News Release Archive
NATURAL RESOURCES--SABLE GAS ROYALTIES WORTH BILLIONS ----------------------------------------------------------------- Royalties from the Sable Offshore Energy Project will range from $2 billion to $3.5 billion over the life of the natural gas project. "This will mean royalty revenues for the Province of about $6 million annually during the early years of production, then upwards of $300 million annually during peak years," said Natural Resources Minister Eleanor Norrie. The royalty framework agreed to by the province and the Sable Offshore Energy Project group was released by the minister in Halifax today. "There is no royalty holiday," said Mrs. Norrie. "This means Nova Scotia will receive Sable gas royalties from the very first day of production when it starts in 1999. The province will receive royalties on an escalating scale from the start of production throughout the life of the project." Under the five-tiered royalty schedule, Nova Scotia will receive 1 per cent of gross revenues for the first three years of the project. After three years of production, the royalty rate will double, increasing to 2 per cent of gross revenues. The third tier of the schedule will increase the royalty to 5 per cent of gross revenues. As the project becomes more profitable, the royalty rate will increase. It will rise to 30 per cent of net revenues when tier four takes effect during peak years of the project. During the fifth and final tier, the royalty rate will increase to 35 per cent of net revenues. In addition to royalties from gas production, the Sable project will bring substantial other benefits to Nova Scotia. "For example, the purchase of goods, services, and materials associated with the project during development and production will mean increased tax revenues for the province," said Mrs. Norrie. "As a result, the total government take of the net cash flow from Sable gas development will be in the 60 per cent range. This compares very favourably with other jurisdictions, particularly for a first gas project. It puts Nova Scotia on the upper end of the scale." The minister said the royalty framework, which is being drafted into regulations, lays the foundation for the province's future as a producer of natural gas. "This royalty structure is in Nova Scotia's best interest," said Mrs. Norrie. "It will benefit the people of Nova Scotia well into the 21st century." -30- Contact: Blain Henshaw 902-424-5252 trp Jan. 30, 1997 - 3:20 p.m.