Premier Ed Stelmach faces either his “finest hour or his final hour” beginning today as the Tory chief embarks on a strategy for Alberta’s oil and gas royalties, one of the most important public policy decisions confronting government in years.
It starts tonight when the rookie premier appears in his first recorded television address, laying out his vision for the province and briefly touching on the royalty review that has sparked an emotional debate across the province.
Stelmach will then unveil Thursday afternoon in Calgary the government’s much-anticipated royalties strategy, released more than a month after an expert panel proposed hiking royalties to ensure Albertans get a “fair share” from the development of publicly owned energy resources.
I’ll bet we have oil industry readers who have opinions/predictions/observations to share. They’re welcome in the comments.
This farmer had better not do anything that sends the oil men packing. He will regret it dearly.
Alberta has given the oil boys more than a fair shake for a long time, now it’s time for big oil to spread a little grease around.
It’s getting embarrassing how bad the infrastructure is right now in Alberta, considering the prosperity the oil boom is supposed to bring.
I don’t support massive royalty grabs or nationalization, but when we are taking in a fraction of what Texas does, somebody is getting fleeced.
…greed is an amazing motivator.
The last time somebody played with the oil companies this way it killed both Alberta’s economy and also Canada’s as well. I beleive they have to do something but not 20%, an increase like that will scare business away. If any Country or Province says they will raise taxes 20% just see how fast business will find other places to put their money. Money goes where it can make the best return for the owner of the money. I have worked in the patch for 25 years and I am scared about this proposal. The people asking for this just don’t seem to remember the NEP and the havoc it caused us in the 80’s.
To: John West. Where will they go?? Russia? Does anything change when thr price of oil goes up by $10.00 per barrel?? And it is Alberta’s oil, not Shell’s or Exxon’s. John! we need to do the same and retain what is rightfully ours. Stelmach is a lot smarter than he looks!!
This 20% increase is after the industry takes all the risk, invests their own money and expertise, navigates all the other rules the government has put down, etc. It is out of their before tax net. They then have to pay taxes and benefits just like every other business in the country. We will see whether it is the straw that breaks the back or not.
I don’t really agree with much of the tar sands development in the first place, but with oil approaching $100 a barrel I would surmise that oil extraction in Alberta is more than economically viable. Where there’s a buck to be made oil companies will be. It’s the people’s resource, this they should be fairly compensated for it.
This should be interesting although I’m afraid that the Alberta PC government is stuck on stupid and it has been that way for a long time.
Full marks for balancing the budget and eliminating the debt but then Ralphie and Fast Eddie start making decisions and spending like drunken sailors(no offense to the senior service). It’s like buying prime steak and making meatloaf; a waste.
they should cut the royalty to 0 at the wells and charge 15% at the border. collect the royalty at all the exits from the province.
. all refining , upgrading , liquid extraction and chemical plants would flock to Alberta creating jobs.
the admininstration would be cheaper and more efficient and only the free hold royalties would have to be calculated.say about 10% of the wells.
the infrastructure suffers because they have been banking the money to the tune of a 8 billion surplus a year, most of which comes from oil and gas.
as an aside.
there are hardly any state royalties in texas, texas is mostly freehold, so I dont know where that high texas royalty crap comes from. most texas freehold royalties are 12.5% , they dont flow to the state except on school sections .
Eddie better not destroy the oil industry or the Wild Rose Party will make the Progressive Conservatives join the Social Credit, United Alberta, and Liberals in the ruins of former governing parties in Alberta.
Ah yes “The people’s resource”. Just by living in a judristiction the government is entitled to the revenue even though they do nothing to produce the wealth.
Explain to me why the province needs to raise royalties, last time I checked both the Alberta and federal governments are running surpluses which means governments are already getting too much revenue.
Don’t think because they rase royalties that you will see an increase in government revenues.
Let Saskatchewan be your example. Sask lowered our royalties and gov’t revenues are higher.
