Royalty Review

[Castuserraticus]

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?

[steelhead]

Can you dumb it down a little for me please. There may be 3 out of a thousand members that got that one.

 

Steelhead

[toolman]

I understand the fear of the industry slowing with the new royalty rate bieng discussed, but it is long overdue and Alberta is at the bottom of the list of rates. With oil at $80 a barrell, big oil companies are cleaning up and it's time we got a fair piece of the pie. Why should we give our resources away for free like we have been for half a century. In Alaska, the citizens get a royalty cheque for the resources extracted from their state. Why should'nt we? We pay for all of the infastructure and deal with the deforestation, pollution, inflation etc. and will have to clean the mess up when all the oil developement is completed.

I say, good on Ed for having the balls to do the right thing for the citizens of this province. I don't get a free ride in my business, why should the oil industry.

[trailhead]

Let's make sure that we are comparing apples to apples here. Alaska and Venezuala both do not have the twice monthly landsales that we have in Alberta. The term of an oil lease or license is two to five years. The oil companies pay hundreds of millions a year for the land with no guarantee of anything, and if they do not drill within the timeframe, the land reverts back to the crown for resale. If they drill and find oil or gas in one zone the rights to the remainder of potentially producing formations on the land reverts back to the crown for resale. In Alaska you buy the land it is yours, all of it. Oh and by the way where did those cheques that Ralph gave us come from?

[Pipes]

Agree with Trailhead.

Oil maybe at 80 bucks, but the natural gas situation (as seen in the Say it ain't so thread) is hurting Alberta. Fact is, if the big oil companies don't like what the Alta gov't is doing, they will bail.

Agreed somethings needed to be adjusted, but poor timing to increase natural gas royalties by 5%.

[mikefromsundre]

Why do all dollars have to flow through government coffers when businesses generally create value and governments spend?

...because the companies do not build the roads, hospitals, schools, etc. Oh I know the story -but companies pay taxes and employed people pay taxes. Albertans have the lowest taxes in Can. and would lynch any premier who rasied their taxes. And companies in Alberta also have very low taxation and always scream and cry when there is a suggestion that it be rasied. The money to run the province has to come from somewhere, thus royalties.

I don't buy the argument that comapnies will fold their tents and leave -where will the US get their gas from?

I have been on both sides of the fence. I was a geologist during the National Energy Policy days. What happend was a lot of companies that really had no business being in business folded (guys starting seismic companies because they had been a driller for 5 years). don't get me wrong I did not agree with the policy. But you know the US companies stayed and are still here pumping our gas south.

And now do I dare say it I am a teacher. When I read about people being concerned about their $500,000 stock incentive plans with the current downturn I cannot feel sorry, especially when the current gov't is offering me 3%, which is below inflation.

Now I am not saying take the money and pay us more. What would be a wonderful vision would be to take all the money Alberta can get and lets build a strong province which has a diversified economy (that is needed when our resources start to run out), a healthy population, a highly educated population and a healthy environment, one in which there is affordable housing for all and all citizens are cared for. I realize that is asking a lot of our politicians...

Mike

[hydropsyche]

"Can you dumb it down a little for me please. There may be 3 out of a thousand members that got that one"

 

I'm still trying to figure out how every gas station in Calgary raises gas by 3.5c/lt all within 5 minutes of each other (I don't believe in ESP and collusion is against the law, so how do they do it? )

 

I, personally, welcome any change that will slow the growth of this economy to a manageable level while at the same time acknowledge who is selling their non-renewable resources to foreign companies/stock holders. Maybe putting the 2Bil in government coffers isn't the best solution, but its better then bonus cheques and stock options for oil exec's. Whichever results in a better trickle down to albertans in general, not just those in the energy industry.

 

Will it result in a depression? I highly doubt it. I can't see demand for oil/gas trailing off anytime soon. They may pull out for a while, just to teach us a lesson, but they will come back on our terms, eventually. The oil and gas won't go anywhere if they aren't taking it.

