Alberta Royalty Review

[shirtr]

Here is an interesting website to view and post your opinions. Tristone's report is a good read.

http://www.getitrightalberta.ca

[genek270]

It's a different slant on a very hot topic and should be considered along with the recommendations of the Royalty Review Panel (which you'll notice was headed by an ex-lumber executive ?????).

[TreeGuy]

genek270, what in the hell does having it headed up by an ex-foresty guy do with anything?? That's the stupidest damn thing I've read all day! Would you prefer that it was headed up by yet again another industry insider who created this mess in the first place??

Tree

[Guy Smiley]

Looks like auditor general Fred Dunn agrees with the Royalty Review. Additionally he found evidence that people within Alberta Energy thought royalties should go up and were ignored, and that even under the existing royalty structure the Government wasn't collecting all of the money owed to it. Nice to see the Tories lookin' out for what's best for Albertans.:lol:

Cheers

[orca]

The panel and Stalmack have it in there head that the golden goose can't fly away and move investments to another location. Do they not remember what hapened in the mid 80's when OIl moved out of Alberta. Who's going to pay for all the infastructure and hospitals when they leave. and house prices drop by 30%

[Guy Smiley]

Ya, that's what the oil companies would have us believe. Meanwhile, they still owe a few billion under the current royalty structure. So, they've been stiffing Albertans all along.

The 80's can't be just blamed on the NEP. While it didn't help, the oil companies left mainly because of a worldwide recession and because the price of oil dropped dramatically.

How much should we get for the oil? Who's benefitting right now from the overheated economy and who's paying the price?

Fred Dunn is no caped crusader. For the most part he has toed the party line. It's pretty indicative of bad/corrupt planning if even he is on side with royalty increases.

Cheers

[Okotokian]

Who's going to pay for all the infastructure and hospitals when they leave. and house prices drop by 30%

Well, apparently not the oil companies. They have made that clear. They want the oil cheap. It's their right. We can pay for that crap ;)

[russ]

Any of you guys do a whois for the website mentioned in the 1st post? You might want to. Personally I'd be wondering why a PR company is the registrant.

[BigBuck$]

You’ve probably had some information come across your desk or e mail analyzing the recommendations of the Royalty Review Panel. I have had dozens of them, but I thought I would pass on the attached in particular. It seems to be one of the better explanations of why the recommendations are, or would be, bad for the Canadian industry generally if implemented. Considering that polls show that the vast majority of Albertans agree with the panel’s recommendations, it might not hurt to have this in your back pocket to campaign for the good guys.

[BigBuck$]

Too big to post, anyone wants a copy to read PM me.

[genek270]

Hey, tree guy (or is it sapling?) One wooden head defending another wooden head; perhaps you would have preferred an entirely soft wood panel that would have made the panel as smart and knowledgeable as the politicians.

[Deer Hunter]

What a mess.

This is how I see this ending up:

1. Royalties are changed as per the review, lower oil spending combined with lack lustre gas prices and lower income tax collection push province into a hole. Albertans suffer.

2. Royalties are left as is, the general population who listens to the mis- informed panel and the "screaming socialist" media, vote out the conservative slime for the liberal losers. Albertans suffer.

Government just couldn't leave well enough alone. They'll mess with success everytime.

All imo.

[Greasemonkey]

if the royalities go up to whats recommended and they oil companies put a halt on drilling there will be alot of suffering people. like all those people who bought a 500 000 dollar house in ft mac or grande prairie , edson ,whitecourt red deer , drayton valley just to name a few towns . I'll suffer i mean as a mechanic i can find another job but not one that wouldn't pay as good. but i feel for those poor buggers that bought that expensive house with all those toys who never thought the money would end nobody held a gun to there head but nobody told them the dam govt would do this stupid royalty report. greed is a bad thing you have the greedy oil companies on one side and the greedy govt one the other side and who will pay for the whole dam thing guys like you and me. they say 1 in 6 albertans work with the oil industry in one way or the other if this goes threw there will be alot of hurtin albertans out there and i'll be one of them SO I'M AGAINST THIS WHOLE DAM THING
just my 2 cents:mad3:

[altaberg]

Any of you guys do a whois for the website mentioned in the 1st post? You might want to. Personally I'd be wondering why a PR company is the registrant.

