Alberta is Canada’s No. 1 producer of wind-generated electricity.

But if the province wants to maintain that leadership, it will take more than a blowhard premier puffing about how many billions his government is raking in from fossil fuels.

Alberta is about to be left in the dust when it comes to wind power.

Quebec Premier Jean Charest announced plans last week for a $1.9-billion project that includes eight privately owned wind farms producing 1,000 megawatts of electricity.

Equally significant, the turbines for this project will be made in Canada. They’ll be built by GE Energy at two plants in the Gaspe peninsula, stimulating about $1 billion in investment and creating 360 jobs in the region.

The Canadian Wind Energy Association says the new production will more than double Canada’s current output of wind energy.

Alberta, meanwhile, has a mere 201 megawatts of installed wind-energy capacity.

Ralph Klein’s government is poised to sink $300 billion of taxpayers’ money into a new industrial railway line from the Edmonton area to the oilsands north of Fort McMurray.

Yet the Tories, sitting fat and sassy on billions in oil and gas revenues, can’t even bother to match an existing federal government incentive to stimulate a homegrown wind-power industry.

All it would take is one cent per kilowatt-hour from now until March 31, 2006, to match Ottawa’s current incentive and help keep Alberta in the lead as Canada’s top wind-energy producer.

Instead, Alberta companies such as TransCanada Corp., Suncor Energy and Enbridge Inc. are finding more fertile ground in provinces such as Quebec, Ontario and Saskatchewan.

TransCanada owns half of Cartier Wind Energy Inc., which will build six of the eight projects in Quebec, scheduled for completion in 2012.

Suncor and Enbridge, along with Spanish-owned EHN Wind Power Canada, have jointly proposed to the Ontario government to build a 75-megawatt wind farm near Ripley, east of Lake Huron.

Ottawa is poised to leave Alberta even further behind in recognizing that wind power, along with fossil fuels, is desirable in an energy portfolio that doesn’t put all its eggs in one basket.

In the Speech from the Throne, Paul Martin’s Liberals said they’re considering quadrupling the federal Wind Power Production Incentive, to stimulate between 4,500 and 5,000 MW of new wind- energy projects by 2012.

That much wind power is expected to generate about $6 billion in investment and create more than 40,000 direct and indirect person-years of employment.

Not much of that investment or many of those jobs will come to Alberta – at least not as long as the provincial government has its head stuck deep inside an oil barrel.

And long after the oil is gone, the wind will continue to blow . . .

Wary Neighbours

The door has been slammed on Startech Energy Inc., a Calgary-based junior energy firm, due to a George W. Bush administration decision.

The fallout threatens to put a crimp in plans by other Alberta companies to expand natural gas exploration in the U.S. Rocky Mountains.

According to reports out of Montana, the U.S. Bureau of Land Management has decided to stop permit work on three controversial gas wells that Startech Energy wanted to drill in the Blindhorse Outstanding Natural Area, on the eastern slopes of the Rocky Mountain Front about 120 kilometres northwest of Great Falls.

The regulatory bureau now says it will do a thorough study of the 160-kilometre stretch of the Front before deciding whether to allow any oil and gas exploration there. The plan essentially halts drilling on the Rocky Mountain Front for at least the next four years.

Startech’s three wells were opposed by 49,000 of the 50,000 people commenting last year as part of an environmental review of the proposed drilling plans, according to the U.S.-based Wilderness Society.

EnCana, meanwhile, says it intends to drill about 450 wells next year in Colorado’s Piceance Basin, including about 150 new wells in the northern part of the region.

But EnCana’s operations in the U.S. Rockies are also coming under much closer public scrutiny, especially after the company was recently fined $371,000 by Colorado energy regulators in connection with a gas seep that leaked from a well into a creek near Silt, Colo.

Doug Jones, of EnCana’s southern Rockies business unit, which includes Colorado and Utah, said that the company intends to address the public’s concerns about drilling impacts and “do better and better as time goes by.”

It had better. Otherwise, doors to other oil and gas opportunities in the U.S. Rockies could quickly start to close.

Royalty Roulette

Curious how most Calgary media – the Calgary Sun being the notable and surprising exception – ignored provincial auditor general Fred Dunn’s criticism of Alberta’s royalty regime for new oilsands plants.

Curious but not surprising, given the cheerleaders’ chorus that passes for oil and gas reporting at certain local and national media outlets. But I digress.

To spur investment in the oilsands, Alberta Energy adopted a royalty regime in 1997 that allows oilsands developers to pay one per cent of gross revenue until they recoup their original capital investment in a new project.

After that, the rate jumps to 25 per cent of net revenue or one per cent of gross revenue – whichever is greater.

In his annual report, Dunn said the government needs to be more rigorous before approving new oilsands projects and in how it analyses the costs and forecasted resource prices that are submitted with applications.

Alberta Energy needs to better assess and mitigate the long-term financial risks of the current royalty regime, Dunn said. The goal would be to ensure that Albertans collect on their oilsands resource in a timely fashion.

According to Alberta Energy, 35 of the 52 oilsands projects paying royalties under the 1997 regime are still in the pre-payout stage. In other words, they’re still enjoying a royalty rate of one per cent of gross revenue.

Only 17 of the 52 projects have reached the post-payout stage, and are now paying the higher royalty rate.

That situation will change by the end of the Alberta government’s fiscal year next March 31, when about half of all oilsands projects are expected to move to the higher royalty rate.

However, Dunn noted that companies shouldn’t be able to defer moving to the higher rate by continually expanding and adding on to their projects.

The auditor general’s criticisms lend some weight to environmental groups’ recent charges that the provincial government is practically giving away a resource owned by each citizen of the province.

At the very least, Dunn’s recommendations point to the need for Alberta Energy to review the current royalty structure to ensure it’s serving the long-term interests of all Albertans.

Wise Move

OK, enough brickbats. Here’s an oilpatch bouquet for the Klein government.

Kudos to the Tories for designating “rig technician” as the new compulsory certification trade in the province.

The move means drilling and service rig workers will soon see more consistent industry standards, better- quality training, and improved workplace safety and productivity.

The Canadian Association of Oilwell Drilling Contractors lobbied for the move. The oilpatch’s increased complexity, technology and safety requirements have made it more and more difficult for industry to train workers to a consistently high standard.

Once the program is established, the number of drilling rigs in Alberta should support between 1,000 to 2,000 registered apprentices a year. A phased-in process will recognize the skills of those already working in the field.

(Mark Lowey can be reached at mark@businessedge.ca)