May 2015 Provincial Election Thread v2

[Resolute 14]

Oil and gas sector losing confidence in Alberta following Notley’s policy changes: survey

Gee, nobody ever saw that coming.

[Looch City]

Althought not surprising, the title of that article doesn't reflect the entire piece:

Green noted that when Alberta last reviewed its royalties in 2007, it also took a dive in the investor perception rankings. Alberta experienced reduced investment compared to British Columbia and Saskatchewan in that period, and he said there is a risk that could happen again.

[...]Of course, the primary reason for falling energy investment in Alberta is weak prices, not government policy. But Green claimed these policy changes could cloud Alberta’s outlook over the long term.

[...]Despite its weaker overall score in the survey this year, Alberta still ranked among the five most attractive jurisdictions that have large petroleum reserves. The others are Texas, the United Arab Emirates, Qatar and Kuwait.

[Kavvy]

Agree or disagree with Notley's objectives of implementing a climate change plan and reviewing the royalties, it should be very hard for anyone to say she hasn't approached it very well by heavily involving industry.

Industry is also showing they want a strong Alberta by standing fairly united with a government that has opposite ideology then they theoretically do.

If this truce between industry and government holds, the world will keep seeing a strong united Alberta which is a stable economy to invest in, aka Confidence will return.

[Resolute 14]

...meanwhile, the percentage of O&G execs who believe the government and the province's fiscal terms are impediments to investment has risen dramatically. Kind of flies right in the face of your argument, Kavvy.

[Ozy_Flame]

Just a caveat, the Fraser Institute, who conducted the survey, is a traditionally right-of-center, pro-free market and conservative think tank that has been described by outlets like Forbes and the New York Times as libertarian. I wonder if they asked the respondents what is the bigger issue - oil prices or provincial government uncertainty.

That same Fraser study also said this:

"Of 14 jurisdictions with large petroleum reserves, the five that rank as most attractive/least deterrent to investment are Texas, United Arab Emirates, Alberta, Qatar, and Kuwait."

[PeteMoss]

Originally Posted by Resolute 14

...meanwhile, the percentage of O&G execs who believe the government and the province's fiscal terms are impediments to investment has risen dramatically. Kind of flies right in the face of your argument, Kavvy.

Businesses - like most people - don't like unknowns. Once this review is done and the world doesn't end for these companies - everything will return to as it would be given the current economic environment for these companies.

[Kavvy]

Originally Posted by Resolute 14

...meanwhile, the percentage of O&G execs who believe the government and the province's fiscal terms are impediments to investment has risen dramatically. Kind of flies right in the face of your argument, Kavvy.

Sorry, I will assume you're right in that point.

I guess I sort of just meant she pulled off a brilliant maneuver getting suncor, shell, Canadian Oil Sands to support her plan.

One would expect that a climate change plan would have no support from oil companies, never-mind 3 of the big timer.

It's exciting we can show a united Alberta to the world (even if it may be a lie, it is good for us to do this).

Throw in the fact that industry is stating the the current royalty regime needs to be reviewed, I am fairly impressed with our premier. Who by the way I didn't vote for, and won't next election

[Frequitude]

Originally Posted by Kavvy

Sorry, I will assume you're right in that point.

I guess I sort of just meant she pulled off a brilliant maneuver getting suncor, shell, Canadian Oil Sands to support her plan.

One would expect that a climate change plan would have no support from oil companies, never-mind 3 of the big timer.

It's exciting we can show a united Alberta to the world (even if it may be a lie, it is good for us to do this).

Throw in the fact that industry is stating the the current royalty regime needs to be reviewed, I am fairly impressed with our premier. Who by the way I didn't vote for, and won't next election

The oil sands majors should love the deal. Yes, they will have higher carbon tax payments but in return they got:

1) The gun turned away from their heads and pointed directly at the coal industry. The biggest loser there is someone like Capital Power who has relatively new coal plants they expected to last long beyond 2030. Someone like Transalta on the other hand didn't really lose there because their plants would be at end of life anyways and need billions of dollar to refurbish. Very little stranded capital on their part. Heck, they'll probably just build brownfield cogens on top of their old coal plants to leverage the existing distribution infrastructure.

