Oilpatch giant makes billion-dollar threat over Alberta royalties

[Flame On]

Originally Posted by Thunderball

Politically unstable as in the political whims of the province are not stable, and that they would be going from being pro-business laissez-faire (with already massive regulation) to an even more hands-on, punitive political jurisdiction. No one is talking juntas and coups here... but politicians playing economist means an unstable business environment. Period.

As for the rest of your argument... talk about a straw man argument. Yes, its all the evil oilpatch's fault for the increasing numbers of homeless... seeing as they are providing thousands of jobs for people who run the gamut of education from nothing to PhD for better than average pay? Homelessness is a societal malady, not an industrial one.

The primary reason this boom has devastated Alberta is due to political incompetence and a severe lack of foresight. Ralph Klein cut the hell out of the budget with the mentality that oil would never again breach $20/bbl. Something anyone who has even walked by a Hubbard curve would say is temporary, because supply is finite and prices will naturally increase... and they did over 5 fold from mid 1990s lows. Therefore, rather than building schools, hospitals, roads, LRT and encouraging TOD when the local economy was weak (and laborers NEEDED work) and putting less emphasis on debt reduction until the economics improved (then sitting back and paying off the debt)... they eliminated the debt (by slashing healthcare and education to the bone despite persistent population growth), and are now competing with private enterprise to catch up at a severe premium... so new developments, oil and gas projects (which are paying for all these overbudget improvements) and private construction are all progressing at a snail's pace. Condo towers and new communities are being delayed because there aren't enough crews. "Cause they're all in Fort MacMurray??" Sure, but what about the ring road, new CBE building, Rockyview expansion, Lougheed expansion, Children's Hospital, Glenmore Trail, etc.

Government projects decades overdue sucking up a ton of labor... and they are paying handsomely for it.

The result? Housing shortages and inflation.

Political whims of the time? What one adjustment being sought in 10 years is a massively unstable system! With a single political party who has NOT been dipping in and out! In fact one that's been shown to be turning a blind eye to the industry, to it's advantage. Give it a rest.
As for your comment about "the big bad oil company", it is exactly my point. Your camp (sorry to generalize) cherry picks the emotional arguments. When the vested groups don't want any change, they make sure to mention the knock on effect to small Ma and Pa towns and little operators. Awwww.
But going the other way, when it's mentioned that the oil & gas industry has been a large contributor to a lot of suffering indirectly it's: "oh yeah the big bad oil companies".

[Flame On]

Originally Posted by fotze

Of course the oil companies are going to exaggerate the direness of recommendatiosn, just like the other side is touting the billions of lost revenue that is being stolen out out pockets, but to suggest that a committee is totally independant is ridiculous.

Looking at Pedro van Meurs consulting company's resume you can see where he gets his cash. He works as a consultant for the government to get them more royalty money, then he leaves and goes to the next country. Ironic that this dutch guy's is based out of the bahamas likely to avoid paying taxes. He was hired to devise a system to get more royalty moneys.

http://www.vanmeurs.org/MainProjects.aspx

How much do you want to bet that he is recommending right now behind closed doors, that with all the conflict in the province about this issue that "the committee must re-visit the additional stakeholder input that has been recently recieved and come back with a supplementary report in 2 months" ensuring that his consultancy gets the $5000/day for another 2 months.

I have been on lots of committees for government projects such as this, where certain members are paid to be there. They are usually paid extremely well and they always proivide recommendations that draw out there employment.

So this consulting firm gets paid whether they recommend royalty increases or not?

[burn_this_city]

Obviously no matter what anyone says people like Flameon wont be convinced. I guess those old bumper stickers saying "Please just one more boom, I promise not to waste it" has been forgotten. International investors will pull large chunks of money out of this province if those royalties are introduced. There are already plenty of OS projects that are on the rocks due to spiralling material and labour costs.. Conventional upstream companies are already hurting.. I guess once the boom is over and the hard landing follows they will be the same people looking around for who to blame. I'm sick of this tin cup syndrome in canadian society, if you wanna make this country uncompetitive and unattractive to foreign investment keep up the good work. I just love the trudeauesque mantra. Ever wonder why he's considered the worst canadian of all time.?

