Official (Alberta) Oil Discussion Thread

[PeteMoss]

Just so I'm clear - if the royalty review comes out tomorrow - and there is little to no change - is anyone suggesting there is suddenly going to be a barrage of investment in Alberta by the O&G industry?

[pylon]

Originally Posted by PeteMoss

Just so I'm clear - if the royalty review comes out tomorrow - and there is little to no change - is anyone suggesting there is suddenly going to be a barrage of investment in Alberta by the O&G industry?

I think it will mean less companies will pull out of the province. Right now it isn't about gains, I think it's more about controlling the losses.

[Locke]

Originally Posted by PeteMoss

Just so I'm clear - if the royalty review comes out tomorrow - and there is little to no change - is anyone suggesting there is suddenly going to be a barrage of investment in Alberta by the O&G industry?

Oh man, really?

Its not a light switch. You wouldnt happen to be the Minister of Finance would you?

[firebug]

Originally Posted by Regorium

Consider AB citizens see a lot of that corporate profit as well in the form of big raises, big bonuses, lots of high paying jobs (including teachers and nurses), and low taxes.

I also agree that I don't know where the optimum balance of taxation is, but I would absolutely consider that just raising taxes does not directly lead to a different split of profits vs. health care. In fact it may mean that the split stays the same, but the pie gets smaller.

And a lot of AB citizens saw it as a some getting to buy political influence, take exotic foreign vacations, purchase luxury cars/trucks while they get priced out of the housing market (and I'm not casting stones, I've been a big beneficiary myself).

Originally Posted by Regorium

I would say it's not impacting the amount of capital spending, but absolutely is affecting the location of it. My company just spent a bunch of money in Mexico, southern US, and eastern Canada. The extra percentage points of tax and the risk premium based on the uncertainty royalty review are direct inputs to decide whether a project is prioritized or not.

Every company has dramatically reduced their amount of spending. It's not just getting shuttled out of this province. And c'mon do we really want to be racing to the bottom vs mexico or the Southern US. Would you really want to raise your kids there? Companies are always going to want to pay less and governments are always going to want to take more - It's up to us reasonable citizens in the middle to balance out those competing interests.

It looks like those investment decisions could just as likely be based on access to tide-water and international markets than AB royalties or political uncertainty. How much more uncertain is AB when every other premier is 2-opinion polls away (or 1 election) from making similar changes (although i did forget about kudetahs - a uniquely AB threat)?

[Resolute 14]

Originally Posted by firebug

It looks like those investment decisions could just as likely be based on access to tide-water and international markets than AB royalties or political uncertainty. How much more uncertain is AB when every other premier is 2-opinion polls away (or 1 election) from making similar changes (although i did forget about kudetahs - a uniquely AB threat)?

It could. But again, you would be wrong.

http://www.660news.com/2016/01/14/su...about-alberta/

According to report co-author Dr. Ross McKitrick, professor of economics at Guelph University, it’s being caused by uncertainty around the new NDP government and its policies.

“In 2014, only five per cent of worldwide investors thought that was a problem for Alberta, in 2015 that’s now up over 50 per cent,” he said. “I think the Alberta government has opened a number of major portfolios that could potentially cost investors quite a bit.”

...

McKitrick says the government needs to make some decisions fast because as this survey shows, as long as things are up in the air, Alberta is going to keep taking hits.

“The Alberta government does need to be careful about the kind of perceptions it’s creating with so many major policy changes on the table, it could take years to win over the trust of investors again,” he cautioned.

[firebug]

Originally Posted by Locke

Fair enough. I would agree with that.

In previous threads I've stated, and still believe, that as Albertans we're doing this all ass-backwards.

We really could have used a more NDP model 10 years ago when money was being made hand over fist, but right now we need a more 'business-oriented' model in order to stop some of the bleeding. We are hemorrhaging red ink here.

I think that sticks in people's craw a little bit because theres an attitude that the businesses 'got theirs' already and now its 'our turn.'

But I totally agree, its about finding the optimal blend between public and private sectors that we can make work. Its not one or the other we need both.

The problem is that the NDP have effectively gone PC just in the opposite direction and at the worst possible time.

The PCs were too heavily focused on the private sector, the NDP are too heavily focused on the public sector, but what drives people crazy at the moment, myself included, is that the NDP are spending tons and tons of money and heavily favouring the public sector not only at a time when we really dont have the money for it but they are also actively doing it at the expense of the health of the private sector.

