Alberta Royalty Review = The death of the Alberta oilpatch

[ed99]

Originally Posted by Quinn

I know absolutely nothing about the energy royalty program, but I'm sure the panel, which includes a former Shell VP, knows plenty.

I expect he does too, but they made a lot of assumptions, especially on development costs and depletion rates which are already out of date.

Originally Posted by Quinn

Absolutely! And when BC, WY and CO are totally depleted, Encana and friends will be welcome back here, assuming they haven't been beaten to the punch. By that time Alberta will have deeper pockets, a better public infrastructure, and hopefully, a better standard of living for all our citizens. Our government will have been among the first in North America to focus on long-term overall prosperity instead of short-term financial gain.

If it is not economic for EnCana to develop, why would it be so for anybody else? Besides, all the companies pay for lease agreements to develop the resources, so nobody is going to beat anybody to the punch.

On the second point- the changing the royalty regime may have the reverse effect. Everybody wants to go after the oilsands, which industry has generally accepted. It's natural gas development that is really going to be hurt, and significantly more money goes into that then oilsands. The AB government may see a short rise in royalties next year, but a decrease in tax revenue and royalties soon after with a net negative effect on natural gas development.

Originally Posted by Quinn

For the record I haven't heard of any public complaints by any other major industry player.

Really? However, as mentioned it is the smaller gas companies and service companies that are going to take most of the pain.

Reading the papers and this board, for most people this is an ideological debate and not about adjusting the royalty structure so it will interesting to see what Steady Eddy does. Without trying to address everything else that has come up on this thread, the main point us oil and gas folk are making is that unlike what the report asserts, some parts of the industry and the communities around it will severely affected.