Castuserraticus

Absolutely. Ed and other political types made mention of too much activity, leaving some in the ground for future generations, unsustainable development, and similar comments. It doesn't matter if you're a company or an individual - a 20% pay cut means your life slows down. If the Liberals and NDP got their way we could stop the industry completely. They like the Ecuador model where the government takes everything over $23/Bbl. Of course their costs are considerably lower than Alberta and they are a perrenial third world country but why let economics stop a great idea.

In order for the non-fishing family members to buy-in there would need to be some development of the lake for swimming - ie truck in some sand, build dock, picnic area.

I did some research several years ago into developing something like this. The price is outrageous Land $1500/ac. = $195,000 Power $50,000 1820 ft2 Barn - $250,000(?) Lake improvements - $100,000 Lease revenue (NPV 10%) - $21,000 Looks like a reasonable value for ~$600,000 The price is inflated by using the words "recreational property" in the listing The property is east of Drayton, NW of Alsike so it's not really remote. Participants would need the ability to carry some ongoing operating contributions (taxes, improvements, utilities). Go with undivided interests in the land - it looks like it would be difficult to subdivide - expensive to work around the water body. There may be environmental restrictions on any work around the pond. You'll need an initial capital budget to put in some infrastructure - recommend trailer sites with hook-ups initially - or people will fight over the barn. Power is already there so that's taken care of. If you do it as a bareland condo, rules can be set-up - common vs private property, financial obligations, voting rights, ownership transfer, operating committee. There are several ways to handle varying useage. As some would be able to spend much more time than others this would need to be addressed. The producing well (2/16-7-49-4W5) looks like it's nearing the end of its life so the rentals can't be relied on. It is an abandonment candidate although it likely would not be done immediately. It's not prospective for additional drilling.

It's cheaper there. A friend sent me links to real estate listings in Edmonton and Dallas. You can get a 1080 ft2 3BR bungalow in Edmonton and a 3800 ft2 5BR mansion on 1 acre in Dallas.

And the economy didn't gain strength until the mid 90's. It wasn't short term pain. Lougheed's royalty increase ended up going to drilling incentives to try and revive the industry.

Ed threw out lots of comments about how has grand plans to improve the "mess" he inherited. What did you like and what would like to have heard? It's always a good dea to remind people of what you've done right so far and he did with tally infrastructure and community funds. I'd like to see some real emphasis on education investment. It's no secret Ralph was not a fan of education and that's the area that suffered most under his watch. The schools are falling apart, custodial staff levels are at 20% of what they used to be, teachers don't have enough support staff, and they often pay for resources from their own pockets. The kids are the real future for us and we need to invest in them. I thought most of the speech was grand but vague politicking. There was little factual content.

It sounded to me like he's leaving conventional alone and going after heavy oil. changes will be phased in. That sounds much more reasonable than some of the stuff he spouted early on. Hopefully Ed learned from this to be more thoughtful before he speaks.

That reminds me of a story. Back in about 1990, the building where I worked had a parkade attached where I locked up my bike. The oil industry was in the doldrums and, even though the parkade didn't even have a door, it was mainly empty. Pretty well every afternoon there would be a scantily dressed "attendant" standing by the exit. Several times co-workers went to their cars to find an adjacent vehicle being used for business purposes. It must have been a slow day because one afternoon when I rode out the exit, the lady on duty asked if I wanted some company. I was more than a bit surprised. "And how is this supposed to work?" I asked, glancing at my bike. "We can figure something out." she said. That scared this country boy and I hit the road.

The Husky upgrader, located in Saskatchewan, had been bleeding cash for years when it was sold. The gov't was tired of subsidizing Sask jobs. Syncrude was a barely break even operation for most of it's existence. The government took the opportunity to sell when it figured a good price was offered. Let's say your cane rods go up in value due to a sudden, short term cane shortage. Are you going to go back to the people you sold the rods to for a share of that value? Or are you going to stand by the deals you made with them?

A Chinese national oil company bought Talisman out of Sudan. Which country has a better record on human rights - China or Canada? Talisman built schools and medical centres there. Is China going to put pressure on the government to increase this type of development in the areas they work?

rickr if you're interested in learning to play PM me. I play Friday 6:30 am with a great group of oil people and we have a real mix from anklers to very skilled. One is a Mexican who came up here for University. He's good with his feet (soccer) but the stick is a problem. We had a big Egyptian guy a few years ago but he fell and hurt himself. Tiger is running an oil company in Calgary these days. I forget which one. Apparently he's still scary on the ice - even in rec hockey.

