Oilpatch giant makes billion-dollar threat over Alberta royalties

[Flame On]

Originally Posted by Azure

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?

Well none can gurantee that it will be seen again and looking at Fotze's idea i like that.
What I can say is that you can guarantee it won't be going there (for example) if it's in the pockets of shareholders.

[RougeUnderoos]

Originally Posted by Azure

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?

You really seem to be driving home the whole "how is 2 billion going to change anything?" idea. Can you, umm, explain that to me? It's pretty clear to me why the province (us, essentially) would want a bigger piece of the pie.

[Azure]

Originally Posted by Flame On

Well none can gurantee that it will be seen again and looking at Fotze's idea i like that.
What I can say is that you can guarantee it won't be going there (for example) if it's in the pockets of shareholders.

Why is it a problem of the share-holders get it?

its their company....they invested at the right time....therefore they have the right to get 'their' money.

Fotze has a good idea....but I doubt something like that would happen.

[Reaper]

Originally Posted by Thunderball

As well, the quality of crude in Alberta is not at the level that gets the $80/bbl, its more like $50.

This one of the things that so many people don't realize and it makes me mental. We're not pulling West Texas Crude out of the sand up north. West Texas Crude is the oil that fetches $80 a barrel. Edmonton Sweet is what we typically get in Alberta and it is around $50 a barrel yet people think we have this MASSIVE stake in the oil game. It's big but the world ain't going to come begging.

[Eagle Eye]

Looked at some of the economics from different sources regarding the royalty rate changes. Basically if you take 2006 activity and change the regime the province would indeed recieve 1.9 Billion in extra revenue (that is if drilling were the same). But a closer look reveals that the more mariginal projects (at the current regime) would be dropped and it would make other projects that made sense ecomnically last year marginal, if royalties were changed. Basically the government would not see any of that new revenue.

These companies invest billions of dollars to produce Albertas resources, there has to be some incentive to make money or they will literally go somewhere else.

[burn_this_city]

Originally Posted by Ford Prefect

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.

I agree with you there.. I did take the extreme approach to get my point across.. I'd just hate to see the high paying jobs dry up in favour of lower paying positions.. Just yesterday I read that 87% of canadians feel they're losing the battle against the cost of living.. I believe a good chunk of the other 13% is people like myself living in alberta enjoying the benefits of this boom. Basically lets just let the good times roll, we could end up with less of the pie over time by trying to take a bigger piece now.

On a side note: Thanks for the avatar compliment, Wish you were here is my favorite album of all time.. I need to play around with it pic a bit to get the clarity better.. Right now its just not doing it justice..

[Bring_Back_Shantz]

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 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.

Are those mom and pop type businesses going to be able to offer the kind of quality of life that a company the size of EnCana can offer it's employees or contractors?

I'm gonna say no, becasue if they could then they wouldn't be losing employees to the patch.

So are you actually advocating these changes to the royalty regime becaue you think it will be beneficial to move people from a highly active, lucrative and well paying sector, into a number of smaller, less well paying sectors?

How will helping that dude with the small company, help the 10 people who are taking a pay cut to go work for him? And how will the reduction in earnings of 10 employees help the overall economic health of the province?

How is the playground guy saying the oilpatch can bugger off so he can pay workers less, (removing income tax revenue from the provinical coffers while he's at it), any different than oil companies complaining about in increase in royalties?

Why do you think that mom and pop playground equipment factory, is any more important than mom and pop pipeline contractor? Or Mom and pop oilfield haulers, or any other number of small oil and gas related activities, that will be impacted by this?

Any movement of workers from one industry to another because of a company removing capital, is not going to benefit the province, because as I said before, there's a reason those other industries can't attract employees, and it's because they do not compensate employees as well. If they did, then why would any welder go lay in the mud in Ft. McMurray, when he could weld playground equipment in nice warm shop in Stettler?

What you've said is another stellar example of how most people don't understand what these changes will mean, and how they fail to understand that the economic impact is not as simple as A + B - C = everything stays the same.