The most comical part of this is the math, and why it will escape the simple servants and other public sector hangers on, to their own detriment as stupidity always does. Can we agree that this will not change the price of a barrel of oil, i.e. something set in international markets? I think we can, since it is so obvious. Therefore, what is being discussed is a different division of the same pie, one which increases government’s share, and decreases the oil companies’. So far, I expect universal agreement, since this is both very basic, and does not cross ideological self imposed blinders.
The question then becomes winners and losers. Clearly, the losers will be oil companies, but since oil companies are legal constructs made of paper, they can’t lose, rather their owners collectively lose. So who owns the oil co’s? A quick perusal of their investor relations websites and the sites of OMERS, Ontario Teachers Pension fund, etc. etc. reveals that these oil companies are mainly owned by pension funds, the bulk of those being public sector union pension funds. This would be truly delicious, except that the morons will shut down whatever meagre critical faculties they posess, and scream “No war for oil!”, and “Kyoto forever!” as thinking is far too painful, thus shooting themselves in their own feet.
It was ever thus.
The gov of Alberta needs to set up a fund to sock the bucks away for the future and to help the province keep taxes low to attract business because of a low tax regime using the fund to support gov programs.
I lived in Alberta 20 years ago and the Heritage Fund was $15B then and still is!!! What did King Ralf do with the money!!!?? Alberta’s gov spending is , if you read the news (for what it’s worth) is out of control.
Canadians, not just Albertans, have to realize what the monopoly health care and education systems in this country are costing us way more than they should and are not sustainable. Alberta has shown that no matter how much money is thrown at these programs as they exist, there will be no improvement, the reason being that there is incentive to improve.
We have politicians that are less than willing to push an infrastructure project over some some monument to the party/cause du jour etc, because of the “vote value” per dollar.
There are too many Canadians who “expect” the government to solve their problems for them and are more than willing to let others pay the taxes so they can have what they want and politicians more than willing to deliver for their vote.
As far as the royalty issue is concerned, I have no idea what is fair but you don’t change things mid-stream by bumping rates by 50% or more and expect no effect.
As a worker in the oilpatch, I can tell you that I have been experiencing the chill already. Projects have been shelved, investment money has been pulled and everyone seems to have forgotten that NG drilling makes up the bulk of Alberta well drilling. Which had already experienced a pullback as a result of low pricing and demand. Add the threatened environmental policies to appease the AGW crowd, the high wages demanded by labor (and threats of unionization!) and increased costs of resources…we will see how they react after tonights speech but I anticipate that this stumble will take considerable time to recover from.
I’ve already began to make preparations for international opportunities in Russia, India and the Middle East ’cause oil is the same wherever you are in the world and these Co. have alot of irons in the fire to choose from.
Only an idiot for making this a political issue in the first place …
a lot of speculation and name calling so far.
let’s hear what Fast Eddie has in store, Thursday.
a royalty adjustment is due.
lower for gas.
higher for oil sands.
Suncor had the cost of production down to $10/bbl in the late 90’s Looks to be room for higher royalties.
Think of it this way, higher royalty rates just means NFLD will take more of our money.
It was a stupid promise to make and to keep. It was a no (political) win promise in the first place.
Everyone is talking about a “fair” royalty without defining what is fair!
So the oil/gas companies get to
-speculate on land,
– rent the mineral rights from the government
– pay landowners / residence to do seismic (who then pay taxes to the government
– Do the seismic (paying a seismic company who pay taxes, then the employees pay taxes
– Analyse the results (employees get paid who then pay taxes
– Pay to drill a well (drillers/employees pay taxes)
– hopefully discover marketable reserves
– Pay to design and build facilities to produce reserves (companies/employees paying taxes all the way along)
– Give the government their royalties
– Find a buyer for the “peoples” energy
– Final, if they should turn a profit…..pay corporate taxes.