[Castuserraticus]

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.

[mikefromsundre]

Thanks castus... I just would like to see our government use the royalties to make AB all it could be and I am not saying increased salaries. Salaries will attract quality people but so will a strong, healthy, caring diversified province. As you point out when India decided to improve their education system good things happened. While I would like to see more royalties in our coffers I also fear that our politicians would not handle more money any better than they have handled what they have now. How did Ralph handle extra money? Gave every AB a little cheque.

Mike

[toolman]

grin...true, forestry companies are responsible for a lot of the deforestation, but I'm not happy about it and I think all resource based industries need to pay their fair share and be responsible corporate citizens. I have to be one, so should everyone else.

[trex]

I think Ralph and Rod could have hit the Eddie and put this one to bed in about twenty minutes.

 

Something like this:

1. Let the dust settle

2. Get some serious ministry guys in the oil companies offices for talks.

Any leaks and there is a never ending health and environmental audit from hell.

What can we all live with? Thrash it out , everybody gives up a little something......

say 1.25-1.5 billion in increases to heavy oil. Handshakes all round.

3. Pick the most politically oppertune moment and release the plan.

4. For joe sixpac....err lunchbucket it reads something like this:

 

The ever vigilant Government of Alberta has stepped in on behalf of the people once again.

For the good of joe sixp....... we have decided to raise royalties.

This additional money will go directly to the honest hardworkin...blah blah.

 

At the Chamber of Commerce:

 

The Government of Alberta has once again stood by the side of business.

In direct contravention to our published panel of experts advice we have decided to raise royalties

far far lower than recommended. We believe these are the lowest royalties in the known universe.

Together.....blah blah

 

4. Perhaps introduce a sliding scale for royalties on gas and conventional oil.

When gas is in the toilet cut back on the royalties to keep the gas sensitive service companies

and deep hole rigs alive.

Maybe take some of the 1.5 billion in additional heavy oil royalties to subsidies a small business tax cut.

Maybe have a chat with BC about what to do about the low investment in gas and harmonize a slight royalty review.

 

5. So maybe the heavy oil/Fort Mac development slows down a wee bit say 20%.

Helps keep wages and inflation down.

Fort Mac gets to catch its breath.

Infrastructure and housing starts to catch up in the heavy oil areas.

 

Conventional gas gets a little bit of help and stays alive.

 

Maybe business taxes come down a wee bit and Alberta stays the most competitive province

in Canada.

 

6. Pass them smokes over. Who's round is it?

[fisher26]

I think it’s an out rage that we let the oil companies rape and pillage our province destroying it’s natural beauty and causing sever stress on our community and we get NOTHING for it. Oil companies are making HUGE profits and we still have one of the worst under funded school systems in Canada. Not to mention our parks, or public campground and hospitals.

 

If anything big oil should be paying to make this province a better one while in fact there making it worse. The damage they have done will be a scar for ever and a reminder of what happened when we let money get to our heads and a let bunch of foreigners steal a piece of the pie and leave.

 

Our province will be left poor, and miserable with no oil or real sustainable industry. And the initial occupants will be left to clean up after the hordes that took their money and left.

[Taco]

**Sigh**

[hydropsyche]

I graduated geology into the aftermath of the NEP.... My wife is a teacher. ... 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.

 

You are a geologist and your wife is a teacher and you think its possible that some day you might be looking to mow lawns????

 

Man. I know fly fishing is expensive, but I never thought it was *that* expensive.

[trex]

I think it’s an out rage that we let the oil companies rape and pillage our province destroying it’s natural beauty and causing sever stress on our community and we get NOTHING for it. Oil companies are making HUGE profits and we still have one of the worst under funded school systems in Canada. Not to mention our parks, or public campground and hospitals.

 

If anything big oil should be paying to make this province a better one while in fact there making it worse. The damage they have done will be a scar for ever and a reminder of what happened when we let money get to our heads and a let bunch of foreigners steal a piece of the pie and leave.

