Alberta Royalty Review = The death of the Alberta oilpatch

[Matt]

Higher royalties will slow down investment and new drilling? And that's bad news how?

There is no imperitive to extract all the hydrocarbons as fast as possible. We're selling our house, brickload by brickload, and all the while cackling about the money we're getting. Are we getting enough to build a new house (economy) when the bricks are gone?

[trilinearmipmap]

What is going to happen to Alberta several decades from now when all the easy and cheap oil and gas has been extracted? There will be thousands and thousands of people out of work, and without the education or training to find work outside the oil industry.

It makes sense to slow down the rate of extraction of the oil and gas from Alberta. First it will mean more efficient and environmentally sound resource extraction. Second it will leave more resources for the future, 40 60 or 80 years from now, when we will appreciate having some oil and gas left, and people in Alberta will still need jobs. Extracting all of the oil and gas as fast as possible might make short-term economic sense for the oil companies but it doesn't make sense for taxpayers, workers, or the environment.

A friend is moving to Fort MacMurray where I am told a dumpy 3-bedroom home costs $600,000.00 and blue-collar workers earn six figure salaries. Any guesses on how much a house in Fort MacMurray will be worth in 20 or 30 years when the jobs are gone. How many people will have sunk their life savings into a house that is now worth less than a hundred grand?

The oil and gas belong to all the people in Alberta and all the people in Canada. They let the oil and gas companies extract it from the ground. It is not the companies' right to do this, it is a privilege we allow them. Of course the government of Alberta should maximize its profits from the resources that belong to the people. By maintaining high royalty rates the government can preserve oil and gas for the future as well as preserving long-term employment for the future rather than a boom-and-bust economy.

I have no connection to the oil industry but I have invested in many of these companies in the past. I can tell you that as corporations, they are simply machines for making money with no other consideration whatsoever for people jobs environment or anything. Any noise these companies make about caring about the economy, caring about jobs, paying attention to the environment etc. is just a smokescreen. They care about money, money, money and nothing else. We should recognize the sociopathic nature of corporations and create strict regulations to use corporations for the public benefit. If corporations do not benefit the public, they should not be allowed to exist at all.

[rigger11]

ok well the way i see it is it is a bad thing to have Encana pull out of Ab. does anyone else remember last september/october when Encana cut some where around 5-6 billion out of their exploration budget?

the rig count in september 26 of 06 in alberta was 215 active rigs
then again on september 19 the count was 317 active rigs
one week later 112 rigs shut down.

this year the count is 230 rigs active as of septeber 25
september 18 235 active rigs

we are bairly above the active mark or last year. and antone that works in the patch knows how long and slow this years breakup was. if Encana pulls more money out of the budget then other oil companies will more then likely do the same and then the rig counts will fall even more.

[Ruth]

Well they say the good lord hates a coward so I might as well wade into this debate.
I do work for an oil company - not Encana - but out of BC. I do remember the NEP and the absolute devistation that brought about so that yet another government could buy eastern votes.
I think that the question every Albertan should be asking is why the heck would we want to give this government yet more $$$. Let's face it, there is more $$$$ going into the government coffers than any Oil Companies. I think who really has to be questioned is the Alberta government. They have seriously mismanaged the $$$ that are going in right now and now they want more! (and one of the above poster said that big corporations are heartless). Maybe if there was more revenue going to the province they could give everyone $500 checks next year. Talk about a stupid way to spend over a billion dollars. Alberta should be ashamed of itself for the condition they have let their roads and infastructure get into. I am old enough to remember the day when driving across the border from BC to Alberta was a startling reminder of how inept the BC government was about maintaining infastructure - it is now the opposite.
People like to talk about big corporations making $ - hello - that is what being in business is all about. It is easy to sit back and be envious of someone or thing that has more than you and point fingers and say it isn't right - that is human nature. But really think about the money that does get put back in to the communities in the way of jobs, income that supports just about every other business in a lot of communities, large corporate donations that help in a big way hospitals, community organizations and charities of all kinds. I work in the community relations part of the industry and can tell you it is not small $$$ we are talking about.
Whew! rant over for now but I could go on.