[Ford Prefect]

Originally Posted by Bring_Back_Shantz

So are you actually advocating these changes to the royalty regime becaue you think it will be beneficial to move people from a highly active, lucrative and well paying sector, into a number of smaller, less well paying sectors?

I didn't say what my opinion is one way or the other about the royalty issue. Don't put words in my mouth. What I said is that I don't trust either side in this debate, big oil or government, and I therefore don't take either side's viewpoint at face value. I don't know enough to say which side is right.

What I did say was that a down turn in the oil patch will benefit small business. Period. So at least there would be some benefit in that sector. My attack on oil companies was limited to Encana, for what I thought was a childish reponse on their behalf. Whether Encana is right or wrong regarding the royalties I don't know. It was their childish response I took issue with.

Originally Posted by Bring_Back_Shantz

What you've said is another stellar example of how most people don't understand what these changes will mean, and how they fail to understand that the economic impact is not as simple as A + B - C = everything stays the same.

You're right, as I have already acknowledged, I don't fully understand the situation. I am, however, old enough to know that both big oil and government are going to spin things there own way though, and I'm not going to swallow the kool-aid from either side without giving some critical thought to the matter. And I don't think that the gains for small business that could materialize from the fallout of a down turn in the oil patch will offset all the losses to the provincial economy. They will in part though, and for those in that sector it will be good news. That's really all I was saying.

I don't get the defensiveness you and some others have on this issue, on either side of the debate. As far as I'm concerned, both sides are out to screw the taxpayer ... the government and big oil companies. And please don't tell me that big oil really gives a damn about us peons. That they're willing to pay big salaries and offer great benefits only tells me they can easily afford to without compromising their bottom line. But Mother Theresa they're not. And neither are the inept, money grabbing leeches we call politicians.

[Flame On]

Originally Posted by Azure

Why is it a problem of the share-holders get it?

its their company....they invested at the right time....therefore they have the right to get 'their' money.

Fotze has a good idea....but I doubt something like that would happen.

It's their company yes. But the resources they're profiting from are Albertans at large. The profits are not big enough for the rest of Albertans according to the Auditor General and others.
Who said anything about problems?

[Bring_Back_Shantz]

Originally Posted by Ford Prefect

I didn't say what my opinion is one way or the other about the royalty issue. Don't put words in my mouth. What I said is that I don't trust either side in this debate, big oil or government, and I therefore don't take either side's viewpoint at face value. I don't know enough to say which side is right.

What I did say was that a down turn in the oil patch will benefit small business. Period. So at least there would be some benefit in that sector. My attack on oil companies was limited to Encana, for what I thought was a childish reponse on their behalf. Whether Encana is right or wrong regarding the royalties I don't know. It was their childish response I took issue with.




You're right, as I have already acknowledged, I don't fully understand the situation. I am, however, old enough to know that both big oil and government are going to spin things there own way though, and I'm not going to swallow the kool-aid from either side without giving some critical thought to the matter. And I don't think that the gains for small business that could materialize from the fallout of a down turn in the oil patch will offset all the losses to the provincial economy. They will in part though, and for those in that sector it will be good news. That's really all I was saying.

I don't get the defensiveness you and some others have on this issue, on either side of the debate. As far as I'm concerned, both sides are out to screw the taxpayer ... the government and big oil companies. And please don't tell me that big oil really gives a damn about us peons. That they're willing to pay big salaries and offer great benefits only tells me they can easily afford to without compromising their bottom line. But Mother Theresa they're not. And neither are the inept, money grabbing leeches we call politicians.

First off, I'm not sure why you think me asking you if you were advocating something, is putting words in your mouth, but that's kind of irrelvant to the debat at hand, however it doesn't bode well for your "I don't get the defensiveness" comment, as you seem to be pretty defensive yourself.

But I digress. The defensiveness that people on the oil and gas side of the debate comes from the fact that people like you throw out statements like the one you made about the slowdown in oil and gas benefitting small businesses, without mentioning the fact that you recognise that this still means an overall downturn to the provincial economy (at least not untill you're called on it).