So Eddie Strom er Stelmach wants to upset the apple cart to score points the the socialists.
Alberta is ROLLING in taxes.
The larger the oil/gas producer the easier their capital will leave the province for better rates of return. It all about RoR, which includes costs of production(very high in Alberta) and Risk (was Low in Alberta but is now increasing).
The report was incomplete anyways and always bad policy to go off of incomplete information
As an armchair economist it’s always amusing to hear people ranting on about “Big Oil” presumably vs those “mom and pop” offshore drilling and tar sand upgrader projects we all reminesce about. Since the tar sands belong to “the people” perhaps a compromise can be reached whereby for every 100lbs of tar sand mined by “Big Oil” a 100 lb bag of tar sand can be shipped to the home of every Canadian who wants one to do with as they please. As for being “exploited” by “Big Oil”, my brother, who works in the oil patch has in turn “exploited” “Big Oil” over the years to the tune of a two storey house, maintenance for a wife, four children and several dogs, cats and hamsters, cars, minivans, vacations and a pension. Numerous others have done the same. Given a choice between the exploitation and the bags of tar sand delivered to the basement, I as a low tax paying Albertan will take the exploitation thank you very much. The fastest way to kill the economy out here will be to morph overnight into another tin pot, business unfriendly jurisdiction in which contracts and government business agreements are worth less than the toilette paper in the washrooms. That’s not to say it won’t happen. I saw it before with the NEP. Only this time, I’ve got a wad of cash to clean up on some cheap foreclosed houses.
I’m liking the idea of greater royalties on unrefined oil leaving the province .. pay us one way or another your choice
“Think of it this way, higher royalty rates just means NFLD will take more of our money.”
They must be lowered in an effort to slap Danny Williams in the face and bankrupt those Newfoundlanders with their 12 percent unemployment rate.
Russia, now there’s a real safe place to live and invest!
ROI, return on investment, rather than ROR is more proactive imo.
I’m told over and over by politicians, activists and the royalty panel that I’m an owner of Alberta’s resources but frankly I do not feel like one.
I did not pay any money to acquire ownership of these resources nor have I laid out any capital for the finding and developing them.
Other than the $400 Ralph-Bucks that I received some years ago, I have not received any dividend or value appreciation for my ownership.
I’ve rarely been asked how the money collected on my behalf should be spent.
I cannot divest myself of my ownership to a third party.
I’m liking the idea of greater royalties on unrefined oil leaving the province .. pay us one way or another your choice
Apparently, that’s what’s going to happen; there’ll be at least one new refinery in Alberta getting built. Dunno how that will fly with NAFTA and the mare cans.
It looks like all we get today are hints of what we might learn tomorrow. Read this: http://tinyurl.com/3x64tv
I for one wonder why we are making such a fuss about increasing our take on royalties when that increase will only increase our payments to other provinces through the equalization formula. A recent article by Licia Corbella of the Sun newspapers reports that in the 2006 – 07 fiscal year Alberta and Albertans sent $32 billion to Ottawa and received back $17 billion. Now there is some real cash. Should we not be more concerned with our province being bled dry by that transfer of money
rather than the mere pittance of $2 billion or less on supposedly foregone royaltie payments.
?
Be wary of a debt free gov’t that thinks it needs more cash. Might as well burn the 2 billion to produce steam for electricity generation.
“It is the position of the Wildrose Party executive committee that Alberta’s oil and gas royalty regime should not be changed at this time.
…
If an unknown amount of royalty income is being forgone by the government due to its own antiquated accounting systems, as the Alberta Royalty Review Panel has reported, then the government should fix that, so that all terms of existing agreements are met.
With an $8 billion surplus last year, and the highest level of program spending of all major provinces, the Stelmach government does not need $2 billion more from petroleum producers.