2) The 100 megatonne CO2 fence put around the oil sands is a fence they are already inside of. These companies aren't in massive growth modes, so this isn't that big of a deal. Instead it will give them a more measured control over the growth of the oil sands (i.e. labor and suppliers). The oil sands companies who really got screwed by this are the Petro China's of the world who mostly own a boatload of undeveloped leases.

[OMG!WTF!]

Originally Posted by Kavvy

Sorry, I will assume you're right in that point.

I guess I sort of just meant she pulled off a brilliant maneuver getting suncor, shell, Canadian Oil Sands to support her plan.

One would expect that a climate change plan would have no support from oil companies, never-mind 3 of the big timer.

By default she did create support in the big oil companies, I suspect it's not because they support a carbon tax. The cap on emissions does essentially eliminate smaller competitors. Growth is now capped and largely assigned to existing players who can adapt quickly. It's also a panprovincial plan that if adjusted in the future would effect everyone who votes, not just business. So there is some stability there. And the large companies are the ones who get the majority of the tax returned to them. As well the chances of getting a pipeline approved should theoretically be improved. In additions, some of the companies you've mentioned as well as the other supporters are the ones who have already developed alternative energy divisions. Shake that down to the new investors and the small developers, and you hear a different story. Typically those are the companies that make a big difference in our province.

[Zarley]

Originally Posted by PeteMoss

Businesses - like most people - don't like unknowns. Once this review is done and the world doesn't end for these companies - everything will return to as it would be given the current economic environment for these companies.

Actually, this will not occur because in addition to the royalty review which has stalled new oil & gas investment in Alberta and the carbon tax (which I'll agree rightly targets consumers rather than industry only), the government has already jacked corporate income tax by 20%. This is the single worst policy implemented by the NDP thus far and it is entirely ideological. There is no economic rationale for increasing the corporate rate; it provides only a short term increase in revenue as non-essential capital investment in future years will shift to provinces with more attractive tax regimes (BC, Ontario). Research has shown that corporate tax revenues to the government as a % of GDP tend to be immune to changes in corporate tax rates.

If the carbon tax plan was to be truly revenue neutral and offset be a decrease in corporate income tax, as has been successfully implemented in BC, I would be on board with the plan.

[Leeman4Gilmour]

Originally Posted by Frequitude

2) The 100 megatonne CO2 fence put around the oil sands is a fence they are already inside of. These companies aren't in massive growth modes, so this isn't that big of a deal. Instead it will give them a more measured control over the growth of the oil sands (i.e. labor and suppliers). The oil sands companies who really got screwed by this are the Petro China's of the world who mostly own a boatload of undeveloped leases.

On point number 2, I believe the current emissions for oilsands sits around 60 to 70 Mt. The 100 Mt cap allows almost 50% growth not accounting for always increasing improvements.

If I'm Petro China, using your example, a potential strategy may well be to accelerate development....get in while you can if you will.

[Frequitude]

Secret deal on Alberta’s oilsands emissions limits divides patch

A hard cap on oilsands emissions that became part of Alberta Premier Rachel Notley’s climate change plan was the product of secret negotiations between four top oilsands companies and four environmental organizations, the Financial Post has learned.

The companies agreed to the cap in exchange for the environmental groups backing down on opposition to oil export pipelines, but the deal left other players on the sidelines, and that has created a deep division in Canada’s oil and gas sector.

...

But leaders of competing companies, including Imperial Oil Ltd. chairman and CEO Rich Kruger, and MEG Energy Corp. president and CEO Bill McCaffrey, were not consulted and are reportedly outraged by the secret deal. The arrangement’s details and backers, other than the Pembina Institute, remain unknown, said senior industry sources.

...

Notley was only informed about the deal in the days leading to the climate change announcement. The rest of the industry was advised a day before.

Tempers flared when the four oilsands leaders briefed CAPP members last week.

[Tinordi]

CAPP was and still is a big barrier enact GHG policy in the province. It's no surprise they were cut out of the late-stage negotiations.

Love the framing of this article as well "secret deal." Implying it's illegitimate. When the actual policy was developed by a blue ribbon panel of experts representing all stakeholders.

But no! It's a secret backroom dealing that did it in!