Finally, EnCana's "Childish response" is about as far from childish as can be. What EnCana was trying to do was make the point that yes this extra $2 billion that Eddie is drooling over is a good thing for the province, but it does come with some pretty major consequences, specifically companies like EnCana having to move their capital budgets out of the province to places where they can be more profitable.

Would it be childish for a hockey player to sign a contract for the same money in a state/province where the income tax was 10% less, or would it be a good business decision? And would it be childish for him to tell the other team that if they give him 10% more it would offset that loss to him?

[Azure]

Originally Posted by Flame On

It's their company yes. But the resources they're profiting from are Albertans at large. The profits are not big enough for the rest of Albertans according to the Auditor General and others.
Who said anything about problems?

Right.

I should also ask for my 'share' of the money generated by the 100's of windmills around here.

My wind too.

You seem to think its a problem if Encana maximizes their profit.

Its a free market economy....they have every right to do that...and the MORE the government stays out of it...the better.

We don't 'need' 2 billion more. It wouldn't do us 'any' good....unless of course like Fotze said....they would stick it into a heritage fund type thing and save it for a rainy day.

Somehow I doubt that will happen.

[Ford Prefect]

Originally Posted by Bring_Back_Shantz

First off, I'm not sure why you think me asking you if you were advocating something, is putting words in your mouth, but that's kind of irrelvant to the debat at hand, however it doesn't bode well for your "I don't get the defensiveness" comment, as you seem to be pretty defensive yourself.

But I digress. The defensiveness that people on the oil and gas side of the debate comes from the fact that people like you throw out statements like the one you made about the slowdown in oil and gas benefitting small businesses, without mentioning the fact that you recognise that this still means an overall downturn to the provincial economy (at least not untill you're called on it).

Finally, EnCana's "Childish response" is about as far from childish as can be. What EnCana was trying to do was make the point that yes this extra $2 billion that Eddie is drooling over is a good thing for the province, but it does come with some pretty major consequences, specifically companies like EnCana having to move their capital budgets out of the province to places where they can be more profitable.

Would it be childish for a hockey player to sign a contract for the same money in a state/province where the income tax was 10% less, or would it be a good business decision? And would it be childish for him to tell the other team that if they give him 10% more it would offset that loss to him?

You're clearly convinced that the oil co's are in the clear and right about this issue. I wish I could feel the same, about either side. But I don't. So be it. I will continue to be skeptical of spin from both sides. It's also clear neither of us will win over the other to their side, although I don't even really have a side, come to think of it. Unless being a skeptic of both sides is a side.

[Cowboy89]

Originally Posted by Flame On

It's their company yes. But the resources they're profiting from are Albertans at large. The profits are not big enough for the rest of Albertans according to the Auditor General and others.
Who said anything about problems?

Yes indeed very true, however those who are pro-oil patch on here are not arguing over wheather the province has the right to charge more, but rather that it is not eocnomically prudent long-term or short term to do so. Many of those who are staunch anti-oil company on here are not even contesting any economic arguements at face value but rather revert to the old: 'They'll be back', 'The're screwing us,' 'Hospitals won't be built,' 'Fair-share' arguement. Funny thing is that this sounds a lot like when the federal government dragged oil executives in front of a committee to defend what they charging at the pumps. Jack Layton pronounced how that current prices were "unacceptable and pure gouging." One executive remarked back and asked him "okay what is a fair price at the pump that generates a reasonable profit without gouging the consumer?" His response was "Well not what you're charging now." In other words he had no idea and simply was self-interested in paying less, regardless of whether oil companies got any return at all on their capital invested (Which BTW free capital investment is the backbone of all prosperity in the western world).

[Flame On]

Originally Posted by Azure

Right.

I should also ask for my 'share' of the money generated by the 100's of windmills around here.

My wind too.

You seem to think its a problem if Encana maximizes their profit.

Its a free market economy....they have every right to do that...and the MORE the government stays out of it...the better.

We don't 'need' 2 billion more. It wouldn't do us 'any' good....unless of course like Fotze said....they would stick it into a heritage fund type thing and save it for a rainy day.

Somehow I doubt that will happen.

