Agoracom

Updated: Wed Nov. 19 2008 15:29:02

The Canadian Press

Alberta is rolling back a large portion of the contentious royalty hike that's set to take effect in January in order to encourage drilling in the province's sagging energy industry.

Premier Ed Stelmach says the province is reacting to the current global economic crisis in order to protect thousands of jobs in Alberta's energy industry.

Stelmach has announced $1.8 billion in royalty savings over five years for new oil and natural gas wells that meet the drilling criteria.

But all other existing wells and oilsands projects will pay the higher royalty rates that were first announced a year ago.

Plans to hike Alberta's royalties created an outcry in the energy sector, which reacted by cutting back on drilling and in some cases delaying major energy projects.

Stelmach says the global chill on credit and capital markets has created an urgent need for action of this type to encourage drilling activity in Alberta.