'Big Oil' can't threat

[First Lady]

Originally Posted by Reggie Dunlop

See, here's the thing. When exactly has the Alberta government(s) not catered to the oil industry? You really think they're a bunch of dummies?

We are not promoting "catering" to any industry. We are however concerned about actions that may effect Albertans.

I figure the Alberta Alliance Party (or whatever the hell it calls itself by next year) ought to go back to their traditional voodoo doll, namely Ottawa, who keeps sending homosexuals and French-speaking people out west to stir up the good bible-fearin' Albertans.

I see you have earned that pointed little hat you wear.

The Alberta Alliance Party was formed in 2004, it is a provincial party that has nothing to do with Ottawa and has gone by no other name.

I suspect you are confusing us with the now defunct Canadian Alliance.
Two completely different parties, on two different levels.

[First Lady]

Originally Posted by SeeGeeWhy

Here is a question. Who deserves the money? The corporations and their investors and employees? The federal government? The provincial government? As far as I am concerned, the corporations are the only people actually going out and getting the stuff for us to profit off of - to sit there and say that the people of the province deserve more is a load of crap... what the hell are we going to do with it just sitting in the ground?

Exactly. Many do not realize they benefit indirectly from the corporations developing in our province.

Have any of you ever heard of the experiment where one person is given $10 and has a choice to offer any whole dollar amount to a second person? Anywhere from 1 - 10 dollars. The second person can either accept the money or refuse it. Most people on the accepting end have a poisoned view that anything less than $5 is not 'fair' and therefore they will not accept the money. The ideal solution to this is not what you think it would be, and it underlines the fact that the concept of "fair" is not true. The best offer the person can make is $1 because they get to keep $9. The $1 that the other person accepts is still greater than the $0 they had before. To sit there and hold out because you don't think the offer is fair will get you nowhere in life.

Yes, it is a good analogy. It should be noted that no one is saying there should not be any change to the Royalty regime; just that the current proposal is too much, too quickly.

The solution is somewhere in the middle.

Invest, work for the company, or start your own company and get after it yourself if you want to reap the benefits. Either that, or kick those who do operate out of the province if you don't want them here 'ruining' our environment. Urge the province to stop selling mineral rights and develop the resource as the province if you want more of the profit. Oh, what is that? The government couldn't punch their way out of a wet paper bag, so how could they expect to run a well managed oil and gas company that spanned all the assets in Alberta? That's what I thought.

The more money that gets into government hands, the more that gets absolutely wasted. And specifically speaking, the more money that Mr. Stelmach puts into his pocket, the easier it will be for the likes of Ontario and a few other provinces to hold out their hand saying "NOT FAIR". We'll have no choice but to share because we got the tax revenue from being the exact same kind of crybaby. Is that what you want?

So true.... thank you for spelling it out so clearly.

I am sick of this argument. People are missing the point fighting over scraps. More money in the system will not solve our problems.

Yup, it is badly mismanaged by the PC's now. How much more do you want to give them?

[First Lady]

I just wanted to add a note about the political comments directed at me. I wonder what people expect of their elected representatives. Have you ever called your MLA? Did they call you back? Are they accessible? Do you think they would defend you in the Legislature?

The Alliance Party published a response to the Royalty review. We have had many compliments on it being well thought out and balanced. A concerned Albertan approached us with the idea of the rally. They also approached all the other registered parties.

We responded and got on board; not for political reasons or grandstanding.... come on we only have one MLA; how much influence do you think we have in the Legislature?

We got on board because this issue fits with our policies we have had in place for a long time. We believe in supporting entrepeneurs and business in Albertan. We believe in less tax and smaller government. We believe in leaving money in the hands of Albertans or a close as possible, without it being "filtered" through the government.

Many of you know I joined this board when Fotze made fun of my name during the byelection. It struck me then, many of you did not believe it was actually me when I signed up. Why was that? Because the general public is so used to thinking that politicians (or wanna be's) are inaccessible. That needs to change. After all we elect them to represent us; all of us.

[llama64]

Originally Posted by First Lady

Yes, it is a good analogy. It should be noted that no one is saying there should not be any change to the Royalty regime; just that the current proposal is too much, too quickly.

The solution is somewhere in the middle.

