In the latest assessment of the panel's report, which has ignited fierce debate in oil industry, investment sector and the western Canadian province, Wood Mackenzie said higher royalties will have the biggest impact on high-cost, low-margin projects.

The panel said Albertans are not getting their fair share from booming oil and gas development and government's take should rise by 20%, or $2 billion, a year.

More than $100 billion worth of developments are under way and planned in Alberta's oil sands region.

Last week, a top-level panel appointed by Alberta Premier Ed Stelmach urged the government to raise royalties for oil sands projects once they reach profitability and also levy a new sliding-scale severance tax on all oil sands production.

Those measures will raise break-even thresholds for all developers, which have already been dealing with a sharp jump in the costs of labor and materials, said Derek Butter, Wood Mackenzie's head of corporate analysis.

"Alberta is following in the footsteps of many other oil-producing regions in its desire to extract a greater share of the economic rent from its natural resources, during the current period of high commodity prices," Butter said in a company statement, Reuters reported.

"However, the higher-than-expected level of new taxation will cause concern among oil sands industry players already struggling to cope with spiraling costs."

The consultants said the net present value of projects would fall by $26 billion, based on a long-term Brent oil price of $50 a barrel. Brent now sells for more than $78 a barrel.

The panel also recommends cutting royalties for low-producing conventional oil and gas wells and raising them for prolific ones.

Published: 25 September 2007 20:58 GMT  | Last updated: 25 September 2007 20:58 GMT