Energy Minister & Royalty Review

[Type_S1]

Any thoughts on this one beyond? Thought it might deserve a thread of its own as it is the most important thing happening in our Province at the moment.

I had the chance to hear our new Energy Minister speak recently and below were the take aways:

- No word of a lie she stated: "After I was notified this would be my role all I could think about while going to sleep that night was what about our Alberta Caribou." I honestly don't think I've ever heard anything so stupid.

- She took a few questions and stumbled on all questions basically stating "oh we are looking into that" and then circled without an answer.

- She stated her daughter is an admin at a O&G company and uncles worked in oil & gas so she is connected to the industry.

- She stated a royalty review will be complete by mid 2016 and they are going to all groups in Alberta for input on what would work for Alberta and invites any group or person with an opinion to contact her party and set up a meeting.

- She didn't understand what bonus payments were in Alberta

Overall after the meeting I came away worried for our Industries future.


On the royalty review I don't think the people in charge or the regular citizen understands how easy investment is going to be shifted out of Alberta. For those who don't know AB already has higher royalty rates then both BC & Sask. My big concern here is that the majority of significant activity that will bring royalty revenue in for the province over the next 5-10 years is going to be in the Duvernay & Montney. These are plays that require hundreds of millions per year in investment at a minimum. Other then a few small players (Nuvista, Trilogy, etc.) all the main players are multi-national's that can easily shift investments to other areas of the world. It is extremely easy in a boardroom to decide to pull $ out of Alberta and shift it to the middle east, north sea, asia or USA for higher returns because that is all these companies care about. If our current government fudges with the royalty scheme it is going to push these companies out leaving a massive resource untapped and a huge loss in economic activity in Alberta. We will be left with our base production declining and not enough production coming on to replace it meaning every year going forward we will be stagnant. The NDP is likely to increase spending over the next 4 years meaning we are getting hit on both ends. All I currently can say is "the sky is falling".

[FraserB]

Their “consultation with Albertans” is asking people to rank which shitty options they like the most and the closest she has been to the industry is filling up her car. Pretty clear where this is going in a government stacked with non-Albertans and anti-oil lobbyists.

Someone should have asked her to explain SAGD or comment on the water recycle rates that producers have these days.

[ZenOps]

Consumable commodities like oil rely on someone buying and using it.

Right now, and for the last five years, the US has not been consuming. They are arguably in the biggest recession since the great depression. Japan has been stagnant for twenty years. China is now nearing stagnation.

Which means noone wants to buy oil. There are large gluts of physical reserves now full around the world.

Unless things change soon, without a buyer of oil in the forseeable future - there is no point in spending money on expansion (Keystone XL) The strategic petroleum reserve in the US is at a brim full 700 million barrels, the US consumer has capitulated on oil consumption. Canada wants to build another straw to the US, when the US is already had twelve milkshakes and weighs 800-pounds? Insanity.

The question for me is how much should the oil production be shrunk? Expansion right now is insanity. Pumping more oil is insanity. Building a refinery in the hopes that there will be extra demand for finished products a decade from now, is risky.

[phreezee]

Voice your opinions in an open letter here if your job depends on it:

https://letstalkroyalties.ca/tell-the-panel/

[phreezee]

Dave Mowat is the Royalty Review Panel Chair:
https://letstalkroyalties.ca/panel/dave-mowat/

Dave Mowat is now one of Al Gore's climate warriors.

Mr. Mowat, chief executive officer of Vancouver City Savings Credit Union, spent two days in a Nashville hotel last week being trained to present his own version of Mr. Gore's An Inconvenient Truth to Canadian audiences.

http://www.theglobeandmail.com/repor...article676853/

NDP stacking the deck against O&G.

[sabad66]

Originally posted by phreezee
Dave Mowat is the Royalty Review Panel Chair:
https://letstalkroyalties.ca/panel/dave-mowat/



http://www.theglobeandmail.com/repor...article676853/

NDP stacking the deck against O&G.

Published Friday, Jan. 12, 2007 12:00AM EST

[phreezee]

Originally posted by sabad66

Published Friday, Jan. 12, 2007 12:00AM EST

Fully aware of that since he is now the ATB Financial CEO. It doesn't change the evidence that he may have a bias against the oil sands.

[Xtrema]

Originally posted by phreezee
Dave Mowat is the Royalty Review Panel Chair:
https://letstalkroyalties.ca/panel/dave-mowat/



http://www.theglobeandmail.com/repor...article676853/

NDP stacking the deck against O&G.