Wrong again.
They can make as much profit as they're allowed under guidlines. Or are you suggesting there should be no royalties paid? I mean why not using your arguments? All of the money should go only to the share holders who were sage enough to have enough cash to invest in those companies.
Albertans don't see returns from windmills (as you call them), so perhaps they should not see returns from the particular natural resources we're discussing? Wow.
The bolded section is an opinion of yours and is where we differ.
On this situation I want them to step in and take a higher amount and then put that into "stuff" for albertans. Whether they end up doing that is entirely another issue.

[Bring_Back_Shantz]

Originally Posted by Ford Prefect

You're clearly convinced that the oil co's are in the clear and right about this issue. I wish I could feel the same, about either side. But I don't. So be it. I will continue to be skeptical of spin from both sides. It's also clear neither of us will win over the other to their side, although I don't even really have a side, come to think of it. Unless being a skeptic of both sides is a side.

I'm certainly convinced that the oil and gas companies are in the clear and right about this issue as it pertains to the fact that some of their projects will become uneconomic and that because of this they will have to/be able to find other places to invest their capital where the return will be greater. I also know (as should anyone who can do simple math), that a company removing $1 billion from the economy will have a very measuable effect.

Does that mean that there isn't room to move the royalty regime? Of course not, and no one is saying that any change will cause major catastrophe. What a lot of people, like myself, are saying, is that these changes will cause a great many projects to become uneconomic (this is a FACT, I have seen numbers in the area I work in where this is exactly the case), and that due to this companies will choose to go elsewhere (also a FACT, which should be evident due to the EnCana statement), and that this removal of capital from the province will have a very real impact.

[automaton 3]

Originally Posted by Azure

Right.

I should also ask for my 'share' of the money generated by the 100's of windmills around here.

My wind too.

You seem to think its a problem if Encana maximizes their profit.

Its a free market economy....they have every right to do that...and the MORE the government stays out of it...the better.

We don't 'need' 2 billion more. It wouldn't do us 'any' good....unless of course like Fotze said....they would stick it into a heritage fund type thing and save it for a rainy day.

Somehow I doubt that will happen.

In a free market economy shouldn't the seller be trying to maximize his sale price and rate of return as well?

Just saying...

[Azure]

Originally Posted by Flame On

Wrong again.
They can make as much profit as they're allowed under guidlines. Or are you suggesting there should be no royalties paid? I mean why not using your arguments? All of the money should go only to the share holders who were sage enough to have enough cash to invest in those companies.

No.

Oil companies already pay 15% royalties. They've been good to Alberta....Alberta has been good to them.

Why not leave things as is? Why does 'greedy' Ed need more? What is he going to do with more money?

What the heck does Alberta need a bigger surplus for?

Albertans don't see returns from windmills (as you call them), so perhaps they should not see returns from the particular natural resources we're discussing? Wow.

Nice try.

I never said that.

You were whining about the oil belonging to 'us'....therefore 'we' should get MORE money. If you use that logic...the wind also belongs to 'us' therefore the government should get royalties from the wind power being sold into the grid.

Sweet deal, huh....royalties from an infinite resource.

Our wind...so big deal, right?

If the oil really belongs to 'us'....why not make the oil companies 'public'....like Chavez did in Venezuela? That way the government can screw everything up even more.

The bolded section is an opinion of yours and is where we differ.
On this situation I want them to step in and take a higher amount and then put that into "stuff" for albertans. Whether they end up doing that is entirely another issue.

What stuff?

We already have a surplus to buy 'stuff' with. Why not use that money to buy this stuff you're talking about.

I know you're referring to health care, education, etc, etc....problem is the money is already there....but as the age old saying goes...'you can't throw money at problems and expect them to go away.'

more money does not equal a better alberta.

[burn_this_city]

Originally Posted by fotze

I think Encana owns large tracts of land in Alberta that is royalty free that they got from the Pan Canadian/ CPRail days, so in essence they have owned it before Alberta even existed. This has little to do with this topic though, just thought it was interesting.

