Canada’s western oil province Alberta has changed its controversial royalty scheme announced last year to grant C$1 billion in royalty credits and rebates over five years.

Company’s drilling deep wells will be elligible for the royalty breaks, the Ministry has said, a move intended to fix the pain royalties would have caused companies drilling costlier, high-risk, high-reward wells.

The province concedes it gets 25 percent of its gas production from wells drilled over 2,500 metres downward into the foothills of the Rocky Mountains. Drillers of these wells will win credits worth $200 million year, C$37 million per year for deep oil drillers.

The province expects to make up the lost income in the drilling of more wells.

New, higher royalty rates for oil sands and conventional operations start in January 2009.