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Originally Posted by crazy_eoj
So should expansions not be subject to payout then?
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They should be their own ring fence for royalty purposes and eventually hit payout on the expansion capital, just like any greenfield project.
Quote:
Originally Posted by crazy_eoj
Basically you are saying we should provide no incentive for companies to improve upon old or existing technologies, or to expand any projects; and instead strive to create entirely new systems or simply abandon and walk away from lowly profitable ventures. Is it better to have higher royalties and lose investment?
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There are many ways the government incents companies to expand and improve. The low pre-payout royalty rate itself is one. Accelerated Capital Cost Allowance deductions is another. Those are specifically designed to incent investment. Ring fencing a new project into an old asset is merely gaming the system.
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Originally Posted by crazy_eoj
You can't have a portion of a project in paid out status and another portion in non-paid out...?
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Of course you can. Its just an accounting status. Call them two separate projects if you want. Take an in-situ facility that's been cranking out 50kbpd for a decade that's approaching payout. If I want double it by essentially putting a 50kbpd cookie cutter facility right next door, is that really the same project? No, it's 2 projects. Let the first hit payout and the second be its own ring fence for royalty purposes. That is the intent of the program.