Shhh don't feed the anti-Encana camp... Next they'll want us to void 100+ year old agreements, not just newer ones...

[Flame On]

Originally Posted by Azure

Oil companies already pay 15% royalties. They've been good to Alberta....Alberta has been good to them.

It isn't a question of good or bad. It's a question of a quantifiable amount determined by a thrid party. And certainly not determined by "Azure".

Why not leave things as is? Why does 'greedy' Ed need more? What is he going to do with more money?

Greedy Ed are you serious? I think it's probably his duty to look into it. So he does. The panel looks into it and determines an inbalance. If they came back with zero imbalance assessed, I'm sure he'd happily say no measures need be taken.

What the heck does Alberta need a bigger surplus for?

Thankfully you don't decide what all Albertans want/need. Nor do I for that matter. Although I should.

Nice try.
I never said that.
You were whining about the oil belonging to 'us'....therefore 'we' should get MORE money. If you use that logic...the wind also belongs to 'us' therefore the government should get royalties from the wind power being sold into the grid.
Sweet deal, huh....royalties from an infinite resource.
Our wind...so big deal, right?
If the oil really belongs to 'us'....why not make the oil companies 'public'....like Chavez did in Venezuela? That way the government can screw everything up even more.

You never said that? Actually you are and continue to. You reinforce your stance by making the absurd point that any rebalance of the royalties means a Hugo Chavez like atmosphere must exist.
I point blank ask you. Do the people of alberta rightfully get oil and gas revenues (as collected by their government) from royalties?
Or, like your windmill analogy, should they not get any?

What stuff?
We already have a surplus to buy 'stuff' with. Why not use that money to buy this stuff you're talking about.

Very true. But as I've said before that's an entirely different issue.

I know you're referring to health care, education, etc, etc....problem is the money is already there....but as the age old saying goes...'you can't throw money at problems and expect them to go away.'

more money does not equal a better alberta.

See previous point.

[Azure]

Originally Posted by Flame On

It isn't a question of good or bad. It's a question of a quantifiable amount determined by a thrid party. And certainly not determined by "Azure".

And other parties have said that increasing the royalties wouldn't help any.

It wouldn't help Alberta, outside of giving the government more bragging power in regards to our surplus.

Nothing would change.

Except of course Encana pulling their money and investing it elsewhere.

I think its been pointed out a few times in this thread that the oil pulled from the oil sands is not 80 bucks a barrel. As I understand it(correct me if I'm wrong Reaper)...we get somewhere around 50.

Greedy Ed are you serious? I think it's probably his duty to look into it. So he does. The panel looks into it and determines an inbalance. If they came back with zero imbalance assessed, I'm sure he'd happily say no measures need be taken.

I guess that remains to be seen.

Thankfully you don't decide what all Albertans want/need. Nor do I for that matter. Although I should.

If Alberta 'needs' anything....the money is already there to provide it.

You never said that? Actually you are and continue to. You reinforce your stance by making the absurd point that any rebalance of the royalties means a Hugo Chavez like atmosphere must exist.

Well if the oil really belongs to 'us'....everything should be made public. Right?

or not. The Chavez comment was made to point out how the government has a habit of ruining a good thing when they get too involved.

I point blank ask you. Do the people of alberta rightfully get oil and gas revenues (as collected by their government) from royalties?
Or, like your windmill analogy, should they not get any?

Of course we should get something. 15% is a good number.

I can't figure out why it should be increased.

Are we lacking funds?

Or does Ed need an ever bigger surplus?

Very true. But as I've said before that's an entirely different issue.

That is exactly the point.

I could understand increasing the royalties if Alberta had an unbalanced budget each year, and health care, education, senior aid...roads, etc, etc....were severely drawn back by the lack of funds.

But alas...that is not the case, and any draw back in those fields is probably because of the lack of management, organization or something else 'outside' of money.

Which is why I said throwing even MORE money at the problems we have here in Alberta isn't going to solve anything.

What else would we need with 2 billion more....thats right, we DO NOT need it.

Let Encana generate their profits and stick that money back into the economy. The government would only waste it.

We are NOT lacking in royalty funds.