X2, I'd never trust a web site that has so little information about who is behind it on anything

[TreeGuy]

Hey, tree guy (or is it sapling?) One wooden head defending another wooden head; perhaps you would have preferred an entirely soft wood panel that would have made the panel as smart and knowledgeable as the politicians.

Excellent work. You are now 2 for 2. Stupidest thing I read yesterday.....stupidest thing I've read today!:huh:

Tree

[Vindalbakken]

Just to expand on what russ posted. Here is some information from the operations website of the company who owns the domain site in the first post. Bolding is my addition.

"Public Affairs

Commercial interests are intimately connected with and dependent on the decisions of governments and regulators. Because policy arises at the point where private interests and public concerns meet, it is also crucial to influence public opinion in order to shape political outcomes. Competition for such influence is now more intense than ever and no organization can afford to be silent while others dominate the debate.

We have dedicated and experienced public affairs teams in all of the world’s major political hubs. We understand the structures and dynamics underpinning public policy-making and know who is driving the agenda and why. We can advise on current issues, help identify future opportunities or areas of possible concern, and offer guidance on how to respond. And with experts across a range of industries from pharmaceuticals to food and on policy fields from transport to trade, we can quickly bring rich insights and deep experience to bear on any particular policy challenge.

If you want to understand the political agenda or help in shaping policy outcomes, please call us."

[sjd]

Good investigating.

Get it right Alberta is an "astroturf" i.e fake grassroots site, funded by the oil patch to trick Albertans to lobby on their behalf.

Its pretty funny and unethical to expect you to put in your name and address and email their letter to your MLA telling him not to change royalties, while they won't list who is bankrolling this slick site.

I am glad that 80% of Albertans according to the newspapers today aren't falling for this garbage, and that oil companies are showing their true colours.

They don't give a damn about Alberta our Albertans and are just trying to negotiate the best deal they can. Don't buy it and don't bend over, the proposed royalty increases are very modest and they are still getting a sweetheart deal.

[Okotokian]

It seems to be one of the better explanations of why the recommendations are, or would be, bad for the Canadian industry generally if implemented. Considering that polls show that the vast majority of Albertans agree with the panel’s recommendations, it might not hurt to have this in your back pocket to campaign for the good guys.

Who are the good guys? You mean the CEO's of Encana, PetroCanada and the like? Let's get rid of royalties all together. These good guys shouldn't have to pay for the resource, and by their and you reasoning, that would be infinitely better for the industry and all of us. ;)

Oh, and it would be infinitely better for ME if I didn't have to pay for municipal water, sewage, etc... I could spend my money on new cars, booze, trips to las vegas and other things that would stimulate the economy and benefit everyone... damn socialists. LOL :lol:

[The Elkster]

Okay through sheer fear of the ignorance thats out there (not stupidity but ignorance so don't go loco) I just have to post. This thought that that Oil companies are raping us if complete BS. One of the reasons royalies are less here is because finding and development costs are way higher than other places in the world. You have to make royalties lower to have things overall make economic sense or money will go elsewhere. Contrary to what people have said on this site there are other options still out there and with more upside than here...specially for natural gas which is what contributes to most royalties collected in AB contrary to what most people know and believe. Oil and gas are not the same thing and prices are not tied to one another. Gas is what drives most of the AB economy even though the Oilsands are the "darling" right now and get all the airtime. And I will tell you from first hand experience that gas is very marginal right now. In fact its almost scary to do the economics even without any royalty changes. There are some huge misunderstandings in what the Albertans gain from the Oil companies overall. Royalties are only a small part.

For all the conspiracy theoriests lets keep in mind that almost all Oil companies are publicly owned companies...that being said anyone can buy into a peice of the action if they really think the oil companies are netting hoards and in doing so they will gain right along with the executives they so despise. While executives are often overpaid IMO they only take a fraction of the profits with the rest plugged back to the shareholders (most that own an RRSP at present included). Just thought I'd throw that in there.