…
Alberta is a lavish spender compared to equivalent large provinces. Our government spent $7,900 per Albertan in 2006 compared to $5,900 per Ontarian and $6,700 per Quebecker (note that this includes program expenditure only, not capital projects like new schools and highways). If the Alberta government’s operating budget were as efficient as Ontario’s (which isn’t all that efficient, frankly), our provincial saving would be $6.6 billion – a 20% reduction to what the government is actually spending.”
http://www.wildroseparty.ca/main/index.php?option=com_content&task=view&id=48&Itemid=45
I sent a letter to my MLA and detailed what my busines and myself paid in taxes to the various governments in Canada, over 12 years. It worked out that the “take” was” 76.8% to the feds, 19.7% to Alberta and 3.5% to Calgary. this was based on corporate income taxes, personal income taxes, GST corporate and city taxes of which Eddy takes 50%. If Stelmach is wondering where the money really goes, he can phone Ottawa and cry them a river! Shutting down the oil patch or creating the conditions that investment dries up in this province, will certainly eat away at that big fat surplus that Ottawa crows about on an annual basis. It amazes me that 3.4 million people of this province pay 25% of this country’s bills. I also have an issue with this provincial government that feels that it needs a bigger slice of the pie, when racking up an $8 BILLION surplus themselves! The cost of governent in Alberta is out of whack. The Heritage Fund has barely grown, so I wonder where all that money went?
I’m as free-market as the next guy. But inflation in Alberta is out of control. If we were our own country we could raise interest rates, but we’re not. We’re carrying the load for the rest of the country.
Maybe royalty rates are how we can put the brakes on things. As a friend of mine said, if some oil companies want to leave because of that, be my guest. Maybe then I can find a carpenter.
In business school they teach “charge what the market will bear”, so why don’t we. There’s certainly room to move rates up.
In reading the final report of the Alberta Royalty Review panel I was stunned to learn that the current Alberta government oil and gas revenue share, which includes royalties, fees and taxes, is a whopping 58% for natural gas and 47% for oil. This leaves the producers share at a meagre 42% for gas or 53% for oil, out of which the producers must bear all the costs and risks associated with bringing the resource to market; these costs and risks include discovering attractive potential resources, outbidding the competition for the rights to it, drilling the well, and if successful connecting to the delivery pipeline and finally selling the product into markets with rapidly fluctuating commodity prices. The Alberta government reaps it’s 50 to 60% share without risk and with minor cost outlays. I don’t think it can be argued that it is the free enterprise Oil and Gas industry which produces the current prosperity enjoyed by every Albertan and which contributes $14 billion a year to the provincial treasury. Many will laugh at the analogy but it is not implausible to compare the current resource revenue capture system as akin to feudalism, whereby those working in the oil and gas industry act as serfs in the crown’s manorial lands, performing all the valuable and risky work but giving up over half of the fruits of their industry to the lord of the manor.
an interesting point that will be of interest to saskatchewan viewers is that the saskatchewan ndp government reduced royalties and the general regulatory scheme such that socialist saskatchewan now takes less in royalties than alberta!! imagine that – oil and gas $ leaving alberta for saskatchewan and BC! Hard to imagine? That is what will happen if the royalty report is implemented in full. Not Quwait, Sudan and Venezuela as some people like to mention.
an interesting point that will be of interest to saskatchewan viewers is that the saskatchewan ndp government reduced royalties and the general regulatory scheme such that socialist saskatchewan now takes less in royalties than alberta!! imagine that – oil and gas $ leaving alberta for saskatchewan and BC! Hard to imagine? That is what will happen if the royalty report is implemented in full. Not Quwait, Sudan and Venezuela as some people like to mention.
I hope Alberta does not have a new NEP comming down the tube. I was a resident of Alberta when the first NEP (from Turdo) brought the Alberta economy to it’s knees. It was terrible and tragic.
If the ‘people’ of Alberta want a ‘share’ then why don’t they buy ‘shares’? Eddie and his gov’t could make all oil/gas Cos give tax paying Albertans investment options as tax write offs. I know that the Power Corp outfit have major intrests in Alberta Oil and Gas – ding their holdings for 50% as pay back for the past.
