Alberta bailout for junior and mid-sized energy companies?

[tvp2003]

http://www.calgaryherald.com/Stelmac...289/story.html

The Alberta government will offer short-term financial help to junior and mid-sized energy companies to help them get through the economic downturn.

Details on the bailout weren't released in today's speech by Premier Ed Stelmach to the Calgary Chamber of Commerce lunch. Stelmach said the energy minister will consult with industry before further information is released.

Considering the source, I'm not sure if this quote passes the smell test IMO:

The province will draw on its emergency savings to fund programs and services to support "the most vulnerable." It will also continue to keep building infrastructure, while keeping a "close eye on spending."

[HotHotHeat]

You can almost hear the outrage in Ontario. Imagine the richest province in the country helping out the most profitable industry in the country, haha. Gotta love being hated.

[Thunderball]

Talk about a load of bull.

The only real incentive is to lower the royalties, and the only reason they're not doing that is optics. They don't want to officially reveal their ineptitude, nor do they want to upset the radical, "pitchfork waving" lunatic rural fringe or the "me-first socialists" that supported upping the rates and "sticking it to the man."

We want to encourage a stable and responsible level of production, not life-support to sustain inactivity.

[FLAMESRULE]

Yup. This just smacks of complete incompetence with the economics of Alberta in general. I hate Stelmach with a passion, and this is another fork in his voodoo doll. Another reason why farmers should not be Premiers. EVER.

Of course no details were released, it will take 6 - 12 months to figure things out...blah blah blah.

To be honest, and I work O+G, I dont want a bailout. Tough times do have a silver lining in that it makes the industries affected leaner and more efficient.

[Frequitude]

Originally Posted by Thunderball

Talk about a load of bull.

The only real incentive is to lower the royalties, and the only reason they're not doing that is optics. They don't want to officially reveal their ineptitude, nor do they want to upset the radical, "pitchfork waving" lunatic rural fringe or the "me-first socialists" that supported upping the rates and "sticking it to the man."

We want to encourage a stable and responsible level of production, not life-support to sustain inactivity.

Hit the nail on the head right there. I hope this notion comes up in the media. Does Stelmach think we're stupid?

[Thunderball]

Originally Posted by FLAMESRULE

Yup. This just smacks of complete incompetence with the economics of Alberta in general. I hate Stelmach with a passion, and this is another fork in his voodoo doll. Another reason why farmers should not be Premiers. EVER.

Of course no details were released, it will take 6 - 12 months to figure things out...blah blah blah.

To be honest, and I work O+G, I dont want a bailout. Tough times do have a silver lining in that it makes the industries affected leaner and more effecient.

Agreed. Bailouts only reward inefficiency, and tend to bite the recipients in the ass when things improve. Allowing a bailout now only encourages a carbon tax/NEP 2.0 later on. The government has all the ammo they'd ever need, "we helped you when you were hurting, and now you cry when you're making record profits again... well, now we need something in return..."

A stable, business-friendly environment with low taxes is the best way for the AB Government to help the Oilpatch weather the storm and keep most of its people gainfully employed.

[FLAMESRULE]

Forgot to mention this is probably a knee jerk reaction to BC lowering there royalties as well. Nothing like a bit of competition from your neighbours to show you how to do it...

http://www.calgaryherald.com/ante+wi...708/story.html

[Thunderball]

Originally Posted by Frequitude

Hit the nail on the head right there. I hope this notion comes up in the media. Does Stelmach think we're stupid?

I would love to see the Porky Pig type speech delivery if someone point blank accused Stelmach of covering his ass in the midst of a recession rather than simply admit things have changed and their plan no longer makes sense.

He doesn't think we're stupid, he knows it. After all, we voted for him.

[GirlySports]

Originally Posted by FLAMESRULE

Yup. This just smacks of complete incompetence with the economics of Alberta in general. I hate Stelmach with a passion, and this is another fork in his voodoo doll. Another reason why farmers should not be Premiers. EVER.

Of course no details were released, it will take 6 - 12 months to figure things out...blah blah blah.

To be honest, and I work O+G, I dont want a bailout. Tough times do have a silver lining in that it makes the industries affected leaner and more efficient.

Grrr so people like me have lost their jobs cause these companies are imcompetant and now they will get a bailout to continue to be incompetant? You're right, they will never have to be efficient.