I shall lay out a few facts to be considered before jumping on the "we're being raped bandwagon"... Not only do oil companies pay royalties they pay to buy the land leases to be able to drill. They also plough about 90% of their cash flow back into drilling more wells. To make a billion they spend many many more billions. That spending goes to all kinds of things from the hotelier to the service companies of all kinds to the pipeline companies to electronics to manufacturers down to the delivery guy to the food service places and the trickle down goes on and on and on. You take way some of the action and and any gain from increasing royalties is going to be lost because of reduced income tax that each and every one of those sectors down the line contribute. Think of the compounded taxes that are paid on those trickled down billions...thats tax money that will and does benefit all of us...from when schools and roads are built and hospitals paid for...and all without debt. Forget about Royalties...Take away oil spending and see how fast that situation changes.

In the end I wish that things would hit the wall so that those claiming "conspiracy" would learn a hard lesson about doing their homework and looking at the whole picture but the unfortunate reality is that if there is a slowdown everyone is gonna get stung. I think even those that think they are insultated from a slowdown may get a little shock. Yeah right like farming is going to keep AB going at the level it is :lol:

When times are good everyone wants more more more. Gawd I wish people could see past the end of their noses.

Here's to the future...tighten those belts!

[Jamie]

A pipeline company broke ranks today and said the royalties were not going to be that big of a deal....

Boy, sure would hate to be that guy at the next party at the petroleum club.:lol: :lol:

Jamie

[Deer Hunter]

Does the Alberta government really need more money?

$15+ billion sitting in the heritage fund.
$7.6 billion sitting in the sustainability fund
$3.4 billion sitting in the endowment fund
No debt.

$14 billion already came from non renewable resource royalties last year making up 40% of what the Alberta government takes in. Projected to be much less this year because of lower gas prices.

Do you think that by changing the royalty rules, you will get another hospital, better schools, cheaper housing just by adding potentially $1.8 billion in additional royalties? $26 billion isn't enough to do what you want? I'm sorry, I use hospitals and schools too, but to build more doesn't require more money, it requires that the government get busy and start the projects.

Oil and gas companies pay 60% of the resource to the crown after they take 100% of the drilling risk.
Coal companies pay 1% prior to mine payout plus 13% after on net revenue.
Alberta forest products reported $8 billion in annual revenues last year however SRD recieved $153 million in timber royalties, taxes, grazing and land use. Thats 2%.

Taxes have never stimulated an economy. Maybe a PST next? Equalize everyones incomes? Would everyone own a ski boat then?

[Guy Smiley]

I'm not going to remotely pretend I understand much of the dynamics of the oil and gas industry, but, I do understand a few things about this debate:

The members of the Alberta Royalty Review seem to provide an adequate cross section of shareholders, and if anything were heavy on the industry side. They are the ones who have pointed out the inadequacy of the current royalty regime, not a group of "eco-terrorists".

Auditor General, Fred Dunn, who has been underly critical of the Alberta Government, gave a scathing report of Alberta Energy including claims that they knowingly deceived Albertans regarding royalty rates and collection. When Alberta Energy colludes with Oil companies, I have trouble believing the interests of Albertans are going to be considered on par with top bureaucrats and oil company management.

With current lower natural gas prices, I understand energy companies make less. However, natural gas and conventional oil supplies are not the whole industry. What about oilsands companies which have been enjoying a royalty holiday for quite a few years now? For the last few years they have made concentrated efforts (partly by hiring Rod Love and Peter Elzinga right out of the premiers office) into at least contravening the spirit of their agreement with the government by legally challenging royalties on new projects like "Firebag". Understandably they want to continue not paying royalties, but, how are we to believe they aren't just being greedy. At $80 a barrel, they've got to be covering their costs, especially considering they signed agreements when oil was $20 a barrel.

Perhaps the reason most of the royalties collected by the Province are on natural gas is because the oilsands pay only token royalties (1% or something like that).

