Summary
The Department of Energy uses royalty reductions to help achieve its strategic objectives for Alberta’s energy resources and for royalty revenue. Specifically, these programs are designed to increase overall royalty revenues by giving companies an incentive to recover oil and gas, previously considered unrecoverable, from existing locations.
Objective and Scope
Our audit objectives were to assess whether the department had effective systems and processes to set and achieve objectives through royalty reduction programs, and to monitor and evaluate the effectiveness in terms of costs and benefits to Albertans and the energy industry. Our audit scope focused on three royalty reduction programs and the department’s processes to:
- set desired results for each program
- analyze and report on the benefits and value Albertans receive
Conclusion
Royalty reduction programs increase the amount of oil and gas recovered using new technologies and processes. Although the department knows and reports the amount of the royalty reduction ($1.4 billion), it does not report on the amount of additional royalties generated or other value derived through these programs. Without knowing whether these programs are achieving their intended results, the department cannot assess whether they are working.