Quote:
Originally Posted by Yoho
You of all people know oil and gas revenues pay the rent in this country.
If it’s a paper tiger the Federal big boys sure aren’t acting like it.
What they really don’t like is the embarrassment of the defiance and the precedence it sets.
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Maybe yeah, I'm sure they don't like the defiance.
Yes oil and gas revenues of course are hugely important, but you know what else is? A stable investment environment and when you go threaten sovereignty this creates enormous investment risk.
When you drill a good well in Alberta, maybe you get 100-500 bbl/d. You get some discounted pricing, but your economic analysis knows that any major investment is relatively safe, in a (theoretically) safe political climate. There are no wars, upheaval, etc. You can go deploy the same capital in far riskier jurisdictions and get far more production / way more revenue. But those jurisdictions usually have more risk. So the oil and gas investment in Alberta is a less risky investment partially due to political environment, abundance of infrastructure, knowledge and technical ability is prevalent, etc. This is all a MAJOR reason why multiple royalty reviews were a terrible idea. Now you have created risk on investment, and when you go buy a lease / license at a landsale you run econs on the theoretical well you'll drill and how much you can afford for the land / bonus. So the province gives you an agreement to produce from its' Crown land, and then takes the bonus revenue, and then arbitrarily just changes the royalty regime from under your feet after you've paid them the bonus / committed to the lands? That's Venezuela level stuff, and that's what Alberta did. However, even though this risk was bad, it definitely wasn't a "crazy amount" of risk. Alberta separating or sovereignty BS is a crazy amount of risk, and will drive investment out of Alberta and into other oil and gas jurisdictions with far better production numbers / econs. It's actually a horrendous idea that will decimate Alberta's economy.
Fact is, Alberta needs Canada. It's okay to play the long game and play it smart, as eventually Alberta is going to need Canada when oil and gas starts to die off a bit in the future. The time for Alberta to contemplate separating was in 1985, not now. Plus how does Alberta even get its' product to market? What do those trade deals look like with Canada? Not good, would be my guess.