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Alberta to resume oil land sales, but critics warn against ‘giving away’ assets in severe downturn

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In six lease and licence auctions between Jan. 8 and April 8, 2020, the province raised just shy of $26 million in revenues, the least amount raised at an auction in the province since data was first collected in 1977. If the numbers were adjusted to reflect the full year, it would fall short of the previous record low of $119 million set last year.

Since 1977, the province has generated an average of $775 million per year in land sales to oil and natural gas companies and set a record in 2011 of $3.5 billion, auctioning off lease and mineral rights.

Alberta Energy Minister Sonya Savage.
Alberta Energy Minister Sonya Savage. Photo by Darren Makowichuk/Postmedia files

To prevent selling land rights at a heavy discount into a depressed market, the province is planning to implement a higher minimum bid to ensure land isn’t sold too cheaply.

Interest in oil and gas leases and licences rise and fall with oil prices, so minimum bids are a “prudent move” in the current pandemic to ensure that Albertans get value from the land they are selling to oil and gas producers, said Dan McFadyen, an executive fellow at the University of Calgary School of Public Policy and former deputy minister of energy in Alberta.

“They don’t want to end up with minimal bids where you’re just giving those lands away,” McFadyen said.

However, he said there was more value to the province to selling the land than just the bid amount because oil companies commit to spending money exploring and developing those lands or they lose their leases.

The current minimum bid for a hectare of oil and gas rights in Alberta is $2.50 per hectare, a price that was set in 1977.

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