[Flame On]

Originally Posted by burn_this_city

Obviously no matter what anyone says people like Flameon wont be convinced. I guess those old bumper stickers saying "Please just one more boom, I promise not to waste it" has been forgotten. International investors will pull large chunks of money out of this province if those royalties are introduced. There are already plenty of OS projects that are on the rocks due to spiralling material and labour costs.. Conventional upstream companies are already hurting.. I guess once the boom is over and the hard landing follows they will be the same people looking around for who to blame. I'm sick of this tin cup syndrome in canadian society, if you wanna make this country uncompetitive and unattractive to foreign investment keep up the good work. I just love the trudeauesque mantra. Ever wonder why he's considered the worst canadian of all time.?

Wrong I am listening. I'm obviously just no listening to the groups that you are. I don't know why it has to be all or nothing either. Can't they increase the royalties a sensible amount? But all I hear are threats coming from the industry.
Funny, Albertans are having money taken from them essentially. Can you imagine what the outcry would be if it was Ottawa taking it? But nooooo, because it's corporations that's ok.
Your idea of competativism (sorry for the word invention) seems to be "hands off my industry".

[Cowboy89]

Originally Posted by Flame On

Political whims of the time? What one adjustment being sought in 10 years is a massively unstable system! With a single political party who has NOT been dipping in and out! In fact one that's been shown to be turning a blind eye to the industry, to it's advantage. Give it a rest.
As for your comment about "the big bad oil company", it is exactly my point. Your camp (sorry to generalize) cherry picks the emotional arguments. When the vested groups don't want any change, they make sure to mention the knock on effect to small Ma and Pa towns and little operators. Awwww.
But going the other way, when it's mentioned that the oil & gas industry has been a large contributor to a lot of suffering indirectly it's: "oh yeah the big bad oil companies".

Oh yeah everybody's just suffering mercelessly at the hands of our evil capitalist oil company overlords. Give me a break. Between increased property prices, increased opportunity, and increased wages the common man has come out alright the past few years despite the inflation. It would be absurd to claim Alberta of 2002 was better off that Alberta of 2007. As for the homeless, how many of them are Calgarians that were indirectly put on the street by oil prosperity versus nomadic people from a multitude of cities in towns in Canada that migrate to wherever the gettings good for homeless people? Also look at the headline story in the paper the past few days. It seems that just improving efficiencies at the provincial government would recover the same amount of additional money anyway.

[Azure]

Homeless people?

Give me a break.

Freakin' drive-throughs are being shut down because of the labor shortage with all the kids going back to school in September. Burger King, McDonalds, Tim Hortons...all of these places would gladly train some of these homeless people....pay them 15 bucks an hour and give them a job.

So don't give me the crap about homeless people finding themselves in such a position because of the 'greedy oil companies.' If anything....they should relishing the opportunity at hand to work without any prior experience.

[burn_this_city]

Im not saying that any increase would be dire, but 20% is absurd.. Especially considering the way the oil market works.. I just want people to realize they are walking a very fine line that could result in a huge downturn. I'm all for fair compensation, but not at the cost of future investment. If you read that petition by the alberta alliance party, they discuss how the panel came about its recommendations and what jurisdictions they used for comparisons. Personally I dont think using national oil companies provide a fair comparison, particularily ones located in dictatorships or communist countries.

[kremb]

Originally Posted by burn_this_city

I guess those old bumper stickers saying "Please just one more boom, I promise not to waste it" has been forgotten. International investors will pull large chunks of money out of this province if those royalties are introduced.

Please tell me where they are going to go spend their billion dollars that is quickly turning into a billion pesos.

The first boom was killed by the price of oil plummeting back to earth, I assume because OPEC raised their output. The world cannot suddenly become flooded with cheap oil again. It isn't there.

The oil business has become a game of musical chairs. I don't want to be left sitting on the ground with the environmental disaster these companies WILL leave behind.

It's nice to see BIG oil over a barrel for a change. The only thing I hope is that the GOVT will be on gaurd with these guys. BIG oil aren't angels.