[First Lady]

Originally Posted by Thunderball

Agreed. Bailouts only reward inefficiency, and tend to bite the recipients in the ass when things improve. Allowing a bailout now only encourages a carbon tax/NEP 2.0 later on. The government has all the ammo they'd ever need, "we helped you when you were hurting, and now you cry when you're making record profits again... well, now we need something in return..."

A stable, business-friendly environment with low taxes is the best way for the AB Government to help the Oilpatch weather the storm and keep most of its people gainfully employed.

They just don't get it, there is no hammer big enough to hit them over the head with..... They say they are talking to the industry and listening....I call BS on that....

Excellent column this weekend by Dave Yager... here is an excerpt:

Things are no better in Edmonton. On Jan. 1, and despite the advice and protests of every oil industry manager and investment analyst, Premier Ed Stelmach increased oil and gas royalties. After clobbering his province's most important industry, in his public pre-budget advice Stelmach actually had the audacity to ask Ottawa to ensure Alberta got its "fair share" of federal largesse. Alberta's oil industry and support economy will be devastated in 2009 if nothing changes. Yet stubborn Ed won't even admit he's part of the problem.

The regulatory and red tape onslaught from both governments also destroys jobs. The incomprehensibly long and expensive hearing process into the Mackenzie Valley pipeline plodded right through the recent boom. If federal politicians really cared about economic stimulus, why aren't we building that pipeline right now? A joint federal-provincial environmental panel just stopped EnCana's plans to drill 1,300 gas wells on the Suffield block, allowing Alberta Wilderness Association vice-president Cliff Wallis to proudly declare, "There's some good recommendations that will make it impossible . . . for EnCana to proceed."

Thanks Cliff. One assumes unemployed roughnecks can eat Suffield's kangaroo rats and rare songbirds now that their survival is assured.
The oil business has said for years that if governments just leave it alone, it will roll with the punches of volatile commodity prices. But our governments cannot control themselves when it comes to changing tax policies, increasing royalties, and creating an expensive and tangled mishmash of environmental protection policies and regulatory approval processes. Each is an employment killer created by politicians who purport to care about jobs for ordinary Canadians.

It is impossible not to be angry and cynical.

http://www.calgaryherald.com/Technol...286/story.html

[FLAMESRULE]

^ That article sounds like a stereotypical red-necked Albertan. The environment MUST be protected and its both government, citizens, and industries job to do that. I have no problem with the government saying that there are certain areas of the province that you simply can not drill in. Take a look at ANWR in Alaska.

The Mackenzie Pipeline is an ENORMOUS project. Its not something you can push through in a matter of a couple weeks, or months. Its hard enough dealing with landowners and indians on getting a single MSL let alone thousands of kms of big dia. pipe.

The notion of having a multi-jurisdiction accord on regulatory (eg. ERCB, NEB, AEP, etc.) is a fairly tale. I really dont think we'd ever get to that point, but it would be nice.

The fact is that Stelmach royally (pardon the pun) screwed up the royalty framework in AB and that is what the issue is. I really do think that AB was in for some serious pain in 2009 anyways without the massive drop in oil prices. That just compounds the problem.

[Bobblehead]

Originally Posted by First Lady

They just don't get it, there is no hammer big enough to hit them over the head with..... They say they are talking to the industry and listening....I call BS on that....

Excellent column this weekend by Dave Yager... here is an excerpt:

Maybe Ed is just making it so bad in AB so that AB can get its fair share of Federal money, and then, with the money in pocket, he'll restore the royalty rates and yell "TA DA" and he'll be a hero, with big parades and people lining the streets and cheering. Encana will have the new Bow building renamed Stelmach Centre; Edmonton will announce that it was named after the premier and change the sign to Ed-monton, city of Stelmach.

That's probably what Ed is thinking, that sly old hound dog.

[First Lady]

Originally Posted by FLAMESRULE

^ That article sounds like a stereotypical red-necked Albertan. The environment MUST be protected and its both government, citizens, and industries job to do that. I have no problem with the government saying that there are certain areas of the province that you simply can not drill in. Take a look at ANWR in Alaska.

No question, there needs to be balance.

