Oilpatch giant makes billion-dollar threat over Alberta royalties

[RougeUnderoos]

How do other places with oil in the ground deal with this issue. Does Alberta currently let the O&G companies keep a lot more $ than other places in North America do?

[Cowboy89]

Originally Posted by RougeUnderoos

How do other places with oil in the ground deal with this issue. Does Alberta currently let the O&G companies keep a lot more $ than other places in North America do?

As a percentage of gross production yes. What peolpe don't understand about why Alberta needs to charge less in royalties to be competitive is that in North America most of the technically easy conventional pools of oil and gas have all been discovered and brought on stream. It costs more to get oil and gas out of the ground unconventionally (Ie oilsands and CBM natural gas), and what comes out of the ground is of much lower quality than these other jurisdictions everyone keeps referring to (Africa, North Sea, etc.). The gas needs to be upgraded to pipeline specs and the oil needs to be upgraded to meet refinery specs. To be competitive in this world environment Alberta needs to charge less or run the risk of a whole lot less being produced and thus less royalties overall despite a higher percentage being charged. Also when people mention Venezueala, Nigeria, and other places that charge such high royalties they fail to realize that Chavez is running at less than two thirds the production he started with despite numerous reserves, and places like Nigeria are hardly how any first world country should model their economics around. It's also economically feasible in Nigeria because they have a lot of conventional oil at refinery spec to be produced using much cheaper labor.

[Incinerator]

Originally Posted by Cowboy89

.

The reason why 88% of Albertans side with the government is that should they want to recieve the full benefits from the private sector it would require them to actually do something beyond merely eating, drinking, and sleeping within the borders of our Province.

So much for the idea that Albertans are entreprenuerial, hard working individuals. They'd rather be fed their pork form the government that get off their arse.

I think you're overlooking the fact that those "88%" polled may not even be Albertans to begin with I won't elaborate further but the rest is self-explanatory.

[red sky]

People also forget to think that one of the biggest inputs for extracting the oil out of the bitumen is... natural gas and oil... more specifically, oil and gas is burned to create steam which is sent into the ground. If oil prices are high like they are now, it exacerbates the economic viability issue. This is mainly to do with the oilsands however.

[Ford Prefect]

Originally Posted by Incinerator

I think you're overlooking the fact that those "88%" polled may not even be Albertans to begin with I won't elaborate further but the rest is self-explanatory.

That's a really good point. Media polls are often manipulated to form effective spin tools.

[Azure]

Originally Posted by Ford Prefect

That's a really good point. Media polls are often manipulated to form effective spin tools.

I have no doubt that this one was too.

[NuclearFart]

Originally Posted by Azure

Did I say that?

I said 2 billion 'more' wouldn't necessarily 'change' anything right now.

What, Albertans think that upping the royalties by 20% and health care, education, and the rest of the fields that need funding are suddenly going to get it?

I don't think so.

Money is already there to provide that....which obviously shows that lack of funding isn't the problem.

How would it yield them some benefit?

From some of the accounts I've read....it might actually have a negative effect on the economy.

88% of the people are ignorant of the problem if they think increasing royalties by 20% is going to help.

But then again, people think money first....other consequences later.

But the thing is, that you DON'T KNOW that it wont change anything. You assume it wont, because the governement supposedly already has full coffers, a statement that I find somewhat dubious. Anybody can find accounts/propaganda from both sides that will tell you opposite things.

Instead of trying to confound the situation with layer upon layer of assumptions, the average joe is going to keep it simple. He's not going to expect any immediate benefits from the 2 billion being in EnCana et al. 's hands, but he can at least expect something from the governement as the money has to be spent somewhere.

Just because you choose to think that the money in the hands of the governement is not going to make a difference, doesnt mean that everybody else - or 88% of the population - is stupid, let alone wrong. It is not as black or white as you would like to believe.
________
Yamaha tzr250

[NuclearFart]

Originally Posted by Cowboy89

.

You seem to ignore the concept of oil companies using that $2 Billion to reinvest back into Alberta (Which incidently most are actually borrowing more money than their earnings to invest in future projects). While the distribution may not be even you can't argue that the money doesn't get back to Albertans. Furthermore the arguement is really between which vehicle the private sector vs. the public sector is to provide that $2 Billion to Alberta. The reason why 88% of Albertans side with the government is that should they want to recieve the full benefits from the private sector it would require them to actually do something beyond merely eating, drinking, and sleeping within the borders of our Province.