 

Our province will be left poor, and miserable with no oil or real sustainable industry. And the initial occupants will be left to clean up after the hordes that took their money and left.

 

Well at risk of sounding like an apologist for big oil ( which I really am not)I just gotta rebut the above.

I think oil roads have opened up pristine areas to heavy fishing.

I think some of the oil roads and bridges have increased siltation.

I think some of the oil companies lease cuts have removed cover and possibly increased siltation.

I think the oil companies SHOULD do more to enhance and protect our lands.

Having said all that I think ranchers with unfenced grazing right into the streams and creeks have done more damage.

 

About the above.

 

"I think it’s an out rage that we let the oil companies rape and pillage our province destroying it’s natural beauty and causing sever stress on our community and we get NOTHING for it. "

We get lots for it. We are the richest province in Canada by FAR. The reason the Canadian dollar is going through the roof is that is now considered a partial "petro currency". The oil companies have to restore the lease sites "as per Province of Alberta" requirements.

 

"Oil companies are making HUGE profits and we still have one of the worst under funded school systems in Canada."

Actually I think we have one of the highest funded school systems in Canada. Not sure.

I do know Canadian literacy is 5th in the world. Sweden,Finland,Norway and the Netherlands beat us, we beat the US and UK.

Canadian expenditure per secondary school student is tied for second in the world (with Sweden). The US is number one believe it or not.

So thats not bad.

 

"If anything big oil should be paying to make this province a better one while in fact there making it worse".

They are paying one heck of a lot of peoples paychecks. Lowest unemployment in Canada.So how is that worse?

 

"The damage they have done will be a scar for ever and a reminder of what happened when we let money get to our heads and a let bunch of foreigners steal a piece of the pie and leave."

Actually they restore the drilling sites. If you see one that you feel has not been restored properly or is causing environmental damage you should report it ASAP to the Gov of Alberta.

They are not foreigners, they is us.

Or perhaps you mean the head office is located somewhere else. Well what about Ford, GM, General Electric, Walmart...and on and on.

 

"Not to mention our parks, or public campground and hospitals".

I have been all over North America and I think we have pretty good parks and campgrounds.

I live in Calgary so I am with you on the hospital thing.

 

"Our province will be left poor, and miserable with no oil or real sustainable industry."

It will be left rich and if we dont have any sustainable industry here who's fault is that?

 

"And the initial occupants will be left to clean up after the hordes that took their money and left."

Them hordes is US local folk and a whole whack of US local folk were born here. Nor are we leaving.

[hydropsyche]

The reason the Canadian dollar is going through the roof is that is now considered a partial "petro currency".

 

The reason the Canadian dollar is going through the roof is because its being measured against the American dollar, which is tanking due to the mortgage crisis (among other things). Almost every currency in the world is doing "very good" right now.

[reevesr1]

I think it’s an out rage that we let the oil companies rape and pillage our province destroying it’s natural beauty and causing sever stress on our community and we get NOTHING for it. Oil companies are making HUGE profits and we still have one of the worst under funded school systems in Canada. Not to mention our parks, or public campground and hospitals.

 

If anything big oil should be paying to make this province a better one while in fact there making it worse. The damage they have done will be a scar for ever and a reminder of what happened when mwe let money get to our heads and a let bunch of foreigners steal a piece of the pie and leave.

 

Our province will be left poor, and miserable with no oil or real sustainable industry. And the initial occupants will be left to clean up after the hordes that took their money and left.

 

I can't remember many arguments that made me want to attack the person making it, but this makes me want to change that policy. However, I will try to hold my tongue other than to say BORING!!

 

I am not from here, but I have worked in Alberta for 10 years, in two stints, in the O&G industry. I raise my family here, go to church here, revel in what this province has to offer. I pay triple the taxes I did in the states for the privilege (and I think of it as a privilege) of doing so. You better pray that the thousands and thousands like me keep coming here to "rape" your province. By the way, I also bristle a bit when someone calls a province "theirs" when their intent is to exclude others.

