The Alberta government is rolling back most of its year-old royalty hike and launching a study on how to trim red tape as it attempts to revive its political fortunes and woo oil and gas investment back into the province.

Effective next January, the province will drop its top royalty rate on natural gas from 50 to 36 per cent, while the highest rate for non-oil sands crude production will drop from 50 to 40 per cent. The bottom rate for both will remain at 5 per cent, and the government has indicated a willingness to make further concessions that would favor deep new wells designed to use new technology to access oil and gas pools.

Those figures constitute an almost complete return to royalty rates prior to a new regime that Premier Ed Stelmach set in place to give the province a greater share of windfall energy revenues. Before that change, gas royalties ranged from 5 to 35 per cent, while oil royalties fell between zero and 40 per cent.

“We can't pretend that oil and gas investment levels haven't eroded or that we don't have a responsibility to current and future generations of Albertans to address that,” Energy Minister Ron Liepert said in a statement Thursday.

Alberta will also lock in a 5 per cent royalty on the first 12 months of a well's production, in part of a wholesale change in the province's energy taxation scheme designed to boost oil and gas cash flow reinvestment by two percentage points. Provincial reinvestment levels have fallen by nearly 30 percentage points since 2006. A two percentage increase will be worth about $700-million a year, the government estimates.