Alberta is preparing to announce new incentives for oil producers later this month, aiming to spur enough production to help fill its proposed Pacific Link pipeline to the West Coast, CBC News reports.

The plan comes as major producers report billions in profits, prompting questions from some former industry executives about why additional public support is needed. Details of the incentives have not yet been announced.

According to reporting by CBC’s Kyle Bakx, Premier Danielle Smith has described the proposal as an “alternative enhanced royalty structure” intended to encourage companies to commit to increasing output. Smith wants construction of Pacific Link to begin in fall 2027, but there is uncertainty over whether producers will supply enough crude to justify starting the project.

The incentives are expected to target the oilsands, which account for most of Alberta’s oil production. New oilsands projects already benefit from lower royalty payments during their early years of operation.

Suncor Energy, Cenovus Energy, Canadian Natural Resources and Imperial Oil reported combined profits exceeding $12.5 billion in their latest quarterly results, CBC reported.

Janet Annesley, a former executive with Husky Energy and Shell Canada, questioned the need for more support in an interview on CBC Radio’s Alberta at Noon.

“They’ve got money, they’re buying back shares, they’re flowing lots of dividends to shareholders,” she said, arguing that Smith would need to explain the case for further incentives to Albertans.

Some producers are considering accelerating investments, though they have not committed to doing so. Imperial Oil chief executive John Whelan told analysts on Oct. 30 that the company was examining whether to bring forward a decision on its Aspen oilsands project, previously contemplated by the end of the decade.

Suncor chief executive Rich Kruger said on Nov. 4 that his company was doing preliminary work on potentially advancing growth plans while awaiting provincial details on royalties and incentives.

Former Suncor chief executive Mark Little told CBC that investor willingness—not access to money or government support—could be the biggest constraint on expansion. He described the proposed new incentive as “mystifying,” saying the existing royalty system works well.

Lennie Kaplan, a former senior manager with Alberta’s Treasury Board, offered a different assessment, saying some incentives would be needed to encourage investment in capital-intensive, large-scale oilsands projects. His modelling also points to substantial fiscal risks if oil prices are low.

The Oil Sands Alliance declined to comment to CBC before an announcement is made.

Sources