And thats something that crazy people do.

To characterize it: its racking up a huge debt load while simultaneously doing damage to your ability to earn the money to pay it back.

Thats crazy and incredibly short-sighted.

This is where you and I will respectfully disagree. I think the best time to do a review like this is when the market has tanked and none of us are making any capital deployment decisions anyways. An NDP royalty review at $100 oil would terrify me. At $30US WTI i'm much more comfortable with the process being fair to the industry over the longer-term.

[firebug]

Originally Posted by Resolute 14

It could. But again, you would be wrong.

http://www.660news.com/2016/01/14/su...about-alberta/

Ross McKitrick... the same one I heard speak at an energy conference in Toronto funded by a bunch of Alberta oilmen...

Colour me surprised by his comments ;-)

I bet that if I posted some comments from David Suzuki confirming that I'm right, you'd take it just as seriously as I'll take Ross's.

[Resolute 14]

Somehow I just knew you would fall back to ad hominem as your rebuttal.

But you just go on and bury your head in the sand and pretend that this government isn't a major issue in this regard.

[rubecube]

Originally Posted by peter12

Hate to sound cynical, but...

I know you've said you were part of the negotiating process, but is your view maybe coloured by which side of the table you were on and your political stripes.

Originally Posted by Resolute 14

I am quite certain that many of the people on the ground are very much concerned about the environmental issue. However, most of the money that is coming into these groups is coming in from the US. And those same donors aren't putting nearly the same effort into their fight against American "dirty" oil. It isn't exactly a giant leap to argue that the fight to destroy Canada's oil industry is driven primarily as a means to protect America's oil industry.

I can only speak anecdotally on this topic, but the FN and environmental friends/protesters I've spoken with on the manner are primarily concerned with protecting the coast line from tanker traffic, and trying to get the government to practice more consensual policy decisions with FN bands. There have also been a number of earth sciences, environmental studies, biology, etc., professors out here from UVic, SFU, UBC, etc., who have gone on record against Northern Gateway because they feel the potential impact on the environment outweighs the economic benefits for BC. I don't think all of these people are on the payroll for American oil interests.

You also have to add on to this the big spill in English Bay last year and the pipeline burst in California that got a lot of media attention, and it's easy to understand why people are concerned. It's not even just an Alberta oil thing here either. There's quite a bit of opposition to Clark's LNG plans as well. The obvious hypocrisy in all of this is the mining industry, but most of the people living on the coast don't really have a clue what goes on in the interior.

[peter12]

Haha, environmental friends. Good lord.

I would say that my view was coloured by the 1000s of hours I spent interviewing 100s of community members. I found that actual environmental and cultural concerns were in the minority.

[flamesfever]

Originally Posted by rubecube

You also have to add on to this the big spill in English Bay last year and the pipeline burst in California that got a lot of media attention, and it's easy to understand why people are concerned. It's not even just an Alberta oil thing here either. There's quite a bit of opposition to Clark's LNG plans as well. The obvious hypocrisy in all of this is the mining industry, but most of the people living on the coast don't really have a clue what goes on in the interior.

With the US just starting to ship major quantities of LNG to take advantage of higher prices abroad, and predictions that the US will be the 3rd largest shipper of LNG by 2020, wouldn't it be extremely important to get our LNG operation up and running ASAP?

Most of the people in Eastern Canada don't don't have a clue what goes on in Western Canada.

[northcrunk]

Originally Posted by peter12

Haha, environmental friends. Good lord.

I would say that my view was coloured by the 1000s of hours I spent interviewing 100s of community members. I found that actual environmental and cultural concerns were in the minority.

Yeah it's pretty frustrating. You negotiate a deal with the first nations leadership and some fringe element comes out and claims they werent consulted blah blah blah.

Don't waste your time trying to convince the dipsters as they really don't have a clue how the industry operates. I wish the oil and gas industry would stop being used as a political football to score points. There is no other industry in this province subjected to the partisanship that oil and gas does.

[PsYcNeT]

Originally Posted by northcrunk

I wish the oil and gas industry would stop being used as a political football to score points. There is no other industry in this province subjected to the partisanship that oil and gas does.

This but unironically.

