'Big Oil' can't threat

[Incinerator]

Originally Posted by EddyBeers

What will solve our problems? More money seems to work for most corporations...it seems to me that I need more money to buy a nicer car or a bigger house, or new clothes etc. etc....what is needed to ensure that we have more doctors to reduce waiting times? What is needed to ensure that we have more teachers to reduce classroom sizes? What is needed to ensure that we can improve infrastructure, build schools, provide more mass transit, reduce the cost of post-secondary education to an affordable level.

We live in a debt free province pulling in surpluses left right & centre every year, there is plenty of money in the provincial coffers. What is needed is for your namesake Eddie our buddy to loosen up the purse strings and start spending that money - to attract more doctors and nurses and more teachers to Alberta, to give the cities more funding to pay contractors who will hire the labour needed for these infrastructures.

More money SPENT always solves the problem, but more money in the government treasury locked up and not being utilized does not. Why do you think Bronco is always crying for money? It's all there locked up in Ed's safe. Would you need more money if you were Bill Gates? Start worrying about how to SPEND the obscene amount of money you have first before worrying about what is the best way to duplicate the NEP legacy of the Trudeau era.

[Slava]

Originally Posted by Incinerator

We live in a debt free province pulling in surpluses left right & centre every year, there is plenty of money in the provincial coffers. What is needed is for your namesake Eddie our buddy to loosen up the purse strings and start spending that money - to attract more doctors and nurses and more teachers to Alberta, to give the cities more funding to pay contractors who will hire the labour needed for these infrastructures.

More money SPENT always solves the problem, but more money in the government treasury locked up and not being utilized does not. Why do you think Bronco is always crying for money? It's all there locked up in Ed's safe. Would you need more money if you were Bill Gates? Start worrying about how to SPEND the obscene amount of money you have first before worrying about what is the best way to duplicate the NEP legacy of the Trudeau era.

What he said!

[flamesfever]

Some use the argument, "What choice to the companies have, if we raise royalties?". Well, some of the choices are:

1. Shut down current projects until they get a better deal eg. CNRL, Encana, ConocoPhillips and probably many others.

2. Explore and develop in B.C., Saskatchewan and areas outside Canada.

3. Curtail spending by acting only those fewer number of prospects that are economically viable under the new royalty regime.

[edn88]

I will preface my comments about this by saying I work for an Oil and Gas company (in Alberta obviously), so I know where my bread is buttered.

However, it is as an Albertan, a Canadian and an owner of common sense that I make my comments.

Firstly, the royalty review is not as simple as stated in the paper - on either side, the government or oil companies. Oil and gas companies are actually okay with paying more on some of their properties - especially ones where it does not ruin the economics. The royalty review is somewhat flawed, both in the data used to create it and the economics used to evaluate it.

Personally, I believe everyone in the province should educate themselves on the issue as soon as possible, make up their mind and let their MLA know their thoughts. Too much is at stake to risk making a mistake in what could be a multi-billion dollar gamble.

Provinces like BC and Sask are drooling over the prospect of Alberta capital moving into their provinces, even if it is temporary (someone made the point, that at some point the money will com back to drill the gas and oil).

If no one has yet posted the link, here are some links for both sides

http://www.albertaroyaltyreview.ca/
http://encana.com/media/currenttopic...view/index.htm

[ddj]

I think the point everyone is missing is that the battle between big oil and the government is not going to impact either of them. It is us Albertans who will be the roadkill left to deal with the mess if they proceed with the report in its form.
I love the quality of life Alberta offers and the availability for everyone to succeed in the province. The royalties already account for 35-40 percent of our provincial budget, we have surplus money in hand, the problem is not that we need to raise royalties the problem is getting government to use the money received and put it to good use.
Being that the gov. already collects over fifty percent between taxes, land sales and royalties before the oil co has to pay costs, wouldn't it be fair to say that government should be considered more of a big oil company than the producers themselves?
Just food for thought

[flamesfever]