Word is that the oil companies have contracts, and they will be taking the government to court for not honouring them.
I would like to know what Alberta’s ‘fair share’ is actually. Still little has been done to widen the Highway ‘to from and hell’ 63 – I’ve seen slugs covered in salt move faster.
Quebec will have her hand out for more in the way of transfer payments – don’t they have a lot of overpasses to rebuild.
Stelmach is a stupid Ukrainian, and I know one to see one. If oil companies have to pay more in royalties, it will be the workers who pay or should I say, don’t get paid. Fort Mac is a two high-income town, and if one person loses a job while paying through the teeth for their mortgage, they’ll have to pack up and leave – the result will mean real estate prices will plummet. The Cash Cow can only be milked for so long before she’s sick of having her teets pulled. The workers in Fort Mac aren’t crying for higher royalties, so why is the Alberta government wanting a bigger surplus – are they going to subsidize the price of gas at the pumps in Fort Mac – not bloody likely.
Johnny Jesus,
“Stelmach is a lot smarter than he looks!!”
So we agree he looks stupid.
My question is: The royalties are a percentage. If he percentage was good at 20 dollars a barrel then why isn’t it even better at 80 dollars a barrel.
I had a contract with a business long ago and we were both doing well. I worked hard to increase to gross, so we were both doing even better. But for some reason it irked the contractor that I was make so much money. He didn’t think there was anything wrong with him making more money, but who the hell was I to be so prosperous?
We soon parted trails and his next contractor failed to maintain and they both wound up making a lot less. It never improved up to the point where the business was sold.
I am not sure where that thinking comes from, but I suggest that Stelmach is the same kind of greedy fool.
I see this in the envious less motivated types in our society. They hate the man who make big bucks, and even thought that man pays big taxes, he still has so much left over. If you tax him enough he will stop working and then less motivated types will soon have no jobs.
For some reason most Canadian simply don’t understand cause and effect. They also don’t understand or perhaps just simply hate the capitalist system. You know … the only system on the planet that allows idiot a high standard of living, because the smart are free to create it for them.
Maybe when we are all living in trailers and eating Kraft dinner, people like Johnny Jesus will be happy, but I doubt it.
If the oil men are treated badly enough they will find other places or industries to put their money and their efforts in. They are not owned by the oil industry and are certainly not owned by the Alberta government.
Taze yourself bro and think about it.
MaryT said: “Think of it this way, higher royalty rates just means NFLD will take more of our money.”
Here are the tables for equalization payout for 2007, 2008 and 2009
NL- 632, 477 and 197 million respectively (NL attains have status after 2009)
PEI 291 294 310
NS 1,386, 1,308 1,294
NB 1,451 1,457 1,492
Quebec 5,539 7,160 7,622 millions
MB 1,709 1,826 2,003
SK 13 226 0
BC 260 0 0
So MaryT, let me fix that for you:
“”Think of it this way, higher royalty rates just means NS, NB, MB, PEI and especially Quebec will take more of our money.”
Other money transfers like CHT(Canada Health Transfer) and CST(Canada Social Transfer) bring the total for NL, including equalization, to 1.370 and 1.183 billion for 2007 and 2008 respectively. Approximately $2325.00 per person.
Quebec will receive 16.677 and 18.731 billion for 2007 and 2008 respectively, approximately $2436.00 per person.
Since the new federal transfer formula, including the wait time health gaurantee, is based upon a per capita payout, the amount NL will continue to receive from the feds will get smaller and Quebec’s take will get larger, especially with the new immigration rules and monies attached to those provisions.
Ryan said: “They must be lowered in an effort to slap Danny Williams in the face and bankrupt those Newfoundlanders with their 12 percent unemployment rate.”