And that's exactly what I think we will see from Stelmach. There is too much support for the royalty increase to do nothing and too much outcry against it to implement the reviews recommendations.

The royalties will be going up and that is a much needed increase (think past this year to 20 years down the road). But they won't be going up by the overly large figure that the review specifies.

Oil & Gas is a growth industry (in that the price will only go up on average). Unless all of humanity switches energy sources in the next 20 years, Alberta's economy will remain strong. Ensuring that a decent slice of that industry's profits go to public use is something most Albertan's I know agree with.

[Slava]

Originally Posted by First Lady

Many of you know I joined this board when Fotze made fun of my name during the byelection. It struck me then, many of you did not believe it was actually me when I signed up. Why was that? Because the general public is so used to thinking that politicians (or wanna be's) are inaccessible. That needs to change. After all we elect them to represent us; all of us.

Ok, so who are you then? (I must have missed that thread).

I would still like to see a response to the auditor generals point where he says that the royalties could've been increased a few years ago and never were. He states that this would be without harming the industry at all, and would put us in the bottom half around the globe.

The Auditor General is certainly not suggesting this for political reasons and did this after a review of the facts.

[metal_geek]

One way of looking at it leaves us with a view that says without the oil companys there is no one to make the investment and spend the money for the oil. There is also the view that without the oil in the ground there is nothing for the oil companies to profit from.

There is only one thing for certian and that is there is a limited ammount of oil and gas in the ground for them to take. The "Alberta Advantage" is a term thrown around by all kinds of people to mean different things when it suits the need. In this case The "Alberta advatage" means alberta, most importantly has OIL, and secondly a favourable set of policies that make producing it profitable for everyone involved.

Now we have a set of changing circumstances that might change the policy part of the alberta advantage.... It's NOT gonna change oil in the ground part. So we have a choice as Albertans, Do we keep the tax costs for the oil companies lower to encourage them to generate us a lower profit today, or raise thier tax cost encouraging them to leave it in the ground and generate less today more tomorrow?

Personally, I don't think leaving it in the ground is a bad option. It's not like money in the bank, in that its going to "lose" value based on inflation, or an item thats gonna deperciate in value... it's in appreciating asset and is only gonna become more and more valuable.

Why are the oil companys here in the first place... I think we can aggree that it's because it is the most profitable place they can do business in, I think the oil companies have said as much when they say "If royalties go up, we are gonna put our money in more profitable places". So that reads to me as we have an apperciating asset thats valued more by the oil companies compared to all the other places in the world, and Oil companies can more easily "FLIP" the oil for a tidy profit. If we raise the cost... they'll flip someone elses.. but in the end no matter what the cost of Albertas oil, they'll be back to Flip it when it becomes profitable, even more profitable for the people of Alberta and Canada.

There are so many example of this even in the Oil and Gas industry, Newfoundlands and Nova Scotia Oil, that was too unprofitable in the 70 and 80's is now a perfect place to "Flip" some oil. Texas and the contental US has exahusted a large part of their reserve when they could flip it for a quick profit, they did good when offshore Canadian oil just didn't have the same "Advantage" and now look where they are... Where are the oil companies?.. In some other location, back only when it becomes more porfitable to scrape the bottom of the abandoned wells then to produce elsewhere.

The basic fact remains, and there is no politial spin to it. The Longer the oil is in the ground, the more valueable it is. As long as we have oil the companies are at our mercy not the other way around.

People can spew all kinda of things about dollars today, and taxes, and jobs and tax revenue and inflation and , and and... All of that stuff we be there tomorrow at even better values for alberta.

I've often wondered, without the NEP in the 80's, if the boom has of continued at the pace it was, How much of Alberta's Oil and gas reserves would have been removed then at now and MUCH MUCH MUCH less revenue for the people of alberta, and how much would we have left to profit from now. I'd be willing to bet, a Huge part of our success today, was the "Mistakes" make 30 years ago... So the "HUGE" mistake we make today, might be our childrens "Blessing" 15 years from now...
________
Lovely Wendie99

[Reggie Dunlop]

Originally Posted by First Lady

The Alberta Alliance Party was formed in 2004, it is a provincial party that has nothing to do with Ottawa and has gone by no other name.