Originally Posted by ddj

I think the point everyone is missing is that the battle between big oil and the government is not going to impact either of them. It is us Albertans who will be the roadkill left to deal with the mess if they proceed with the report in its form.
I love the quality of life Alberta offers and the availability for everyone to succeed in the province. The royalties already account for 35-40 percent of our provincial budget, we have surplus money in hand, the problem is not that we need to raise royalties the problem is getting government to use the money received and put it to good use.
Being that the gov. already collects over fifty percent between taxes, land sales and royalties before the oil co has to pay costs, wouldn't it be fair to say that government should be considered more of a big oil company than the producers themselves?
Just food for thought

Your right, it's the average Albertan who will suffer the most if the Government doesn't get it right. The trouble is the Premier has put himself between a rock and a hard place. If he does nothing, he's toast, and if he does something stupid and kills the industry, he's toast. Personally, I think he should take a lesson from Danny Williams in Newfoundland, and sit down in some back room with the industry reps and make a deal that's a win / win for everyone.

Let's hope he has the intelligence and balls to do so.

[SeeGeeWhy]

Originally Posted by EddyBeers

What will solve our problems? More money seems to work for most corporations...it seems to me that I need more money to buy a nicer car or a bigger house, or new clothes etc. etc....what is needed to ensure that we have more doctors to reduce waiting times? What is needed to ensure that we have more teachers to reduce classroom sizes? What is needed to ensure that we can improve infrastructure, build schools, provide more mass transit, reduce the cost of post-secondary education to an affordable level. I love when right wingers say that more money will not solve the problem. What will solve the problem, what is the neo-conservative solution to these problems?

I live in Canmore, and each night 100 dollars is donated per goal scored by the local boys to the local hospital to buy needles, sheets etc. I always laugh, only in Alberta would we have sponsors for needles, bake sales for textbooks...but god forbid we raise the royalty rates so that they are somewhere in the middle of the pack in the Western world. If we had the same royalty rates as Texas, that bastion of socialism, we would have an extra 2 billion dollars in the government coffers. I think that is the least we can do....

There is a disconnect with your understanding. Just because royalty rates are raised does not mean that the average person will see more out of it.

The government has been hoarding cash for years - there is plenty of cash to go around, but a government that does not like spending is in control.

My soultion would be to review the government's budget and divert more cash to funding hospitals, schools, and emergency services. Transportation projects (for the most part) need to take a back seat in this Province until city planners can get real with solutions on combating urban sprawl.

Do you mind if I ask when you moved to Canmore, and what you do to earn a wage?

Back to the subject at hand, I don't know how much room there is to move on the royalty structure if we still want the benefits of business activity in our province.

[SeeGeeWhy]

Originally Posted by EddyBeers

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....

Your points are valid, but there are still other politically stable regions to explore and develop, so no one will be taking the $1 when the offer is higher elsewhere - for the time being.

[ddj]

Well tonight is the night weve all been awaiting. Will our Premier make his decision based on vote results, or has he succeeded in finding a way to keep investment in AB as well as bring a little more into the fund. As nice as it is to see the heritage fund grow, at what expense do we want this to happen. If the money was going back into the province and major infrasructure needs it would be great, but to hurt our economy just to throw it in the bank would be ludicrous.

I hope he has taken care on this issue and can find the common ground we need. He has put himself in the damned if you do, damned if you don't catagory. I wouldn't like to be in his shoes but he did bring it on himself....

[Ayrahb]

So, should we expect the prices of gasoline to go way up as soon as the government announces their decision either way?

I have this nagging feeling that the relatively low gas prices lately were a PR move considering that the crude has been hovering around $87/barrel.

[ddj]

Originally Posted by Ayrahb

So, should we expect the prices of gasoline to go way up as soon as the government announces their decision either way?

I have this nagging feeling that the relatively low gas prices lately were a PR move considering that the crude has been hovering around $87/barrel.

I don't believe the gasoline prices have anything to do with this as Alberta has very little refining power to control this commodity. If you compare 87/bbl now to 65/bbl when our dollar was only worth 0.65 the money taken in has declined or stayed.

