Alberta royalty move prompts muted market reaction

CALGARY, Alberta, Oct 26 (Reuters) - Canadian oil and gas shares fell only slightly on Friday despite some fears in the industry that Alberta's new royalty structure might put a major crimp on returns and spending.

The Toronto Stock Exchange oil and gas subindex , which includes the shares of producers, integrated oil companies, energy trusts and oil field service providers, dipped less than 1 point, or 0.3 percent, to 351.15 after the open. It also crossed into positive territory at times.

The broad Toronto market was up 82.24 points at 14,207.18.

The oil index is a few points higher than the day after Alberta's royalty review panel issued its report on the province's royalties in late September.

Among big names, EnCana Corp (ECA.TO: Quote, Profile, Research, Stock Buzz) was up 8 Canadian cents at C$64.49, Canadian Natural Resources Ltd (CNQ.TO: Quote, Profile, Research, Stock Buzz) slipped 7 Canadian cents to C$76.10, and Imperial Oil Ltd (IMO.TO: Quote, Profile, Research, Stock Buzz) rose 51 Canadian cents to C$49.20.

Alberta Premier Ed Stelmach said on Thursday he will increase oil and gas royalties, but he backed away from some of the more contentious recommendations in his review panel's report.

Under the new measures, Alberta's take from the oil and gas industry will increase by C$1.4 billion ($1.45 billion), or 20 percent above projected 2010 revenues.

The revamped system is largely sensitive to commodity price movements, and will mean smaller increases in natural gas and oil sands royalties than envisaged by the panel.

Stelmach rejected the panel's proposed new tax on oil sands production.