It seems like the Tories and Oil company execs have gotten caught with their hand in the cookie jar, and now they are wanting people to believe it's always just been full of just crumbs.

Cheers

[Sakoman]

Elkster good post.

More info for those who are misinformed. West Texas Intermediate ( WTI ) is $80 a barrel. Heavy oil, medium heavy ect. do not get that pricing. I can not quote the exact number but less than 20% of the oil leaving this province gets that pricing.

Jamie - fyi pipeline companies do not pay royalties thery only ship crude and gas.

Elkster good post.

As I have said in other posts there is room to move on royalties just not what the report is indicating. The report has been reviewed by numerous financial / goverment and oil companies and it has some fundamental flaws.

All the Oil companies are saying is if you take this report and make it law You are going to severly slow a sector of your economy.

[TreeGuy]

"The sky is falling! The sky is falling!" Sheeze.

I've heard alot about killing the goose that laid the golden egg. 88% of Albertans don't want to kill the goose, but said goose most certainly needs a swift smack upside the beak.

Under the previous 'conservative?' administration, the damn goose moved into the house from the barn! He's brought all of his goose buddies and a select few of his favourite pigs with him! The buggers, are eating all of my food, making a freakin' huge mess, trying to tell my wife they want cavier at dinner, and the FINAL straw came when they, get this, drank ALL OF MY BEER!!!:mad2: I lost it! I said, "Listen, you guys gotta buy your own damn beer, and start to clean up after yourselves!" Well didn't that turn into the kerffule! They called me a greedy ingrate even though I owned the house, the barn, the food long before the goose came along. The goose helped get my driveway paved and my kitchen renovated. Had they forgotten that farm animals belong in a barn? All I asked of them was the buy their own beer and THIS is the thanks I get. The problem is, I've gotten kind of used to all that extra income, so I'm in a bit of a pickle. Should I move into the barn? Should I punt his feathered ass out on the street and take my chances? Seem we need to actually sit down, man to goose (no one else, especially those pigs), and hammer out an agreement that works for both of us. He keeps my La-z-boy, I keep my beer. Hmmm:evilgrin:

Tree:tongue2:

[Sakoman]

Tree,

It is one thing to be passionate and beleive in something, but unless you have some idea of what you are saying and data to back it up you do not have much of an arguement. I am guessing that up until last week you had no idea Oil companies even paid royalties.

[katts69]

well boys and girls, i dont know about the rest of you but i would be more than happy to see the oil companies pull out and head over to sask or wherever.
then maybe things might get back to a decent pace here in alberta. might actually see the return of the service industry, contracters and companies might actually see that they have to competetively bid again instead of outright raping the guys trying to get some work done.
things have gotten way out of hand. i was shopping the other day for a trailer, asked the price the fella says $10,800. so i said whats the cash price no BS. he said $10,800, if you dont want to pay it step aside cause somebody will. this is alberta man!!
yeah this is alberta allright. really ****es me off when some useless tit comes up wanting to work and demands 30 bucks an hour. no experience, lazy as old hell, but figures he is worth 30 bucks. whatever happened to earning what you are worth. let the oil companies go and they can take all the guys chasing the allmighty dollar with them.
i dont want to see the outcome for the guys that went and strapped themselves to the half million dollar houses and new trucks, quads etc. , but hey everything in moderation boys.

i guess i am just old school and would sooner see things at a nice even pace, everybody just happy to be working, not chasing their tail trying to get the biggest and best of everything. anyways thats all i wanted to say, take care, rob

[russ]

Does the Alberta government really need more money?

$15+ billion sitting in the heritage fund.
$7.6 billion sitting in the sustainability fund
$3.4 billion sitting in the endowment fund
No debt.

$14 billion already came from non renewable resource royalties last year making up 40% of what the Alberta government takes in. Projected to be much less this year because of lower gas prices.



No debt - is that according to the government. I'd bet it's not to the GAAP rules (Generally Accepted Accounting Practices) the only jurisdiction that's adopted that to my knowlege is B.C. Alberta has no "net debt" and I'll bet it fails the acid test big time.