[mykalberta]

Will be an interesting speech - I cant stand him and its an embarrasment to the province that he is the premier

I see a 50-60% increase as to what was proposed. I could see a modified grandfathering rule as a way to stop foreign takeovers in the oilsands.

I love how Taft has tried to copy the Fed Bloc/NDP Strategy of issuing a "Non - Negotiable" demand. HAHA - oh Taft, thats like the Green party saying legalize MarryJane or we wont vote in the House - HAHA.

[ddj]

Originally Posted by mykalberta

Will be an interesting speech - I cant stand him and its an embarrasment to the province that he is the premier

I see a 50-60% increase as to what was proposed. I could see a modified grandfathering rule as a way to stop foreign takeovers in the oilsands.

I love how Taft has tried to copy the Fed Bloc/NDP Strategy of issuing a "Non - Negotiable" demand. HAHA - oh Taft, thats like the Green party saying legalize MarryJane or we wont vote in the House - HAHA.

I see it going along the same line except maybe a little lower in the natural gas sector because of depressed prices and the fact they are already the most hit.

As far as the politics goes I can't see any of our Alberta candidates having the common sense to run a business let alone the whole province.

[SeeGeeWhy]

One thing I was wondering is if the government can adjust the earning conditions on mineral leases easily. I think that if a bunch of companies are going to go pout about the royalty structure, forcing their hand by accelerating expiration conditions may be an interesting way to either:

1 - get them back into the province to develop the resource they bought the rights to produce

2 - cause them to decide to pull out of Alberta permanently by selling their interests to other companies will to participate under the new regime

3 - have a bunch of land expire and allow new companies to re-purchase the rights to production (ensuring activity and increased revenue from landsale).

Just wondering.

[ddj]

Originally Posted by SeeGeeWhy

One thing I was wondering is if the government can adjust the earning conditions on mineral leases easily. I think that if a bunch of companies are going to go pout about the royalty structure, forcing their hand by accelerating expiration conditions may be an interesting way to either:

1 - get them back into the province to develop the resource they bought the rights to produce

2 - cause them to decide to pull out of Alberta permanently by selling their interests to other companies will to participate under the new regime

3 - have a bunch of land expire and allow new companies to re-purchase the rights to production (ensuring activity and increased revenue from landsale).

Just wondering.

Excellent questions. Would be nice to put the pressure on to them to do something or let someone in to do it. But I would think we still need to make the market favourable for the other investors to buy in. Hopefully we can maintain a fair amount of Canadian companies here. What do you think with the way Sask has dumped on their royalties to bring investors in?? Is it going to take away from AB for a time??

[SeeGeeWhy]

Originally Posted by ddj

Excellent questions. Would be nice to put the pressure on to them to do something or let someone in to do it. But I would think we still need to make the market favourable for the other investors to buy in. Hopefully we can maintain a fair amount of Canadian companies here. What do you think with the way Sask has dumped on their royalties to bring investors in?? Is it going to take away from AB for a time??

I wasn't aware that SK made changes to their royalty structure. The last time I was out talking with Sask. Industry and Resources, the rep was saying that there is starting to be increasing pressure from the public for their province to up the royalties there too. He said that if AB increases the royalties, there will be a public outcry to do the same in SK.

[ddj]

Originally Posted by SeeGeeWhy

I wasn't aware that SK made changes to their royalty structure. The last time I was out talking with Sask. Industry and Resources, the rep was saying that there is starting to be increasing pressure from the public for their province to up the royalties there too. He said that if AB increases the royalties, there will be a public outcry to do the same in SK.

Sask has not made any changes since 2002 introducing the fourth tier to their structure. At this time the Oil and Gas business started to increase and has held stable and growing. The current government there has no intentions of messing with the royalty structure and has reduced the amount of business tax required to be paid in. They show they are a stable place for investment and that is the same way we have had the AB Advantage for years. Until recently we were known as a stable place to invest but at the moment all eyes are on us.
I agree there will be a public outcry to do the same in Sask but at the present time they do not have the amount of business they require to take a chance of losing their investment dollars. The NDP government has already said if Alberta raises royalties they as well as BC would probably not follow suit. But then again who knows governments make the rules as they go don't they??

