Quote:
Originally Posted by Ozy_Flame
My point is that when I see companies like BP and Shell reaping record profits, I question why the royalty regime is loosening. Frankly it comes down to oil companies making $5 billion in profit rather than $7 or 8 billion.
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This is completely irrelevant to the situation in Alberta. The Western Canadian Sedimentary Basin is aging; new wells are becoming more complex and riskier, so the rate of return on wells drilled here is a lot lower than elsewhere. All companies have a hurdle rate of return that must be met in order to obtain approval for the expenditure of funds, and the higher royalty rates push the return on investment below the line for many marginal wells in Alberta. Simply put, Shell and BP are going to continue to make their record profits, whether they invest here or elsewhere. The question we have to answer is whether we as Albertans want them to put their dollars here - always keep in mind that you can't collect royalties on a well that isn't drilled.