NL’s unemployment rate for Sept. 2007 was 13.7% of a labour force of 251,300 which means there were 34,428 NL’s drawing their pogey. How many of those 34,428 work in the oilpatch during the winter season doing part-time work that Albertans and other Canadians can’t or won’t do?
Conversely, there were 450,000 Ontarians, 293,000 Quebecers and 72,000 Albertans currently drawing their pogey as well in Sept.
Hope I didn’t slap you too hard in the face with the facts there Ryan. Premier Williams will be attending and the guest speaker at the Annual Press Gallery Dinner on Saturday night. Lining up all his media contacts for his election campaign against PM Harper.
Enjoy. I know I will.
Joanne:
My, my, aren’t you the tolerant one?
Just because the premier is a third-generation farmer does not make him a stupid Ukrainian.
I’ll tell you who was stupid and that was Ralphie, who was bought off by the silver-tongued devils in the Calgary oil towers.
A bit of history here.
When Peter Lougheed changed the royalty regime to 25% in 1972, that seemed pretty fair. No accounting trick, no we’ve got to pay our expenses first baloney … just straight 25%.
In retrospect, Ralphie was suckered in … and I’ve voted for Ralphie each time he ran for election.
Truth of the matter is, the royalty rate is much lower than 25% today because of accounting trickery and embellished expenses.
So, take a hypothetical barrel of oil at $80 bucks right now.
Let’s assume Stelmach announces on Thursday that he will go back to the Lougheed formula of 25% with no provision for start-up costs.
Are either one of you going to tell me that Big Oil cannot make a go of it selling their product at $60 a barrel?
If you think they can’t, then you’re much dumber than you claim the premier to be.
I’m with Johnny on this one. Stelmach is much smarter than your statements claim, especially the out-and-out bigotry displayed by Joanne.
Keep it up guys and pretty soon Calgary will be even more hated than Toronto.
expenses are not deductable from royalty , the formula is volume and price based. there is nowhere in the formula that expenses are included.
capital costs are only on the federal tax and the Alberta Government thru the municipalities taxes the capital investments, they are not deductable from royalties either.
on gas where the royalty can be up to 35% the government can take its gas in kind and pays for delivery thru gas cost allowance. this only includes the gathering system , the government does not pay for the seismic, drilling , completion or wellsite facilities and these are not included in the calculation. they do pay for thru GCA cleaning the gas and transportion, but the rate of return on all the gas plants and gathering systems is limited to a utility rate of return.
so before you blather at the mouth ‘Set you free’
understand what you are talking about.
an interesting point that will be of interest to saskatchewan viewers is that the saskatchewan ndp government reduced royalties and the general regulatory scheme such that socialist saskatchewan now takes less in royalties than alberta!!
Socialists are known for that. Suck ’em in, then take ’em to the cleaners.
If an increase in royalties was going to badly harm the oil companies, I would expect their share prices to be dropping. Its not happening. They have already factored in a 20% increase and are still expecting to make a healthy profit.
Steady Eddie will need to raise royalties on the oil sands or he will be toast in an election. The economic growth is too fast in Alberta and the quality of life is suffering (high rent, costs, labour shortages, etc. It this cancels a few oil sands projects then good. Some more revenue will be raised and growth will slow down. It makes no sense to process bitumen in the US from Alberta’s perspective.
They would be wise not to touch gas as this is in a recession currently.
every time i hear someone say it’s the peoples resource i cringe. wee socialists everyone. all gov has a lousy track record of doing anything for the (people). what makes anyone think this is any different in alberta. billions more to be sucked up by fools who will squander it with no benefit except to politicos and their friends.
It’s just after 04:00 Alberta time here as I write, so within about 24 hours we should have enough information to begin to discuss Premier Stelmach’s government’s proposals, that is to say, once we know what they are.
The bigwigs at the oil company I work for showed up for a meeting last month to whine about the “20%”, and how important it was to oppose the royalty increase or face layoffs. It was all very reminiscent of pathetic leftist union tactics.