I suspect you are confusing us with the now defunct Canadian Alliance.
Two completely different parties, on two different levels.

Same fringe of parochial pariahs building sod-roof castles in the sky, whom haven't been relevant since Bible Bill thumped his last tub.

They certainly don't represent the Alberta of today.

[JiriHrdina]

With regards to the OP - its worth noting that some media oulets in Canada have actually made a specific point NOT to use the word threat in their reporting of this story.

[flamesfever]

Just a few points that come to mind:

1. The public are tremendously ignorant in how the oil and gas industry works. I blame the oil and gas companies who have always done a poor job of explaining how the industry works to the public.

2. The stroke of a politician's pen has always been the biggest risk in the oil and gas business eg. the NEP.

3. Investment funds flow where they make the best return, and any change in the industry economics will change the flow.

4. I'm told the recent royalty review proposal does not take into account the huge amount of money that flows into the government coffers from land sales, it has low balled industry costs, penalizes high producing wells, and comes into effect at lower commodity prices as well as higher prices. Also, why would you have someone in forestry conduct the review?

5. The companies who produce mostly natural gas, especially the smaller ones, are hurting from low gas prices. It costs more to replace the gas than they are presently getting. If anything they should getting incentives and royalty relief at this point in time. There should definately be a difference in how oil and gas are treated for royalty purposes.

6. With the continuous 5 year boom, the industry costs have ratcheted up enormously. This includes land prices, geophysical, geological, drilling, completion, pipeline, administrative, etc.

7. For those companies that have committed large sums of money for programs that won't produce for years, based on the present royalty regime, it would be a blatant breach of contract to change the royalty rate at this time.

8. By raising Alberta's take, you are indirectly eroding the tax base of the Federal Government. Remember the fight between Lougheed and Trudeau which resulted in the NEP which was designed by a young recent University graduate who did his Phd on socialism in some African country. I wouldn't be surprised if Harper tells Ed to lay off raising the provincial royalties.

9. I believe there is some room to raise royalties in some cases, however that if the situation is not handled carefully, and with the full input of the oil and gas industry, I think the net result will be reduced house prices, reduced employment, investment money leaving the province, and a much poorer future for Albertans.

10. The whole process should not be allowed to drag on, as things will only get worse the longer the situation remains unresolved.

just my opinion

[puckhog]

Originally Posted by llama64

And that's exactly what I think we will see from Stelmach. There is too much support for the royalty increase to do nothing and too much outcry against it to implement the reviews recommendations.

The royalties will be going up and that is a much needed increase (think past this year to 20 years down the road). But they won't be going up by the overly large figure that the review specifies.

Oil & Gas is a growth industry (in that the price will only go up on average). Unless all of humanity switches energy sources in the next 20 years, Alberta's economy will remain strong. Ensuring that a decent slice of that industry's profits go to public use is something most Albertan's I know agree with.

I think you're right that most Albertans would agree with ensuring a fair amount goes to public services, including the "Big Oil" executives. I've pointed out before that none of the companies have made releases expressing outright opposition to raising royalties, most of them agree that there is room to increase them (see CAPP's website). The problem is that this specific proposal will not provide the best scenario for anyone - includinng those in and out of the industry. Finding the middle ground is necessary.

I would still like to see a response to the auditor generals point where he says that the royalties could've been increased a few years ago and never were. He states that this would be without harming the industry at all, and would put us in the bottom half around the globe.

The Auditor General is certainly not suggesting this for political reasons and did this after a review of the facts.

The problem is that the AG's report is looking back in time, and assumes that if royalties had been increased, the revenues generated in those years would remain consistent, which is very counter-intuitive - it would have definitely caused some marginal projects to not be completed. Putting that aside, however, his review doesn't help the current situation, because it makes very little sense not to consider the fact that things have changed in the past few years, especially the fact that costs have sky rocketed. I hope you can see that setting future policy based on suppositions about what could have happened in previous years is completely assinine. What is required is a forward-looking recommendation that will maximize the benefit to everyone. Crying over royalties that could have theoretically been collected a few years ago does not help - that money is gone, so everyone needs to forget about it.

[First Lady]

Originally Posted by Slava

Ok, so who are you then? (I must have missed that thread).