[TreeGuy]

Tree,

It is one thing to be passionate and beleive in something, but unless you have some idea of what you are saying and data to back it up you do not have much of an arguement. I am guessing that up until last week you had no idea Oil companies even paid royalties.

Sakoman, you are providing vital information to this thread...thank you, and keep it up. I am the same as I was last week though. I STILL have an honors degree in economics from the top under grad university in Canada. However.....I believe that I have heard something about royalties prior to last week. In fact, if I really think about it, Prince Harry is my favourite 'royalty'! Can you say humorous analogy?

Tree:D

[Sakoman]

I can not argue with that.:D

[Sakoman]

Another article in the Globe and mail on the Royalty subject.

[Okotokian]

Just heard the first Encana commercial on this on the drive in... the intimidation and scare tactics begin. They are probably using the same PR firm that gave the liberals the "Conservatives are scary and will destroy healthcare" line.

There is one thing few have noted that plays into this debate, at least in my opinion. People worry about driving out the oil companies if the royalties go up... well folks, they will be leaving eventually anyway... Supplies in the Western Sedimentary Basin are declining. gas shipments from Alberta are projected to decline over time. Why do you think there is such a push to get McKenzie and Alaska going? One of the reasons is to keep the pipelines heading east and south full. We have a declining resource on our hands here folks. And I for one don't propose we give it away at firesale prices until it's gone. If it comes to it, I'd rather have higher royalties extracted over a longer period of time.

As for oil companies running from Alberta, perhaps they will run to Newfoundland, where they have just signed a deal with higher royalties AND a portion of the project equity handed over to the government.

[bearbait]

well im in oil country....ive seen bussness drop off by 85% since they have started this roylties thing...rigs are being released as soon as holes are compleated..drilling programs cancelled...on average it costs the oil co 2-3 million dollers to drill, compleate and bring that well into service...the oil co's are not the bad guys..yes they make money...thats what any bussness dose..but the affects this could have not only on the province but on the country is huge...yes i work in the patch..i make good cash and am accustem to my lifestyle...i also work long hours and sacrifice my family life to make the cash i do...

do u realy think it will benifit albertans to jack the royalties???we have had huge surpluses for years...do u get free health care???how about a tax break???i see no benifit for us as a population at all...leave well enough alone...mabey the polititions should take a wage cut at the same time...and no more tax free paychecks for them...

go ahead kill our econimy, put people on the street...then they will say what happened...i see it first hand, this year is slow as it is if this gose through it will only get worse...
rob

[bingo1010]

The panel and Stalmack have it in there head that the golden goose can't fly away and move investments to another location. Do they not remember what hapened in the mid 80's when OIl moved out of Alberta. Who's going to pay for all the infastructure and hospitals when they leave. and house prices drop by 30%



maybe when houses drop 30% the average joe will actually be able to afford to buy one, would be nice to see the inflation in the province drop back a couple of points.

[russ]

well im in oil country....ive seen bussness drop off by 85% since they have started this roylties thing...rigs are being released as soon as holes are compleated..drilling programs cancelled...on average it costs the oil co 2-3 million dollers to drill, compleate and bring that well into service...the oil co's are not the bad guys..yes they make money...thats what any bussness dose..but the affects this could have not only on the province but on the country is huge...yes i work in the patch..i make good cash and am accustem to my lifestyle...i also work long hours and sacrifice my family life to make the cash i do...

do u realy think it will benifit albertans to jack the royalties???we have had huge surpluses for years...do u get free health care???how about a tax break???i see no benifit for us as a population at all...leave well enough alone...mabey the polititions should take a wage cut at the same time...and no more tax free paychecks for them...

go ahead kill our econimy, put people on the street...then they will say what happened...i see it first hand, this year is slow as it is if this gose through it will only get worse...
rob

The slow started well before anyone uttered the word royalty increase. It's just an excuse or scapegoat. Just look at the deal Nfld. just got, higher royalty rates and a stake in ownership.

