Quote:
Originally Posted by fotze
No, if we retroactively imposed the proposed royalty rates to 2006 oil and gas production there would have been 2 Billion extra dollars. There is a huge difference between the two. It does not take into account the much lower gas prices of today and the effect of the royalties itself. Of course it won't be as dire as the companies say but it definately will not have a negligible affect on the capital spent in Alberta.
I was perusing our investor presentation today and the finding cost per BOE in Alberta is the highest in the world. This includes offshore drilling in the North Sea, Australia, Texas, South America. This is because Alberta basin is the ugliest in the world.
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I would argue it would be negligible, but that is just my opinion. I would argue this for a couple reasons:
1) Supply outstrips demand on a global scale by anywhere between a high of 1.2 million barrels a day on average to a low of 500,000 barrels a day. The difference between actual supply readily available to the public and demand from the public has increasingly narrowed over the past 7-10 years.
2) OPEC expects demand to increase by 1.3 million barrels per day next year, and you would be very hard pressed to find an oil economist who says otherwise regarding demand side pressures.
3) Canada produces approximately 3.4 to 3.5 million barrels a day, of which about 2.2 million barrels per day comes out of Alberta.
4) And finally, I just do not have a clue where these poor oil companies are going to go to make up the difference, perhaps they will go to Venezuala or Iraq or other similarly more stable political regions of the world.
To reverse an analogy used earlier in this thread, I have a hard time believing that if the government tells oil companies that they can make 1 dollar in Alberta and the government keeps 9, that they will say "Screw it" we refuse to make 1 dollar...to hold out for a better offer will get these oil companies nowhere in life....