Wow - I don't check for a couple of days and the fan gets dirty. Where to start. From Suncor's latest annual report their production costs are $24/Bbl. They received a -$9 differential to West Texas because they mainly produce upgraded synthetic crude. The non-mining (in situ) projects are looking at differentials of over $25 with similar operating costs but less capital invested. Drilling activity in most gas producing areas (ie most of the province) has virtually stopped. I talked to a guy from Whitecourt this morning and it's dead. Oil producing areas (ie a small part of the province) are still going strong. Encana is a special case as it directly owns the petroleum rights under huge areas east of Calgary (railroad grant lands). It pays a 6% mineral tax vs higher royalties. They are also very efficient drillers due to large scale programs. How can you tell the difference between left and right wing? The right wing people are willing to invest time and money to build companies that add to the prosperity of society. They have a desire to be successful through their own hard work. The left wing people believe profits are evil and should be taxed thus taking away from prosperity. They have a desire to be taken care of because they're afraid to stand on their own. The truth is that without entrepeneurial companies there would be no economy. The Soviet Union didn't work. There are still economic projects in Alberta at $5 gas but they're few and far between. This means a much smaller industry. The windfall money came from old production. There is no windfall profit with new drilling. Without reinvestment, the gas industry will shrink by ~20% per year. The provincial government participated in about 90% of the windfall because of ballooning landsale revenues (company reinvestment). A recent report found that while company revenues increased $130Billon the government revenue increased $128 Billion. I can't remember the time period. Norway's take is a combination of direct investment in their industry and royalties. Alberta doesn't invest, it just takes. The return on investment in Norway is nearly 30%/year for the companies because the oil pools are so much bigger. The average return in Alberta is about 15%. The increased royalties would take that below 10%. Where would you want to invest? The term sustainable development gets thrown around a lot by people who can not define it. Sustainable development = population growth. Globally the number is about 3%/year. This means everyone who wants to be employed is. There are two possible roads there. In one, everyone is happy with their standard of living and remains there. In the other, some become richer and some become poorer and the result globally is the same. I am very thankful I live in a society where I can make the choice to better my life. Leaving the resources in the ground for future generations is senseless. There wasn't a major oil industry 100 years ago. I doubt there will be one in 100 years from now. The resource belongs to the generations that needs it. Human ingenuity, sparked by rising costs and business opportunities, will find new sources of energy that we likely can't even imagine (PC's anyone). We live in an incredibly abundant universe. Every time humans have predicted impending doom, new resources and technologies are found. There is no reason for people to live in scarcity in our society. There are no laws in place that state "This segment of the population shall remain poor." I've met princes and paupers over the years and the only real difference lies in the choices they make. Headline today from a new study - F&D Cost For Western Canada Gas Tripled Since 2000 - "The average full-cycle cost of new natural gas supply in Western Canada -- including a return on producers' investment -- has more than doubled since 2000 to $7.90 an mcf, a study has found. That cost is $1.65 an mcf more than the $6.25 an mcf producers received at the Alberta gas plant gate in the first nine months of this year, Ziff Energy Group reported in its 21st annual finding and development (F&D) cost study for Western Canada." And that's why the industry has slowed down.

You should maybe take over my alias.

Can anyone here cast like this? I'd love to learn some of these techniques. It seems to me he must be working with a light line to keep it airborne for so long.

General comments - The idea that Alberta has generally not benefited from the present upswing is absurd. Just look at the jobs, jobs, jobs and all the tax revenue this has created. Mike - there is already enough LNG (liquified natural gas) facilities in the US to completely displace Cdn gas. Four more terminals are under construction off the coast of Texas and will be starting up between late this year and mid 2009. These will more than double import capacity. We have quite a bit in common. I graduated geology into the aftermath of the NEP. I worked as a store clerk during the crash of '86. Was able to get into a company the next year but made less than a first year city bus driver. My wife is a teacher. I've never had the security of a tenured position with a pension. I hope someday to get a big payoff because that's the path I've chosen. If it doesn't work I'll be looking to mow your lawn. I also would like to see a longer term plan and while the government may be able to draw up a plan it's always ultimately up to industry investment to create prosperity. Ralph's cutbacks to education and health were short sighted. Of course we all know he had no respect for education. Maybe with all the new funds they can top up the teacher's pension plan, invest in schools, and drop the PTR. About 25 years ago India made the decision to concentrate more on math and sciences in their schools. Look at what that plan created - one of the fastest growing economies in the world. Toolman - I've read the report. One of the big problems is that it is very broad brush. Critical info is missing that would allow individual companies to calculate the potential effects. I don't know if my company is going to be hurt or helped. Where there's an information vaccuum fear thrives. Alaska is not a fair comparison because their wells are so big and prolific. Charts within the report show how insignificant our wells are in comparison to the rest of the world. Low productivity=high costs just like your business I imagine. It's actually amazing we are able to compete when you compare areas. Alberta is saved by extremely high government takes in other regions. We have one of the highest cost structures in the world. I do like the idea of a cheque in my pocket rather than going into government coffers. You should really think hard about accusing the oil industry of deforestation when I understand you make cutting tools for the logging industry. When I google map northern Canada there's way more impact by forestry and it's coast to coast.