[peter12]

Originally Posted by northcrunk

Yeah it's pretty frustrating. You negotiate a deal with the first nations leadership and some fringe element comes out and claims they werent consulted blah blah blah.

Don't waste your time trying to convince the dipsters as they really don't have a clue how the industry operates. I wish the oil and gas industry would stop being used as a political football to score points. There is no other industry in this province subjected to the partisanship that oil and gas does.

Constant fracturing. The area referenced in the BC Supreme Court case is composed of dozens of splinter "groups" from the Gitxsan peoples - same things happened in OWN territory. Impossible to get anything done, but almost everyone has bought the lie that "more" can be done.

I wish the oil and gas industry would start lashing back. TCPL's lawsuit is an excellent start.

[rubecube]

Originally Posted by peter12

Haha, environmental friends. Good lord.

I would say that my view was coloured by the 1000s of hours I spent interviewing 100s of community members. I found that actual environmental and cultural concerns were in the minority.

Fair enough. Your anecdotal evidence is stronger than mine. I just take issue with the idea that there aren't legitimate environmental concerns, even if they're only held by a small minority.

[rubecube]

Originally Posted by flamesfever

With the US just starting to ship major quantities of LNG to take advantage of higher prices abroad, and predictions that the US will be the 3rd largest shipper of LNG by 2020, wouldn't it be extremely important to get our LNG operation up and running ASAP?

Most of the people in Eastern Canada don't don't have a clue what goes on in Western Canada.

Not sure what Eastern Canada has to do with this. I'm talking about opposition within B.C. to getting our own LNG operation up and running. The earthquakes, contaminated water supplies, etc. that are being attributed to fracking are getting quite a bit of media attention.

[peter12]

[QUOTE=rubecube;5584600]Fair enough. Your anecdotal evidence is stronger than mine. I just take issue with the idea that there aren't legitimate environmental concerns, even if they're only held by a small minority.[/QUOTE

The reports that I generated were not for distribution to the public, but if they were, I could also provide statistical evidence. It would even get worse when you put community environmental concerns side-by-side with the scientific analysis. I chose to believe that there concerns were based on a poorly-educated view of the regulatory process, but the reality is probably different.

[jammies]

Originally Posted by Street Pharmacist

we're not living in a zero sum environment

It's so much easier to pretend we are, though! Business and government are opposing forces and our duty is to throw our lot in with the benevolent overlords of whichever side seems shinier.

[Resolute 14]

Originally Posted by rubecube

I can only speak anecdotally on this topic, but the FN and environmental friends/protesters I've spoken with on the manner are primarily concerned with protecting the coast line from tanker traffic, and trying to get the government to practice more consensual policy decisions with FN bands. There have also been a number of earth sciences, environmental studies, biology, etc., professors out here from UVic, SFU, UBC, etc., who have gone on record against Northern Gateway because they feel the potential impact on the environment outweighs the economic benefits for BC. I don't think all of these people are on the payroll for American oil interests.

As I said, most of the people on the ground are very likely sincere in their beliefs. But while they likely do not realize it, many of them are also very likely working with or for organizations that are heavily funded by American groups such as the Rockefeller Foundation and Tides Foundation. Tides, for instance, has outright bribed Native leaders to oppose oil sands development. And the lengths they go to to obfuscate their actions does little to suggest that the originating sources of these bribes are on the up and up.

[flamesfever]

Originally Posted by rubecube

Not sure what Eastern Canada has to do with this. I'm talking about opposition within B.C. to getting our own LNG operation up and running. The earthquakes, contaminated water supplies, etc. that are being attributed to fracking are getting quite a bit of media attention.

I was simply pointing out the analogy between one side of BC not having a clue about what was going on with the other side, and what is going on in Canada.

I think as far as getting an LNG export facility in place, it will take great leadership, not only from the Provincial Government but also the Federal Government. Besides the effort to convince the people of BC of its merit, IMO it will also involve a great deal of effort in educating people in the eastern part of the country, as to its imminent need. Putting a moratorium on the shipping of oil off the west coast is not helping matters.

In my 40+ years in the industry, I have watched the advantages of oil vs gas swing back and forth numerous times. Perhaps with the horrendous difficulties trying to get oil to seawater, the advantage may be swinging back to gas, in the near term anyway. One should also understand that the Western Canadian Basin is primarily a gas basin.