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“But it is not the time to reach out and make a big money grab, because that is just not going to help Albertans.”

During last year’s election campaign, the NDP promised a royalty review to ensure Albertans receive “a full and fair return” from energy revenues. The report, however, comes in the midst of a massive downturn in commodity prices that has hammered the industry.

The changes announced Friday are intended to modernize a system the government describes as “complex, unpredictable and too rigid to keep pace with the rapidly changing economy of our energy sector.”

Photo by Ted Rhodes / Postmedia Network

Under the revised regime, new oil and gas wells will pay a flat royalty rate of five per cent until payout, followed by a higher rate once those costs are recovered — similar to the current structure for oilsands.

The government says these rules will reward producers who reduce drilling costs through innovation and, over time, grow total revenues industry-wide and increase royalties to the province.

However, the province won’t see any incremental revenue changes for at least two years, with the expected increase unknown.

Tim McMillan, president of the Canadian Association of Petroleum Producers, said the new royalty framework is “principle-based” and he praised the government for signalling it “is serious about encouraging investment in Alberta at this difficult time.”

Royalty Review Advisory Panel chair Dave Mowat said he believes the revamped regime will spur activity by giving petroleum producers more certainty around costs and their financial return.