[sullijr]

I read somewhere not too long ago that the money "loaned" to ALPAC for the startup of the Grassland lumber plant still hasn't been repaid in fact not one interest payment paid.Diashawa also walked away with a lot of money when they closed down. I wonder if all their debts were repaid to the people of Alberta?
I hope that Stelmack calls the bluff here are lots of other companies unfortunately overseas that would gladly take over the operation of the Alberta oil industry.
The oil royalties are also owed to the people of Alberta.It is time that government stopped giving away the resourses of this province and not being properly compensated.
The CEO's of the oil companies certainly are being paid and bonused,at whose expense.After more than 50 years military service, working for MOT and Nav Canada never once a bonus or recognition for the job we did or a decent living wage I have no sympathy for the oil or lumber companies having to pay their share of the profit.

[Kelly & Beth]

they do believe that changes need to be made just not to the extent that is proposed.


http://www.encana.ca/media/currenttopics/royaltyreview/index.htm

[LB 270]

I like quite a few guys don't understand all of the workings of the royalty's but I thought hey the gas and oil are here so leave if you want, you'll be back.
I recently talked to a customer of mine who is in the gas industry and he is peed right off about the royalty increases for gas because it costs so much more to drill a gas well than an oil well. The royalty pay out doesn't differentiate between the two and gas is alot weaker than oil, price wise. It was another slant to the issue that I was unaware of.
My business is a luxury business (pool tables) and I don't want the economy to slow down any but it can't sustain the levels to which it has risen in the past 5 years forever. Gulp. I'm glad I bought my house before the price went stupid and do not have every toy available on credit. I don't know what is going to happen but like it or not we are at the mercy of Stelmach. Double gulp.
Lance

[bearbait]

russ,
the slow down was on to get service co's back in check...so yes it was already a slow year as i had stated the first time i posted....

the oil co's offered to up the roylties but had said when the price drops on oil and gas so should the royalties....

gov said no...they are trying to work with the govenment but to no avail.

wonder if our strong dollar has anything to do with it???im sure the americans dont like that..and this move will kill our dollar again..

all my stuff is payed for but alot of guys are going to go bankrupt if it gose through...
rob

[Sporty]

I agree there needs to be changes but it needs to be done reasonably and implemented over time so that everyone can adjust, from oil companies to hotels. My husband works in the oil patch and he's told me the costs of running and maintaining a rig compared to what the oil company actually takes out of it is less than what they spend to get it going to begin with. I tend to believe what he says after 20 years in the patch over the media who are writing biased, uninformed news about this royalty increase.

I think so many Albertans are looking at the high wages of oil execs and not understanding the dynamics of the industry. To punish the oil execs means punishing every day hard working Albertans.

Alberta is too intertwined in this sector and absolutely needs to diversify but to force it will not make it happen, it could lead Alberta into another recession. So yea for those that don't own houses yet or for those that bought houses before the real estate boomed are safe but sadly those that bought 500k houses end up with a house that is only worth 300k is a kick in the pants. I also don't trust our government to put any money back to Alberta that they receive from these increases and expect to see many bureaucrats with nice big raise increases instead.

There are many businesses that are tied to the patch in Alberta so if something happens in the patch it affects everyone.

[Chung66]

I read somewhere not too long ago that the money "loaned" to ALPAC for the startup of the Grassland lumber plant still hasn't been repaid in fact not one interest payment paid.Diashawa also walked away with a lot of money when they closed down. I wonder if all their debts were repaid to the people of Alberta?
.

With Daishowa-Marubeni, it was 100% Japanese investment 0 % Alberta Government. Unless something has happend within the last 3 days, should still be going strong in Peace River. Actually the Daishowa people were pretty ticked when they did not get the same loans that Alpac did.
Alpac has a penalty assessed against them for their loan default. They had a portion of their landbase taken away. Landbase to a forest company is long term production.

Didn't mean to hijack, had to clarify this up

[Hoochie Papa]

I'm back. (Formerly known as Smokinjoe) Thanks to the wife deleting my profile.

