is so much to learn from history and other areas. Canada’s provinces share many of the same issues with Alaska,” said Senate Resources Chair Senator Cathy Giessel, R-Anchorage. “It was so valuable to hear, first hand, from Mr. Knight how Alberta changed its tax structure and even more valuable to hear how those changes triggered a positive outcome for both industry and the citizens of Alberta.”
Knight said the province worked with the industry to create programs and incentives over a period of two years that made Alberta’s royalty structure sustainable while improving the economy and bringing jobs back into the state.
“One thing we did was a two-year drilling royalty credit. This was on new wells or re-entries. Anyone could apply to get credits by hiring a rig and drilling to get oil. That sparked a lot of new activity,” said Knight. “Some of things we did, people said were too generous. But in 10 to 20 years, you’ll see, the industry will put that money right back into the community.”
Knight’s distinguished record of public service spans more than 10 years in Alberta. Knight was first elected to Alberta’s Legislature in 2001, served as Energy Minister from 2006 to 2010 and Forestry, Fish and Wildlife through 2012. Before Knight became a member of the Alberta Legislature, he worked for several years on drilling rigs and fracking crews until 1970 when he formed his own energy sector service company, which employed more than 50 people in Northwest Alberta and Northeast British Columbia.
Knight’s connections to Alaska include being a member of the Alberta/Alaska Bilateral Council, which was created in 2002 to focus on five areas where Alaska and Alberta can cooperate including energy, transportation, aboriginal issues, trade and investment.
Knight was also a member of both the Pacific NorthWest Region (PNWER) and the Energy Council for nine years, both of which contain members from Alaska’s Legislature.
For more information, please call Senate Majority Press Secretary Carolyn Kuckertz at (907) 465-3803.
Posted: February 7, 2013