What were the manifesto commitments of this government in relation to the oil and gas sector and what has it achieved as we approach the midway point of your term?

Alberta is unique in that the crown (the government) does not play a role in resource development. The province has been built on foreign investment and we continue to have an open marketplace. We happen to sit on what could be the largest oil reserves in the world. Currently our proven reserves are 170 billion barrels in the oil sands, though this is believed to be only one tenth of the actual oil in place, as that represents the only portion of the oil that, with today's technology, can be extracted. It is likely that new technology will change this situation, and if the figure was moved from 10% to 20%, for example, Alberta would become the largest oil jurisdictional in the world.

There are no signs that the world is getting off of oil yet. There is a growing recognition that we need to rely more on renewable energy resources and cleaner burning technology, but it is clear that oil will remain a dominant source of energy for many years to come. In Alberta we have a very open investment climate with assets owned by various wings of the Chinese government, Korean, European and American companies. We have always felt that we are open for business. As a government we try to put in place a fiscal regime that is competitive and encourages investment. We had to make some changes in spring 2010, which I feel have been well received by industry.

Why did you chose to lower royalties in the spring of 2010 and what do you as a party hope to achieve?

To understand the situation you need to look at the background. We had a leadership race in the Progressive Conservative Party in 2006, when we also had what I would describe as an outdated fiscal regime for the oil sands. In order to encourage investment in the oil sands, the royalties had been fixed as an upfront fee of 1%. Many Albertans did not understand the difference between this rate and the royalties levied for conventional oil.

We appointed a panel to review the rates and it came back recommending significant increases. You can argue all day about if this was the correct panel or not, but the government tried to find a happy medium between the recommendations and the old regime. The new regime came into place in 2008, just as the global economic crisis started. Investment went elsewhere and we were not doing well. I don't know how else to describe it. My predecessor implemented a competitiveness review in mid-2009 recognizing that there are a whole range of factors that affect investment decisions. The report received strong support from the industry and we implemented the proposed fiscal regime. There has been virtually no public negative reaction. Land sales in this calendar year have set an all-time record, and our drilling numbers are double those of the previous year.

How do you as, one of the prime regulators of the oil industry, ensure responsible environmental management in the sector and help convey that message to the public?

It is very difficult to get an accurate message out about the industry, although we are doing better than we were a year ago. We have recognized that we do need to do a better job and have put in place the most stringent environmental regulations in the world that relate to oil sands. All mining operations are dirty, and there needs to be an improvement in the development of technology.

We live in a communications world today of 10-second sound bites, where phrases like "dirty oil" and "catastrophe" stick in people's minds, but the 10-minute explanations we give do not. There is a comprehensive campaign in place now to tell our message and we want to ensure that people know the facts. Nobody is denying that there are open-pit mines, but there is a whole area of good news that is not being told.

How is the government supporting investment through the value chain and the creation of jobs in the oil sector?

One of the messages that we try to communicate is that it is not just Alberta that benefits from the development of the oil sands. We do not manufacture most of the capital equipment in Alberta, it comes from around the world and the proposed Keystone pipeline in the south of the U.S. will be American jobs. A lot of people in the manufacturing industry do not know where the parts are going, so again, we need to increase awareness.

The one area that we are struggling with is the area of value addition and taking a raw product and upgrading it to whatever level is required and doing it here at home. A number of years ago, this province embarked on some innovative mechanisms to ensure that we built, for example, a better chemical industry and that has worked well over the last 30 years. We are now at the same stage of development and are discussing enhancing the oil sands and the value add for Albertans. We have implemented a similar policy relative to raw bitumen. We are currently in the process of finalizing talks with a company that is proposing to build an upgrader and we would supply 75,000 barrels a day, which would upgrade in diesel fuel. That is a pilot project, and I think this will give us a template to move forward.

What is your final message to our readers about Alberta and its oil industry?

There are not many places in the world where there are both viable reserves and a climate that welcomes foreign private capital. Here in Alberta, we are part of a country that has strong human rights values and strong environmental regulations and a stable democratic government. We have put in place a fiscal regime that benefits Albertans and recognizes that the private sector needs to make a profit. Nowhere else in the oil world has a greater entrepreneurial spirit than Alberta. The thousands of junior oil and gas companies that have emerged from this province are testament to that spirit. M

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