Former Talisman CEO warns Alberta on royalties

The former chief executive of Talisman Energy warned Alberta the company would likely cut around $500 million from its capital programif a proposed royalty hikeis approved.

"At current gas prices, I believe it will be difficult for anyone to grow their natural gas production in Alberta, and if you implement these proposals we will see a significant loss of investment, jobs, taxes and the loss of world class technical expertise," Jim Buckee wrote in an open letter Wednesday to Premier Ed Stelmach.

"Mr. Premier, I urge you to be cautious about implementing the major changes that are contemplated by the royalty review paper," Buckee wrote.

The cut woud be on top of Talisman's current plan to trim $500 million from its spending in the province due to low prices for natural gas.

Among other things, theroyalty review paper recommends a 20 per cent increase in the province's energy royalties.

On Tuesday, Crescent Point Energy Trust said it would shift about $150 million in investment from Alberta to Saskatchewan if royalties are raised. EnCana has threatened to pull $1 billion from the province next year.

Stelmach has promised to consult with the oil and gas industry prior to making a decision on royalties.

Petro-Canada also weighed in on Wednesday, saying that royalty rates should increase only at oil and gas prices above current levels. The company also said any royalty changes should be phased in, so that producers and investors have time to adjust.

"We want to continue to invest here, so it's important that we find a solution that works for everyone," said Petro-Canada CEO and president Ron Brenneman.