[Bring_Back_Shantz]

I'm not trying to be a dick, but it seems like there are a lot of people who are incredibly misinformed about what this royalty change will mean, and what this statement by EnCana means.

I'll preface this by saying that I'm in the industry, so I've got a vested interest in not seeing the royalties change, but that proably means I'm also in a better position to understand what this change is all about, as knowing what the canges are directly affects (and is a part of my job). Not be be rude, but unless you've read (AND UNDERSTAND) how the royalties are chaning, and how the economics of oil and gas produciton work I doubt you're in a very good postion to critique it and explain why it's toally fair, and Oil companies are just greedy.

First up, all of the asertations that EnCana can't just take their $1.0 billion and spend it elsewhere is a bit of nonsense. EnCana has properties in Colorado, Wyoming, Saks, BC, Texas, all of which are NOT changing their royalty regimes. projects that up untill now were not as economic as ones in Alberta are now getting priority (apparenlty to the tune of $1 billion).
Think of how many jobs that $1 billion supports, yes those of you not in oil and gas can say that the oil and gas sector has had a nice boom, and now it's time for a slowdown, but less people making oil money, means less people buing cars, less people going to restaraunts, less people buying just about everyting, it's a simle trickle down effect, and you can't think that taking that much economic activity out of the province will not have a very profound and easily felt consequence.

Secondly, not too long ago a lot of incentives were added to increase activity in what was previously marginal opportunities, and some of this is now being removed. One examle is the deep gas royalty holidy, which greatly improves the economics of a deep gas well, because the royalies are reduced early in the life of the well when the NPR is affected the most. In the area I work in removing this means that the economics on a well that was previously somewhere near 25% rate of return has dropped to less than 13%. With cuts in profitabilty like this it is no wonder EnCana is saying that they will move their capital elsewhere.

Do the royalties need to change? Probalby. But there is most certainly a better way to do it than what has been proposed. I'm not going to go over my full objections to this change, as they are too many to go into here, but beleive me when I say that comments like "The oil and gas companies are just being greedy" sho exactly how ignorant some of the people on here are about what these changes really mean.

This statement by EnCana is not a threat, it is a statement of reality brought on by basic economics.

No one in the Calgary office will lose their job over this $1 billion, because you can be guaranteed that EnCana will still spend it and will need people to plan it, but that $1 billion in capital will be spent elsewhere and the whole province will feel it. And remember, that that is just one company, others will do the same.