 

I have no idea exactly what the fair amount of royalties are. But to say that the O&G industry, and by extension, those of us who work in it, haven't given anything to this province is, in a word, idiotic. Has it or us given enough? I have no idea. In the end, the market and the people of Alberta will decide. But to say nothing?? Please. As I said above. Boring.

[toolman]

Well I still want my royalty cheque dam it. And it should be a big one as there will be an extra 2 billion in the slush fund.

Ralph only had 1 billion to give out. Ed better pay up or else...we revolt!

See, if we all stuck together and took this position, we would all have an $800 royalty cheque by the first of Feb.

 

Danny Williams for PM.

[fisher26]

Sorry about that Rick. I had no intention to offend you but since when was freedom of speech so frowned upon? I have strong opinion, maybe even wrong ones as I'm not all knowing and like many others on this board simply gave my 2 cents.

 

Some of the things I said in that post where warped and looking back on it a tad bit strong... I will refrain from making opinionative posts in the future for my own safety

 

I sincerely hope you re not thinking homicidal thoughts towards me as "attack the person" is just a tad bit creepy.

[reevesr1]

Sorry about that Rick. I had no intention to offend you but since when was freedom of speech so frowned upon? I have strong opinion, maybe even wrong ones as I'm not all knowing and like many others on this board simply gave my 2 cents.

 

Some of the things I said in that post where warped and looking back on it a tad bit strong... I will refrain from making opinionative posts in the future for my own safety

 

I sincerely hope you re not thinking homicidal thoughts towards me as "attack the person" is just a tad bit creepy.

Fisher26,

Any attack will be verbal only!

 

I'm sure I read way more into your post than you intended, and for some reason it hit me wrong(and the fact I'd just finished an argument with my 14 yr old didn't help my frame of mind). But whatever the case, I should never make any response personal. You are certainly entitled to your opinion and should feel free to express it without any fear of someone (me in this case) attacking you instead of the idea. I made it personal. For that I apologize.

 

But I do reserve the right to argue the idea!!

 

Hope to meet you at the cleanup. I'd love to banter this around in person with beer and burgers.

[trex]

The reason the Canadian dollar is going through the roof is because its being measured against the American dollar, which is tanking due to the mortgage crisis (among other things). Almost every currency in the world is doing "very good" right now.

 

Howdy Hydro,

 

Right you are.

 

I guess I should have said " the reason wny the Canadian dollar has been escalating against the US dollar for the last year or so and PRIOR to the sub-prime mortgage financing fiasco of last month was........"

 

The Canadian dollar has been escalating against a few other countries for quite a while.

The Economist magazine feels that the Canadian dollar is now a "petro-influenced currency"

So apparently do the international money traders.

They gotta hate that in TO eh?

[wongrs]

thought I'd post these links as nobody has already:

 

http://www.cbc.ca/eyeopener/ (click on 'Socialist Alberta' and 'Royalty Reaction')

http://www.cbc.ca/thecurrent/2007/200709/20070921.html

 

i haven't read these posts just yet but will get around to it eventually...

[SanJuanWorm]

Scarring the province? Some damage yes, but why do you think reclaimation companies do so well?

[GuySmiley]

bump

 

Geez, go figure... Auditor General Fred Dunn doesn't think Albertans are getting enough in royalties as well. Additionally he says the Tories weren't collecting all the money due under the current royalty structure. Hmmmm... maybe we weren't getting our "pound of flesh" after all.

 

Cheers,

[DonAndersen]

GuySmiley,

 

Last number I heard quoted is about $ 20,000,000,000 behind. Now I just have to wonder how many hospitals/schools/roads you just might build with that.

 

And the best part - nobody is blaming Ralph.

 

 

catch ya'

 

 

Don