[ddj]

INCENTIVES FOR ENHANCED OIL RECOVERY (EOR)

The Government of Saskatchewan today announced tax and royalty changes along with other measures to increase the amount of oil produced in Saskatchewan through enhanced oil recovery (EOR).

The changes include a revised and simplified tax and royalty structure for EOR; a renewed and improved Saskatchewan Petroleum Research Incentive program (SPRI) and Provincial Sales Tax and Fuel Tax exemptions on substances injected into oil-bearing formations for EOR purposes. The changes reflect the outcome of discussions with industry on steps that could be taken to expand Saskatchewan's oil production through EOR.

Speaking at the Petroleum Technology Research Centre in Regina, Premier Lorne Calvert likened Saskatchewan's oil resource to a sleeping giant. "An estimated 35 billion barrels of oil have been discovered in Saskatchewan. Roughly 15 per cent is recoverable through current proven technologies. Heavy oil recovery rates are in the 5-10 per cent range," Calvert said.

"With current technology, this means we will be leaving almost 30 billion barrels of oil in the ground. Today's announcement builds on our historical record in enhanced oil recovery to tap more of this resource. It benefits the companies. It benefits the communities where this development will occur. It benefits the province, in that any increase in oil patch activity has a positive impact on jobs and the provincial treasury."

The incentives were developed by Industry and Resources following consultations with the Canadian Association of Petroleum Producers and other stakeholders. The objective was to identify existing constraints to expanding EOR production and means of addressing them.

A new and simpler tax and royalty regime for EOR brings it into line with lower rates currently in place for EOR projects involving carbon dioxide injection. The revised structure will apply to all new and expanded EOR projects, as well as any possible future oil sands and oil shale projects. It is consistent with the overall objective of using simple, fair, competitive taxation as one means of improving Saskatchewan's climate for growth.

Renewal of the SPRI program for a further five fiscal years will provide as much as $30 million in tax and royalty credits on new small-scale EOR pilot projects. All pilot EOR projects will be eligible for SPRI.

The Sales Tax and Fuel Tax exemption on propane, butane and other chemicals injected into oil reservoirs to increase the recovery rate brings them into line with the tax exemption already in place for carbon dioxide used in EOR projects.

All changes come into effect April 1st, 2005.

-30-

For More Information, Contact:

Bob Ellis
Industry and Resources
Regina
Phone: (306) 787-1691

[ddj]

ROYALTY AND TAX CHANGES TO STIMULATE OIL AND GAS

The government is introducing major royalty and tax changes to stimulate

increased exploration and development activity and create new jobs in the

oil and gas industry.



Changes include new lower royalty and tax structures, a new system of

volume incentives, and a reduced Corporation Capital Tax Surcharge rate.

Other components are a new royalty/tax regime for gas produced from new oil

wells and changes that benefit horizontal and deep oil wells. The changes

apply to production from new wells and projects effective October 1st, 2002.



"New investment by the oil and gas industry will generate new jobs for

Saskatchewan people, many of which will be in rural Saskatchewan," Premier

Lorne Calvert said.



The changes are expected to attract $4.3 billion in investment, create

40,000 person years of new employment, and generate an additional $650

million in gross revenue for the province over a 10-year period



"We are committed to fiscal changes which will grow the Saskatchewan

economy and make us the most competitive jurisdiction in Canada," Calvert

said.



Saskatchewan is Canada's second largest oil producer and third largest gas

producer.

Last year the oil and gas industry invested $1.4 billion in new activity,

accounted for 22,000 direct and indirect jobs and generated $684 million in

revenues for the province. These revenues help fund health, education and

other valuable social programs.



-30-



For more information, contact:



Bob Ellis

Industry and Resources

Regina

Phone: (306) 787-1691

News Archives

[ddj]

These are just a few of the things Sask id doing to invite investor money in, They also have initiatives on Coal Gas which I think are very inviting to investors to say the least..I am not syaing anyone or all will go here, Just pointing out from an investor standpoint we are losing our AB Advantage if this review should go through.