Regardless of his view on climate, you can't ignore his expertise in financial world.

[Feruk]

I don't participate much in these discussions because
(a) I believe Alberta already takes the highest royalty rates on new wells in an O&G producing jurisdiction in Canada/USA, so I think the whole "fair share" argument is moot. Nobody is looking for a "fair share" here. Also, it seems nobody ever talks about us vs other oil jurisdictions.
(b) Companies threatening to leave or shift funding elsewhere are full of shit. Most of the big multinational companies already don't invest here in anything outside oil sands (in substantial size). At today's oil price and given future greenhouse concerns, I doubt we'll see another big oil sands project (maybe ever). So really, who will shift investment? The smaller guys mostly can't. Companies like CNQ, Suncor, Cenovus, and EnCana? Sure, they can shift SOME investment, but at the end of the day, their big positions are still here in Alberta. Their lands will come up for expiry and they'll bite the bullet or let someone smaller drill the land.

In the end, companies will bitch, the government will somewhat give in, royalties will go up maybe a couple percent but with new incentives to make companies pay almost nothing more, and nothing will really change. Just the same old farce.

[mr2mike]

Take a look at the Return on capital employed (ROCE) by industries in Canada.
http://www.statcan.gc.ca/pub/61-219-...0/t005-eng.htm

Oil and gas extraction and support activities is 1.0% in 2013.
Food and Bev stores is 20.6%.
Gas Stations are 11.5%

So you turn that 1.0% to 0 or a negative and you'll see things change quickly and not for the better.

[HuMz]

Originally posted by Xtrema


Regardless of his view on climate, you can't ignore his expertise in financial world.

What good is his experience in the financial world if he doesn't view the oil sands as an asset?

Like most of the NDP, they've actively campaigned and opposed much of the oil sands.

[ZenOps]

Oilsands aren't an asset, they are a potential asset.

A bird in hand is better than two in the bush. One working tractor is better than two broken tractors.

Oil value is only derived from the second that it is consumed in combustion or created into a final product (like a polymer deckchair) Until that time, its only a potential asset. If 10% of the US population decides to stop driving - then value disappears.

If the world suddenly figures out cold fusion, the 700 million barrels of crude in the US strategic petroleum reserve become mostly worthless, as does the entire oilsands.

Same with food, if the US stops eating two chicken every day and limits themselves to one - the extra chicken has no value. Its value is tied to the one chicken that will be bought, and the other that will not.

[Xtrema]

Originally posted by HuMz


Like most of the NDP, they've actively campaigned and opposed much of the oil sands.

Mining for oilsand will soon be as exciting as mining for coal today. I don't think we will grow any more. Probably just keep operating for another 3 to 5 decades and shut them down.

[Sugarphreak]

...

[HuMz]

Originally posted by Xtrema


Mining for oilsand will soon be as exciting as mining for coal today. I don't think we will grow any more. Probably just keep operating for another 3 to 5 decades and shut them down.

What is it that will replace Petroleum?

[HuMz]

Originally posted by Sugarphreak
I don't know if people have been paying attention, but O&G companies have been quietly getting into green energy

Suncor for instance has it's fingers into a half a dozen wind projects now. By the time a carbon credits system rolls around, they are going to be laughing at it as they sell themselves their own credits for nothing while the rest of us have to fork out cash on our personal cars to the NDP.

Yep, and the only reason Suncor is involved in those wind farms is because they are highly subsidized, look no further than Ontarios Green energy program to see how it has effected the consumer.

[suntan]

All the big ones have green stuff going on.

There's a lot of cranks and frauds in green energy though. Many of the O&G companies are on the lookout for acquisitions and just plain ol' investing, but so many of the green companies are total shams.

[Xtrema]

Originally posted by HuMz



What is it that will replace Petroleum?

II didn't say petro is going away. I am saying demand is lowered that high cost oilsand will not be competitive and attract less investments to expand or continue.

Something has to increase demand (not happening) or reduce supply (may happen if we nuke Russiaor Saudi) before oilsand will be viable.

[HuMz]

Originally posted by Xtrema


II didn't say petro is going away. I am saying demand is lowered that high cost oilsand will not be competitive and attract less investments to expand or continue.

Something has to increase demand (not happening) or reduce supply (may happen if we nuke Russiaor Saudi) before oilsand will be viable.

But for the foreseeable future demand for oil will be high and continue to grow, it won't be until something that can better replace fossil fuels comes on the market that demand will decrease for oil.

So why would be harm our economy now, on the hopes of a future without oil?

[Cos]

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