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by Stockwatch Business Reporter

West Texas Intermediate crude for August delivery lost 65 cents to $44.76 on the New York Merc, while Brent for September lost 51 cents to $46.25 (all figures in this para U.S.). Western Canadian Select traded at a discount of $13.95 to WTI ($30.81), up from a discount of $14.25. Natural gas for August lost 9.9 cents to $2.702. The TSX energy index lost a fraction to close at 189.72.

The Alberta government has released further details of its revamped royalty framework for the oil and gas industry. These details revolve around enhanced recovery methods and emerging resource plays. They build on what the government announced in April, when it stated that, in general, companies will have to pay a flat 5-per-cent royalty on production from a well until that well's total revenue equals the cost allowance. (The allowance is not necessarily the actual cost, but a proxy based on industry averages.) After hitting that milestone, companies will have to pay higher royalty rates, which will vary depending on resources and market prices. So said the government in April, but the story was not over yet. The government also said it would come up with different royalty programs for enhanced recovery and emerging resource activities because of the higher associated costs. Now the details of those programs have been released. Under the enhanced recovery program, the period of 5-per-cent royalty rates can stretch as long as 90 months, while under the emerging resource program, the cost allowance can be up to twice as high. Only after those milestones are reached will the wells be subject to the normal royalty program as disclosed in April. The government is hoping that these incentives will encourage companies to squeeze more production out of their wells and to explore new areas. The Canadian Association of Petroleum Producers, for its part, says it welcomes the new programs. All new royalty programs will take effect Jan. 1, 2017.

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