[Thunderball]

Originally Posted by kremb

Please tell me where they are going to go spend their billion dollars that is quickly turning into a billion pesos.

The first boom was killed by the price of oil plummeting back to earth, I assume because OPEC raised their output. The world cannot suddenly become flooded with cheap oil again. It isn't there.

The oil business has become a game of musical chairs. I don't want to be left sitting on the ground with the environmental disaster these companies WILL leave behind.

It's nice to see BIG oil over a barrel for a change. The only thing I hope is that the GOVT will be on gaurd with these guys. BIG oil aren't angels.

Neither are governments. Especially ones that have been riding royalty surpluses to overcome bad policy, and yet still throw around terms like "fair share."

Of course, you are aware that Alberta already possesses some of the most stringent and thorough environmental protection laws against the oilpatch on the planet right? You are also aware the three most environmentally damaging industries in Alberta are Coal, Forestry and Agriculture, right?

The main reason why ramping up the rates at this stage of the game is a bad idea is that the boom is essentially over. Operating costs have done this job. All this would accomplish is turn a soft landing into a hard one. There won't be these windfalls of lost revenue.

[kremb]

Originally Posted by Thunderball

The main reason why ramping up the rates at this stage of the game is a bad idea is that the boom is essentially over.

this just today on MSNBC

http://www.cnbc.com/id/15840232?video=540710330&play=1

I don't think this is going to play out like any boom we have seen before.

I think that's great Alberta has such high environmental standards. You can't sit there and tell me that full on production of the oils sands is going to be done in an environmentally friendly way.

Remember the game of musical chairs. Remember how panicked and borderline violent it can get near the end of the game?

[Thunderball]

Originally Posted by kremb

this just today on MSNBC

http://www.cnbc.com/id/15840232?video=540710330&play=1

I don't think this is going to play out like any boom we have seen before.

I think that's great Alberta has such high environmental standards. You can't sit there and tell me that full on production of the oils sands is going to be done in an environmentally friendly way.

Remember the game of musical chairs. Remember how panicked and borderline violent it can get near the end of the game?

This isn't a normal boom, I agree, but operating costs in Alberta are far more expensive than the other major producing areas. As well, the quality of crude in Alberta is not at the level that gets the $80/bbl, its more like $50. The big companies can make it up in volume, its the small and mid-size ones that concern me, and those ones add up to a lot of employment and contract hours.

I agree that its good that Alberta cares about the environment more than most producing regions. I just find it disheartening that people think they are the worst, simply because they are the most lucrative. Agriculture is really bad for the environment (especally pertaining to water use and pollution), but no one crusades against regulating and cleaning up that industry.

The Oilsands will be a mess. I agree. However, they have a list of regulations thicker than a technical manual that they have to adhere to, or pay major fines. Just ask Imperial the cost of cutting corners, re: Lynnview Ridge.

If it was up to me, the government would be more about enforcing the environmental regulations and having some teeth with air and water pollution, than beating their chests about a higher take with record surpluses rolling in.

[Azure]

Originally Posted by kremb

BIG oil aren't angels.

Neither is the government.

Unless of course you want more Ralph bucks.

A lot of good that did for provincial infastructure.

[Ford Prefect]

I know of one business sector that won't be saddened by a down turn in the oil and gas business ... small businesses who can't find tradesmen, skilled labour, even half decent unskilled labour, etc., because they've all headed to the patch. If there's a down turn in the patch then they'll be able to find the welders, electricians, labour, etc to enable them to run their small, independent businesses at a profitable level again. And I doubt first-time home buyers will be disappointed in a return to saner housing prices either. I'm undecided about who's right and who's wrong between the sides of the royalty issue. Personally, I don't trust either side. However, I think a down turn in the oil patch might be good for the overall economic health of the province for the reason's I've stated above. And I don't have much sympathy for a company like Encana that comes out with a schoolyard type response to the problem. Boo hoo, cut my profits and I'll take my ball and go home. Boo hoo. Go then. They guy in Olds who had to shut down his playground equipment manufacturing operation because he couldn't compete with the oil patch for welders will be ecstatic. At least, he will be if he's able to resurrect his company. For many small businesses it's too late.

