AJM Petroleum Consultants

AJM Petroleum Consultants

November 20, 2008 23:59 ET

Royalty Changes Miss the Mark

CALGARY, ALBERTA--(Marketwire - Nov. 20, 2008) - The changes to the royalty framework announced yesterday by the Alberta government will not provide a genuine stimulus to Alberta's oil and gas industry, says AJM Petroleum Consultants, an evaluation firm that specializes in the economic evaluation of oil and gas reserves.

"Right now, one of the biggest challenges facing Alberta is the fact that we are not perceived as an attractive place to explore for and develop oil and gas," said Ralph Glass, VP Operations of AJM Petroleum Consultants. "I think the government's announcement of transitional royalty rates misses the mark as far as what is required to provoke a positive response in Alberta's economy, and will simply increase the administrative work required to figure out what wells fit what system."

In an economic climate where oil and gas companies are making drilling decisions based on low oil and gas prices, a lack of access to capital and high drilling costs, Glass believes a true stimulus must focus on making the economics of oil and gas exploration and production in Alberta more attractive.

"If prices and costs are the primary drivers behind whether to drill or not to drill, then royalty savings become somewhat irrelevant - if wells are not being drilled or the number of wells being drilled is limited, the resulting royalty savings will be similarly limited," says Glass. "While attempts to stimulate economic development are welcome, capital recovery programs that act as a stimulus to a broader cross-section of the exploration and production industry, similar to those in place in BC and Saskatchewan, might go further than the proposed royalty changes in helping to stem the flight of capital from Alberta to our neighbouring provinces."

AJM Petroleum Consultants, a privately owned Calgary-based company, has extensive experience in corporate reserve evaluations, acquisition and divestiture evaluations, and evaluations of unconventional reserves such as coal bed methane, tight gas, shale gas and bitumen/heavy oil. Diverse engineering and geological capabilities combined with a forward thinking approach to technology have allowed AJM to provide innovative solutions to clients in the upstream sector of the oil and gas industry in Western Canada, North America and internationally.

Contact Information

  • AJM Petroleum Consultants
    Andrea Conway
    (403) 648-3269 or Cell: (403) 561-8620