I reminded everyone at the meeting we haven’t elected an NDP government, and that surely the Premier clearly understands the difference between Alberta and Saskatchewan…
I am surprized by the number of people, especially Albertans, saying that Ed had better not implement another NEP.
Clearly they do not understand that the NEP was a deliberately malicious Trudeau/Lalonde taxation program designed to deliberately drive oil and gas companies out of Alberta (where the feds had no jurisdiction) and onto the federal lands where the feds had exclusive jurisdiction.
And the feds would reap all the taxation benefits.
This would be then be the federal government’s ‘private money’ as the wacko Pierre Trudeau once described in his screwed up version of economics.
The primary purpose of the NEP and Ed’s royalty review is not even remotely in the same league.
And thoughtful people should refrain from saying or pretending that they are.
very true rockyt,
Trudeau and Marc LeNez taxed Alberta, changed the tax structure on offshore, confiscated 25% of existing leases offshore and gave them to the newly created PetroCanada. spent billions buying petrofina , pacific petroleum and allowing them to not pay capital gains. billions spent and not accounted for. then there was the deal signed by the feds to import mexican oil, ended up being sour heavy oil that couldnt be refined easily, lots of it turned into pavement.
cal2:
Apparently, you’re willfully blind to the ‘royalty holiday’ instituted by Ralphie, by which Big Oil does not pay any oil sands royalties until their create enough revenue to pay off the cost of their multi-billion dollar plants.
That’s a fact.
Apparently, the Lougheed formula of 25% royalties worked well for convential oil, despite the impression that every hole drilled was a gusher.
Convential oil exploration, with prices way lower than they are today, managed to make a living despite the expense and high incidence of dry holes.
Perhaps I did not articulate my own position clearly enough in my post, so I’ll try again.
I believe it would be fair for both Albertans and the oil companies if we returned to the Lougheed formula of 25% of production.
Take out 100 barrels, pay 25 bucks. Simple.
Ralphie willingly agreed to be bamboozled with accounting trickery and needed to expand the bureaucracy to have somebody check up to make sure expenses were legitimate.
As for Trudeau, that a**hole had no business raking money off Alberta’s oil. Get that, Alberta’s oil. Not a personal reserve of oil companies, who are contracted by Albertans to help extract the resource.
Once again I ask, with oil at $80 a barrel, how can anybody seriously claim oil companies cannot survive on a cash flow of $60 a barrel?
“Alberta has given the oil boys more than a fair shake for a long time, now it’s time for big oil to spread a little grease around.
It’s getting embarrassing how bad the infrastructure is right now in Alberta, considering the prosperity the oil boom is supposed to bring. ”
Jeee ‘dya think there’s nothing left for infrastructure because the feds are vacuuming more out of the province….more oil royalties will sweeten the Fed take first and leave Alberta with crumbs….either you don’t live in Alberta or you just moved there but in any event you have a very unknowledgable opinion of Provincial economics….especially the patch.
set you free, let me answer your question and correct your “facts”.
Firstly, companies DO pay a 1% royalty on oil sands production immediately and additional net royalty when payout is met (as you describe, when costs and allowances are covered), perhaps not enough to your liking, but not the nothing you state is “fact”.
Secondly, bitumen and heavy oil, which is what is relevant with respect to an oil sands discussion, is not selling for $80/bbl, Lloyd Hardisty blend was selling at ~ $30/bbl discount to sweet crude in September 2007. Not every barrel of oil is created equal.
Finally, you make the point yourself, oil companies want to recoup the cost of their “multi billion dollar plants”, well, yeah! That’s the whole point. The oil sands royalty recognizes that HUGE capital investments need to be made before a mining or SAG-D development can produce a drop of product.
But you think it should be treated the same way as a single well drilled for sweet crude (which really may garner $80/bbl) within an already discovered field, close to existing infrastructure (i.e. pipelines etc).
Right-o!