My name was Jane Greydanus (I am married now) and I ran in the Calgary Elbow byelecton. www.janegreydanus.com
I am on the provincial council of the Alberta Alliance Party; I am the CFO,

The point I was trying to illustrate was; how many other parties do you know have either their MLA's or board members available to the general public to speak freely about current issues?

I would still like to see a response to the auditor generals point where he says that the royalties could've been increased a few years ago and never were. He states that this would be without harming the industry at all, and would put us in the bottom half around the globe.

The Auditor General is certainly not suggesting this for political reasons and did this after a review of the facts.

I did respond to you on that......

http://forum.calgarypuck.com/showthr...49#post1016449

[flamesfever]

Just a few more comments:

1. The Western Canadian conventional oil and gas production has peaked, and the drilling prospects are becoming smaller and less economically feasible to pursue, especially for the large companies. Therefore, with time, I believe the intermediate and small companies will play an increasingly important role in maintaining the conventional reserves of oil and gas.

2. Apart from the heavy oil and tar sand areas, the Western Canadian basin is generally considered to be more of a gas than oil prone basin. As the price of gas has been bordering on replacement cost, increasing royalties will just exacerbate a problem that already exists for many intermediate and small companies, particularly those whose production is mostly gas.

[EddyBeers]

Originally Posted by SeeGeeWhy

I am sick of this argument. People are missing the point fighting over scraps. More money in the system will not solve our problems.

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....

[ddj]

I am glad to see that some have looked at this besides from a media stand point. I don't think you'll hear anyone say there's no room for improvement, but Bill Hunter continues to press the issue of implement the report fully. I would think before any of the review is implemented proper current data should be entered. If Alberta can produce the oil and gas for the amount alloted in this report why aren't we in the business. Then you would see billions of dollars, and why not ,Newfoundland is smart enough to buy in.

[EddyBeers]

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.

.

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....

[ddj]

[quote=EddyBeers;1028915]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.

[ddj]

[quote=ddj;1028917]

Originally Posted by EddyBeers

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.

How much of this is from the Oilsands which does not sell for the 80 plus dollars a bbl

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.

I would go to Sask. where they have implemented royalty breaks to bring in industry. Of course only if I was in it for the money

[EddyBeers]

[quote=ddj;1028922]

Originally Posted by ddj

I would go to Sask. where they have implemented royalty breaks to bring in industry. Of course only if I was in it for the money

I imagine that the Sask oil is easily accessible and operational...nevermind the fact that Sask has about 1.1 billion barrels of oil reserves, when Alberta has 1.6 billion barrels of Conventional Oil reserves and 173.5 billion barrels of reserves when tar sands are taken into account http://www.energy.gov.ab.ca/Oil/pdfs/AB_OilReserves.pdf

As even the Sask government says, Alberta has the only proven oil sands reserves.... http://www.eboardoftrade.com/files/M...ds_in_Sask.pdf

Even if one assumes that they find large quantities of oil sands material, it would take years, if not decades to get the capital infrastructure up and running, and it is more expensive to access their oil sands reserves..

But I suppose that 2.2 million barrel a day shortfall could be made up in Saskatchewan over the next 17 months, but then they would be out of oil....and still looking for those magic oil sands...

[EddyBeers]

Originally Posted by fotze

Oil, I think they can afford to give more. Gas, not at all.

I would agree with you on the gas part, the only thing I would say is that the downturn in the natural gas market is part of a natural market swing. These companies in the natural gas area are struggling right now without the royalty increase. However, a short term re-adjustment in the natural gas market with the long range result of a fairer royalty regime would be preferable in my mind. I certainly know that Gwyn Morgan was not pointing out the excessive amount of money they were making a few years ago when natural gas was at an all time high. They have to put in the system eventually, perhaps you grandfather the natural gas, but I would do the oil royalty right now..

[ddj]

[quote=EddyBeers;1028927]

Even if one assumes that they find large quantities of oil sands material, it would take years, if not decades to get the capital infrastructure up and running, and it is more expensive to access their oil sands reserves..




I would agree the Oilsands will take too long to develop. I don't think that anyone is going to shut in production here, but as the wells are more marginal here in AB we will lose out on our share of conventional oil and gas wells. This employs the majority who work in the oil and gas sector. The oilsand companies don't appear to be speaking out against this as much.