[fencer]

1. Please read the exec summary of the royalty report before you comment
2. I think the Journal had commented on that the 1 billion cut from Encanna had already been planned. As the gas side in Alberta is already slowing. Personally you just have to go to Nisku to see all the gas rigs sitting in the yard
3. Corporations make donation for tax purposes...not because of goodwill
4. Alberta is booming...it isn't going to be the Corporation who pays for infrastructure.....royalty taxes will. Don't see any Corp in Fort Mac announcing that they are going to spend profit on a road.
5. Our royalty rules should be reviewed to reflect current conditions

[Ruth]

Originally Posted by fencer

1. Please read the exec summary of the royalty report before you comment
2. I think the Journal had commented on that the 1 billion cut from Encanna had already been planned. As the gas side in Alberta is already slowing. Personally you just have to go to Nisku to see all the gas rigs sitting in the yard
3. Corporations make donation for tax purposes...not because of goodwill
4. Alberta is booming...it isn't going to be the Corporation who pays for infrastructure.....royalty taxes will. Don't see any Corp in Fort Mac announcing that they are going to spend profit on a road.
5. Our royalty rules should be reviewed to reflect current conditions

3. Yes that is true that one most donation there is a tax benefit - as there is for most individual that make donation to registered charities and societies. So if you make a donation you are only doing it for the tax purposes and not the goodwill? Personally if I make a donation the taxation part of it does not come into play. I happen to know that a lot of it is for goodwill on the part of the corporate world but do not for a moment deny that the tax write off does play a part.


4 Exactly - and those royalty taxes come from who????



5 Yes they should be - and it should reflect current costs and risks. It should also more accurately reflect the current state of affairs in the world or market price of both natural gas and oil.

[Delphinus]

I am reluctantly wading into this one now against possibly my better judgment..

On the day that the royalty review findings were released, I had the opportunity to meet the Honorable Ed Stelmach briefly as he addressed my company's user group forum, which in the room held many industry players from across North America. You'll be happy to know that I asked him some very tough questions. (I asked him what is the difference between the title "The Honorable" and "The Right Honorable." Ohhhh Rick Mercer I am not, but I try. .. I try.)

I have to say, he is a stand up guy. He's very likeable in person.

....

Anyhow, I am all for a royalty review. However I am a little concerned about the recommendations. I am not certain if they are a bit of a negotiation tactic, ie. if you ask for "X" but expect to get "half X" and so on. I'm not really sure. For sure, with the price of oil, there's room for ... discussion, shall we say.

Not quite aware of the full details of the recommendations but I have read two reports from financial institutions which are giving advice to investors regarding their projections. These are not the oil companies, these are fund managers. And .. well.. they're quick to point out that the recommendations are not law, but they do say there will be negative impacts. The projections seem to indicate that it's the juniors who will bear the worst brunt of this.

But the comments regarding natural gas ... they are indeed correct. I don't understand how gas already can not be profitable, looking at my heating bill .. but it's true, I have seen first hand that there's no money to be made in natural gas at the moment, in fact, there are companies that are in the red.

So .. while I do favour a review of the royalties, I think that there may be a case for compromise at least in some of the points.

[Pan]

Not quite as simple as govt bad, people good. Who pays for roads, who pays for teachers etc etc. Yes, yes, they waste money but its not that simple. In a perfect world the govt wouldn't spend our money without care and consideration as to where it goes. Also in a perfect world you wouldn't work for a company that is ruining the planet, and I wouldn't drive a car that needed people to ruin the planet. And yes corporations exist for the sole purpose of making money, yeah, basic business 101. But at what price? How far should they be allowed to go? Should One or a group of shareholders be able to dictate laws to govt so it benefits them? There is a reason why the minimum wage is so low, and its not the workers. Should corporations have the same rights as an individual? Should they be allowed to get away with things that the regular folks would go jail for? I dunno about you, but last time i was 2 billion in debt the govt didn't bail me out. How can a business run without making profit for 5 or six years but still gets govt bailouts? Is it simply the govt fault for giving it to them? Should CEO's make millions because they fire people? How much is too much, there is wealth, there is obscene wealth, and then frankly there is ridiculous. Just because you can doesn't mean you should. I truly wish the govt would spend wiser, but study political history around the world and you will notice it doesn't matter the platform or the party the govt will always break the promises it makes to get elected. The Tories are no better than the Liberals who are no better than the NDP, with the slight possibility of the green party being somewhat better, but focusing to exclusively on the environment to the detriment of well everything else. When does the good of all of us outweigh the greed of the bastards?

[Matt]

Originally Posted by Ruth

I think that the question every Albertan should be asking is why the heck would we want to give this government yet more $$$.

So, the implication is that if the GOA can't manage it well, it should be given away? Kind of a mismanagement fine, with proceeds to big oil? Given the auditor-general's report, we've already been paying that fine for years.

Once the bucks are in the treasury, I've at least got a chance at seeing them spent to my benefit, or to the public good in some way. Please, though, no more ralph-bucks (eddies-readies)?

[Sebae again]

Within the next 30 years, there won't be any fossil fuel burning vehicles.The price of oil will come down dramatically and the major consumer will be the manufacturing industry. During that time frame,prices will remain steady as any supposed increases in demand will be offset by a global concern to go ''green'' The governnent and oil companies revenues will both fall. Anyone want to hold onto any oil stocks?