The Mackenzie Pipeline is an ENORMOUS project. Its not something you can push through in a matter of a couple weeks, or months. Its hard enough dealing with landowners and indians on getting a single MSL let alone thousands of kms of big dia. pipe.

This is year 38 or is it 39 of review and assessment. Companies have sunk billions of dollars into exploration with the "faint hope" it will go ahead.

The fact is that Stelmach royally (pardon the pun) screwed up the royalty framework in AB and that is what the issue is. I really do think that AB was in for some serious pain in 2009 anyways without the massive drop in oil prices. That just compounds the problem.

The industry was already on down swing in 2006-07 the PC's administered 3 blows to the O & G sector. The royalties were just the last one and the one that garnered the most publicity.

[vanisleflamesfan]

YES!!! Bail 'em out I say! Bail 'em ALL out! In fact, I want to find out if I can send my income tax cheque directly to an oil company this year!!
/green.

Is this actually an issue that people on both sides of the poltical spectrum can agree on?

[Shazam]

This is so awesome. I wonder if our company is eligible for these funds. Let me tell you, I won't feel a shred of guilt sucking from the government teat. Ha ha! Finally, my incompetence has paid off!

[flamesfever]

I think it's time for the provincial Conservatives to have a leadership review before things get worse.

I don't know whether it's possible for the present leadership to restore the confidence necessary to turn things around. There have been too many changes without addressing the real issue i.e. the new royalty regime and it's affect on the cash flow of small to medium oil and gas companies.

[Barnes]

Originally Posted by vanisleflamesfan

................

Is this actually an issue that people on both sides of the poltical spectrum can agree on?

Yup.

[First Lady]

Well, here is one oppositions view....

February 6, 2009

Wildrose Alliance says Proposed Junior Energy Incentive
is no Incentive at all.

For Immediate Release

Wildrose Alliance Leader Paul Hinman reiterates his call for the Stelmach government to cancel the New Royalty Framework (NRF) outright. "Yesterday's announcement of a tax incentive for junior producers will not encourage more investment", he says. "They are not making money now due to higher royalties and lower oil and gas prices. Lower taxes on no income is the same as high taxes on no income: 0!"

Hinman points out that this marks the 8th change to the initial proposed Royalty Program by this government. Further, the Competitiveness Study the government is just beginning promises to bring further changes to the current Royalty Framework which just went into effect as of January 1st. "However, Minister Knight states there will not be changes to the penalizing Royalty Framework. And lest we not forget, we currently have two Royalty systems running in tandem thanks to one of their latest proposals."


"There can be no confidence by those making multi-year investments in this Province of any stability when changes occur bi-monthly. The change itself discourages investment because it is unknown what or when the next change will be, positive or negative." The Province, Hinman says, has foregone billions in land sale revenues already. Yesterday, the Canadian Energy Research Institute announced that oil sands investment will decline by $97 to $241 billion over the next 10 years, which equates to about $30,000 to $73,000 for every Albertan! If re-gained, it is a non-taxpayer funded stimulus program that dwarfs the Federal Government stimulus programs a few times over!


The solution to getting Alberta back up and running is to eliminate the current Royalty Framework and provide capital cost allowances on energy investment. These simple measures will increase drilling activity and create jobs and income across the Province.

"This latest gamble by Premier Stelmach shows how out of touch his government is with the Alberta economy," Hinman says. "There is no income being generated by the energy sector and this proposal won’t change investment levels in Alberta. The higher Royalties being paid are damaging investment and sending dollars out of Province."


Hinman points out that B.C. has figured this out by providing royalty relief on wells to encourage investment. "The only stability Premier Stelmach provides is instability. He should apologize for his mismanagement and costing Albertans their jobs."

The Wildrose Alliance Party is the only party that has opposed the New Royalty Framework from the beginning. The oil and gas sector provides strong support to Albertans through job creation, investment, and royalty income. The sector should be encouraged to further invest in the Province both upstream and downstream.

FOR MORE INFORMATION:
Paul Hinman
Wildrose Alliance leader
Phone: 403 393-2003

info@wildrosealliance.ca

[Bobblehead]

Well, if "oil sands investment will decline by $97 ..." then we can probably pass a hat and come up with the $100 we're going to be short.

[tvp2003]

Announcement coming this afternoon: http://www.calgaryherald.com/Technol...078/story.html