So the report is out and the recommendation is to siphon another +$2B to the provincial bureaucrats. I predict if the report is adopted verbatim it will be revenue neutral as accelerating the existing slow down in industry, and resulting job losses, will cut severely into payroll and consumption taxes. It's scary. It used to be if prices weakened then costs would adjust downwards. With the global demand for steel there is not likely the flexibility available to tool, equipment, and pipe suppliers to cut their input costs. Sales prices are set internationally and the only locally controlled costs now are human. Can you say "pay-cut"? I thought it was particularly ludicrous for committee chairman Hunter to extol the nationalization movement of many perenially troubled third world countries like Venezuela. Is that the standard of living we want? Why do Canadians feel so guilty during our relatively brief periods of prosperity that we have to self destruct? Why do all dollars have to flow through government coffers when businesses generally create value and governments spend?

The programs cut were quietly doing their job - too quietly. Some of their data may have flown in the face of the alarmists - like the study released last year that found polar bear populations at historic highs. Governments need to justify the taxes collected. AGW is huge so they can tax big.

That's one of my favourite hikes also. The wife and I did it a few years ago when there wasn't a cloud in sky. We also went counter clockwise and were disappointed to find Hidden Lake extremely high. The trail was under ~10' of water so we had to bushwhack over and under logs and ended up wading down the middle of the outlet stream. Was hoping to take my kids this year but it didn't happen. Maybe next....

That's a real good one.

I was involved in the early part of that program. Encana has different economics there because they own the mineral rights (6% tax vs 20% royalty). Stay with the project fi you have the choice. It may be monotonous but job security is good and you're close to Carseland for after work activity.

Why do I only get involved in the "lively" discussions? In addition to a small calculation error (1 US Bbl costs $143.96Cdn) your numbers are simplistic and out of date. Between the producers and the pumps are the refiners, marketers, and governments. Tar sands are heavy oil and do not receive WTI prices. From Suncor's 2006 annual report: Average light/heavy differential $8.83/Bbl - industry average is about $20 so Suncor does much better because they produce synthetic crude, 2007 is trending higher Cash operating costs $26/Bbl - including production, transportation, and taxes. So the estimated netback is down to ~ $47/Bbl and this is to deliver crude to the refinery. The actual calculation for Suncor in 2006 provides a netback of $41 likely because they also sell raw bitumen. Your calculations also ignore the finding and development cost. Wells and mines are far from free. Industry average finding costs are over $20/Bbl. Royalties paid on production increased to $911MM from $406MM (production increased from 165M to 263M BOPD, rates rise with prices) To get product to consumers the oil has to be refined and distributed. The refiners process the crude into more valuable products (gas, diesel, lubricants, AVgas, bitumen). Historically, refinery margins have been below 4% but have crept up to 7% recently. Gasoline refining and marketting costs averaged $23.80 /Bbl in 2005 And the governments take their share. Gasoline taxes averaged $52.30/Bbl in 2005. I have to sign off now because I'm late for the "Global Oil Conspiracy 101" course that's mandatory for all participants in the industry.

Oil price in $US increase + Appreciating $Cdn = $0

The attitude is nervous. Producing companies that were not as disciplined - marginal projects relying on increasing prices, loading up on debt - are in deep trouble. The healthy ones are closely evaluating their capital programs. Risk is back. The service companies are usually late to the party and the first to get hit by cutbacks. The overbuild of equipment, launch of new companies, and large rate increases have set the stage for some tough times. The fortunate ones will be able to move equipment to the US where rig counts are rising. What impacts gas prices? Supply and demand - It's increasingly a world wide market. Canadian production peaked in 2001. There's going to be an explosion of production from the US Rockies region and, potentially, LNG (liquified natural gas) from international sources in the next few years. With gas-on-gas competition, price spikes will be much more subdued. Potentially countering this is competing demand from Europe and developing nations. Demand in North America has been flat for a couple of years. This could change with normal winter conditions, fuel switching due to cost savings, and industrial demand for the oil sands. Alberta internal consumption has grown by about 700MMcf/d over the past 10 years. European and developing country demand is still rising. Exchange rates - The Canadian dollar is firmly trending higher. American markets set the price. Our gas seemed cheap when the $Cdn was worth $0.67US. The period of currency exchange adding to the selling price is ending. Many analysts put a fundamental price of $6US on gas prices due to present project costs.

Carrying two packs, bushwhacking ("Do we climb over or crawl under this tree?"), wading, cliff scrambling - brings back fond memories of a couple of hikes years ago with my wife. The wading was a relief after the bushwhacking. Fortunately, it was only about 10 km.

The owner will have to get the good duct tape to fix that.