Thread by @mark_dorin

Time to explain:

1. What is "CStar"? (Royalty reduction program to incentivize well drilling (2016, NDP govt.).

2. What is the proposed #RStar program and how would it extend CStar?

3. What royalties are (fee paid to owner of a mineral like oil, gas, coal by producer).
1/n

CStar simplified: Left graph shows how C* works. A formula that represents drilling costs (based on depth, horizontal reach and fracturing sand costs) is used to calculate C*. The well licensee pays reduced 5% royalty until the well produces product equaling C*.
2/n

Once C* is reached the higher, normal royalty rate (up to approx. 40% max.) varies based on factors such as type of product(s) produced by the well, market price, etc. until the well reaches Maturity Threshold, after which the percent royalty once again starts to reduce.
3/n

RStar (details being sorted out): R* simply extends C* or increases the length of time the well produces at the reduced 5% royalty rate. R* is a credit for cleanup costs expended on a different well or wells ($1 for $1 or other amounts not yet set). R* is blue graph line.
4/n

Link to Alberta's "Modernized Royalty Framework (MRF)" provided below.

Provincial (publicly-owned) minerals are leased to producers who pay a percentage of revenue from all wells (or mining) to the province based on contractual & legislated factors.
5/n

alberta.ca/royalty-overvi…

RStar - citizen pay - is contrary to laws that require well licensee (polluter) to pay to close its wells and clean up its sites. Failing this, the Orphan Fund (funded by levies on industry) is to cover "closure" costs so citizens are always protected (never have to pay):
6/n

A Pilot for some form of RStar (Liability Incentive Plan Pilot) with a cap of $100 million is proposed to target the worst, contaminated sites owned by existing companies that have been inactive for at least 20 years. Remediation has clearly been delayed, which is illegal.
7/n

As such a Pilot program is proposed by the Premier and minister of energy that would have to be conducted illegally absent significant amendments to existing law (proponents not outlining any law changes). UCP refused to endorse polluter pay principle in the Legislature.
8/n

Attend a session on March 23 to protect polluter pay. The principle applies to all industrial site cleanup, not just oil and gas. If we allow a leak in the polluter pay dam so to speak citizens could be overwhelmed with over a $trillion in various industry cleanup costs.
9/n

Polluter pay is the only way.

Special thanks to the following hosts of Protecting Polluter Pay. Feel free to use the above graphs to explain C* and R* if you so choose. Happy to contribute however I can.
@KathleenGanley
@heathersweetab

10/n finish