Claudia Cattaneo's column should be renamed to "Dispatches from the Calgary-bubblewrap"

[IliketoPuck]

Call it whatever you want Tinordi. Not consulting other major players in the industry creates animosity and distrust, which may lead to investment decisions by those not included at the table that do not benefit Alberta.

It is disingenuous at best when CNRL, Suncor, Cenovus, and Shell come out in support of the new legislation, since they were the only ones at the negotiating table! (Of course they support it!)

What about Exxon, Cnooc, Harvest, COSL, Encana, Husky, etc. etc. Do they not also deserve a voice at the table given the billions of dollars they've invested in the province?

This just reeks of high school cliquey politics, and is an embarrassment.

[chemgear]

Ahhh so this is like Vichy France then.




(Let's Godwin this thread!)

[Tinordi]

Originally Posted by IliketoPuck

Call it whatever you want Tinordi. Not consulting other major players in the industry creates animosity and distrust, which may lead to investment decisions by those not included at the table that do not benefit Alberta.

It is disingenuous at best when CNRL, Suncor, Cenovus, and Shell come out in support of the new legislation, since they were the only ones at the negotiating table! (Of course they support it!)

What about Exxon, Cnooc, Harvest, COSL, Encana, Husky, etc. etc. Do they not also deserve a voice at the table given the billions of dollars they've invested in the province?

This just reeks of high school cliquey politics, and is an embarrassment.

It doesn't 'reek' of anything.

The Provincial Government wanted to implement new GHG regulations and they wanted a show among industry and NGOs that they supported these regulations. It brought them to the table and asked, what would you accept to publicly support this policy? The province then squared that with the climate change panel they put together. Et voila! Policy is made.

Had the province brought CAPP in they would have likely heard that CAPP didn't want these GHG regulations.

So what do you do? Do you not enact GHG policy because Imperial and EOG didn't want to enact GHG policy? Or do you narrow the circle among parties that wanted to see action and come up with something they could all support?

This is hardly a scandal or high-school clique politics. It's policy making at its most fundamental level. Tough decisions needed to be made after 15 years of tough decisions being avoided.

[PeteMoss]

Originally Posted by IliketoPuck

Call it whatever you want Tinordi. Not consulting other major players in the industry creates animosity and distrust, which may lead to investment decisions by those not included at the table that do not benefit Alberta.

It is disingenuous at best when CNRL, Suncor, Cenovus, and Shell come out in support of the new legislation, since they were the only ones at the negotiating table! (Of course they support it!)

What about Exxon, Cnooc, Harvest, COSL, Encana, Husky, etc. etc. Do they not also deserve a voice at the table given the billions of dollars they've invested in the province?

This just reeks of high school cliquey politics, and is an embarrassment.

They picked a sample of companies who invest in the market. You can't consult with everyone when you make a decision. I really doubt these other companies have wildly different perspectives than the four chosen.

[IliketoPuck]

If you read the article, it is abundantly clear that those companies not invited to the table are pissed.

I'm not saying you have to invite CAPP, that would be a disaster. But if you are ring fencing green house gasses, and Oil Sands is a big part of that, doesn't it make sense to invite all of the major oil sands players to the table?

These companies are looking out for their own interests first and foremost, and all compete with each other. Being invited to the table is an advantage for those included, and a slap in the face for those not.

[Flash Walken]

Originally Posted by IliketoPuck

If you read the article, it is abundantly clear that those companies not invited to the table are pissed.

I'm not saying you have to invite CAPP, that would be a disaster. But if you are ring fencing green house gasses, and Oil Sands is a big part of that, doesn't it make sense to invite all of the major oil sands players to the table?

These companies are looking out for their own interests first and foremost, and all compete with each other. Being invited to the table is an advantage for those included, and a slap in the face for those not.

This is one of the inevitabilities of life.

If you won't make a decision, a decision will invariably be made for you.

If these companies are pissed perhaps they should be looking at themselves on why they weren't involved in the process.

[PsYcNeT]

There are pretty glaring industry reasons why Encana, Husky (do not play well with others), Harvest (too small), etc. were not involved.

The only real headscratchers left out were Transcanada, Plains, Imperial (Exxon), and Pembina.