[burn_this_city]

Originally Posted by Ford Prefect

I know of one business sector that won't be saddened by a down turn in the oil and gas business ... small businesses who can't find tradesmen, skilled labour, even half decent unskilled labour, etc., because they've all headed to the patch. If there's a down turn in the patch then they'll be able to find the welders, electricians, labour, etc to enable them to run their small, independent businesses at a profitable level again. And I doubt first-time home buyers will be disappointed in a return to saner housing prices either. I'm undecided about who's right and who's wrong between the sides of the royalty issue. Personally, I don't trust either side. However, I think a down turn in the oil patch might be good for the overall economic health of the province for the reason's I've stated above. And I don't have much sympathy for a company like Encana that comes out with a schoolyard type response to the problem. Boo hoo, cut my profits and I'll take my ball and go home. Boo hoo. Go then. They guy in Olds who have to shut down his playground equipment manufacturing operation because he couldn't compete with the oil patch for welders will be ecstatic. At least, he will be if he's able to resurrect his company. For many small businesses it's too late.

I don't see how hammering on one industry that is internationally competitive in favour of smaller less efficient ones would be of any benefit. These smaller companies shut they're doors because they offer poor wages and pathetic benefits.. Thats not big oil's fault, its tightwad business owners who like to ride within an inch of the labour laws to reap maximum profit. Boo hoo to them I say, Im happy that there are massive oil majors willing to bend over backward to compensate people appropriately. I'm sure theres plenty of tradespeople out there that would agree.. Why would anyone be satisfied with a $30/hr job in the city when you can make $55/hr up north and pay little to no cost of living. hmm $60k vs. $110k.. tough choice.. I agree with the housing market, but i think the slowdown will happen there regardless of what happens in the O&G sector..

[Ford Prefect]

Originally Posted by burn_this_city

I don't see how hammering on one industry that is internationally competitive in favour of smaller less efficient ones would be of any benefit. These smaller companies shut they're doors because they offer poor wages and pathetic benefits.. Thats not big oil's fault, its tightwad business owners who like to ride within an inch of the labour laws to reap maximum profit. Boo hoo to them I say, Im happy that there are massive oil majors willing to bend over backward to compensate people appropriately. I'm sure theres plenty of tradespeople out there that would agree.. Why would anyone be satisfied with a $30/hr job in the city when you can make $55/hr up north and pay little to no cost of living. hmm $60k vs. $110k.. tough choice.. I agree with the housing market, but i think the slowdown will happen there regardless of what happens in the O&G sector..

I think your portrayal of small business is unfair. Some are as your describe ... industrial revolution-like. In my view they're not the majority though. Many small busisses treat their employees like family. Small businesses also provide goods and services that others don't, particularly big oil, which makes them a needed component of society. It's a free country though, so we're each entitled to our own views obviously.

I like your avatar by the way ... that's one of my favourtie albums of all time.

[Azure]

Originally Posted by Ford Prefect

I know of one business sector that won't be saddened by a down turn in the oil and gas business ... small businesses who can't find tradesmen, skilled labour, even half decent unskilled labour, etc., because they've all headed to the patch.

That certainly is one positive aspect of a slow-down in the oil patch.

Not only there, but also in other fields....retail, public works....lots of other work that can't be done because people are going for the higher wages.

But also realize that Alberta is still growing....massively...and eventually not 'everyone' will head for the oil patch.

It will get better with time.

[Flame On]

There's retorhic on both sides for sure. It's also agreed that both parties are probably inflating their claims.
All I know is that I stand a better chance of the money going to a hospital or something, if it lays in the pockets of the Provincial government, than I do if it's in the hands of shareholder companies.

[Azure]

There already is money available to be put into the hospitals.

Lots of it.

[Flame On]

Originally Posted by Azure

There already is money available to be put into the hospitals.

Lots of it.

Seperate issue.

[Azure]

Originally Posted by Flame On

Seperate issue.

How so?

Give the government 2 billion more....whats to say they are going to put it into health care if the money is already available in the first place?

How is 2 billion going to change anything?