So much for the idea that Albertans are entreprenuerial, hard working individuals. They'd rather be fed their pork form the government that get off their arse.

Actually I'm not ignoring that at all, as if you actually read my posts (from very early in this thread), I do think that royalties would cause a downturn. What I am currently speaking out to, is the arrogance displayed in assuming that the average Joe is stupid for believing that government intervention will benefit them more than the corporations.

It's about trust really. Inherantly, the average joe trusts the government more than the industry when it comes to disseminating the wealth, so the majority sides with the goverment on this issue. The O&G sector really hasn't helped themselves in the public image with their flagrant displays of wealth and lack of spending discipline. The average Joe sees a front page story about some guy air-brushing his kids faces onto his Bentley, or building a scale replica of the Banff springs hotel as his house, and the last thing he's going to think of is a that the O&G's are a benevolent group. Greedy, self serving pigs at the trough is what he thinks. Now contrast that with the government, and are you really surprised that he would rather the government attempt to distribute the wealth, rather than relying on the free market to distribute it?
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VAPORISER

[Incinerator]

Originally Posted by fotze

Stelmach Blinks possibly...

As expected, I'm sure he'd like to warm his chair in the Premier's office a little more before he heads home to his farm with a Trudeau-esque legacy.

[cal_guy]

Originally Posted by fotze

Stelmach Blinks possibly...

Or not....

http://uk.reuters.com/article/oilRpt...23280520071012

PT-UPDATE 2-Alberta premier committed to oil-sands reform--aide
Fri Oct 12, 2007 7:23pm BST
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(Repeats to add UPDATE 2 to headline) (Adds comments from panel chairman)

By Jeffrey Jones

CALGARY, Alberta, Oct 12 (Reuters) - Alberta's premier has not ruled out any recommendations from his royalty review panel, which has urged the province to boost its take from the oil industry by C$2 billion ($2.1 billion), or 20 percent, a year, his spokesman said on Friday.

"No final decisions have been made," Tom Olsen, a spokesman for Premier Ed Stelmach, told Reuters. "The premier is committed to meeting the objective of the report. The suggestion of (panel chairman Bill) Hunter is that there was room to move on royalties. The status quo is not an option."

Olsen was responding to a report in the National Post newspaper, which said Stelmach told a business audience at a private meeting that he might not adopt the "most contentious" recommendations of the review panel.

Quoting "notes taken by sources at the breakfast function," the newspaper reported that Stelmach said he "will not trounce existing agreements."

The oil industry has taken pains to discredit the panel's report, entitled "Our Fair Share," with companies, lobby groups and brokerages issuing dire warnings on a daily basis about deep cuts in industry spending and job losses.

Panel members have said the report's measures would preserve the competitiveness of Alberta, whose oil sands represent the largest crude deposits outside the Middle East.

Stelmach is slated to respond to the report on Oct. 24. He won the leadership of the ruling Conservative Party last year promising more transparency on major policy issues than had been the case under his predecessor, Ralph Klein.

Recent polls have shown Stelmach's popularity rising from lows earlier in his tenure and political analysts have attributed that to his statements that he will not be bullied.

Olsen said Stelmach still insists there will be changes to the royalty regime and that "Albertans will be treated fairly."

"There was no blinking. Period," Olsen said.

Hunter, whose six-member panel wrote the report after six months of consultation throughout the province of 3.2 million people, said he has received no indication on whether the Stelmach government will adopt all of or parts of it.

"We delivered the report on (September) 18th and gave another briefing to caucus the 19th and then that's the last I've heard from the boys," said Hunter, a retired forestry executive.

His panel urged the government to adopt its measures without "grandfathering" provisions that would allow existing projects to keep their current terms for economic rent.

But developers have said that would squeeze the economics of multibillion-dollar oil sands developments, which already face surging operating costs due to a stretched labor supply and inflation in materials like steel.

"I still stand behind our report 100 percent. I think it's a very good piece of work, and what (no grandfathering) does do is that it simplifies the process, makes it an even playing field and it gives Albertans their fair share," Hunter said.

Other recommendations are higher royalties for oil sands developers once their projects reach payout, a new tax on oil sands output tied to crude prices, an increase in royalties for prolific conventional oil and gas wells and a drop in rates for low-production wells.

[Fozzie_DeBear]

Well I think Alberta could do a lot worse that Ed Stelmach...but this will be a tricky test for him...I guess a miniscule initial increase that scales up to a modest increase over time...

But I echo what others have said...filling the government coffers with $ is the least of Alberta's problems right now...