Anyways, I am a Wellsite Supervisor, and because of the threats of the royalty changes, I have been without work for almost 2 months now. The drilling has almost completely stopped. Oil companies have stopped until they hear the final decision on the royalties. Many of the major players have said they will simply boycott the new royalties and not drill an inch this winter.

That affects ALL of Alberta, even pipelines. What do they plan to pipe-happy thoughts?

[chuck0039]

isn't this just a reveiw? it's not a bill waiting to get passed, if what i have been hearing is correct the money that the alberta government has been collecting has not gone up since oil was 20 to 30 dollars a barrel. What's the big deal if they do raise it.it would be a long time coming, i have also been told that if they reveiw comes back and it is decided to raise the royalties that it will be a gradual raise not like the guys that determine when gas prices will raise. (overnight by sometimes .10 cents a liter). If the big oil companys want to try and bluff this i say let them. go to Saskatchwan, they will be back once hey realize how good they have it here and remember the oil belongs to Alberta not the big oil companys.

[The Elkster]

The royalty is a % take so if prices go up the royalties go up accordingly. Why do you think the gov't is making record surpluses the past few years. It ain't farming thats doing it I will say that much.

People wanna just look at royalties without any understanding of all the underlying factors at play here nor accurately valuing all they are getting from exploitation of the resource. Everyone wants a villian and everyone thinks they deserve more more more...whats new. They had better watch what they ask for...they may be begging for a jobs creation system with all the new royalty money...yeah right it'll net the average Albertan so much more.
The biggest oil benefit to the average Albertan doesn't come in the way of royalties it comes from the huge dollars spend in exploration and development and the jobs and tax revenue that creates all the way down the line. You only have to live in a place without those perks to appreciate just how valuable that is...ask a nephie or a BC forest worker if all you've ever known is the relatively plush AB job market.

Company A outlays 1 billion in spending...30-40% goes to land and government costs
Approx 60% goes to finding and development (providing jobs jobs jobs! and that money is then is taxed and retaxed as the trickle down occurs meaning the average Albertan (even non-oil workers) benefit again on this money - tax revenue helps everyone)
If they are doing well Oil companies make 10% year over year (good and bad years averaged)...that is hardly rape and pilliage returns. Of course all that is reported is that they made 100 million and we only got a crumby 30% royalty...its never explained what it took to get that 100million nor all the other benefits. Makes for a good news story and whips the masses into a frenzy thats for sure.

Royalties go up and Company A's profit potential goes down to 3-4% and they look and say we can make 10% return in Columbia we're taking our cash and putting it there (taking a better like any individual would do if they found a better savings plan so lets not villify the companies for that lest we be hypocrites). Now we have higher royalties on less production and net nothing extra on that end plus we lose jobs and all the taxes that those generate all the way down the line...GOOD DEAL eh. Hey but house prices are down with a bust...but dohhhhhh I lost my job and even at $300K I can't buy dohhhhhhhhhhhhhhhhhhhhhh.

It pays to look at the big picture and maybe appreciate not only the downsides to the boom...life is never perfect. I don't know many who are hurting more now than what people felt when things were depressed back in the 80's. How quickly we forget.

[Tredeb]

No debt - is that according to the government. I'd bet it's not to the GAAP rules (Generally Accepted Accounting Practices) the only jurisdiction that's adopted that to my knowlege is B.C. Alberta has no "net debt" and I'll bet it fails the acid test big time.


Alberta acheived no net debt back in the 90's. they acheived no debt period, a few years after that.

[HiCountryBugle]

From all of the discussion, opinions and facts on this subject ... it sounds like the crown is justified in collecting more royalty revenue on some O&G products (maybe not on products that yield lower rate of return like natural gas).

In cases where the crown has mineral rights, the province of Alberta should collect higher royalty revenues when commodity prices are high. These are non-renewable and non-sustainable resources. The boom will eventually end. In the meantime, all of the benefits that come with the boom are offset by the drawbacks that so many people have alluded to (inflated home prices, overpaid labour, lack of competition in the service sector, gouging, etc.). A more stable economy with sustained development would be best. A little less greed maybe ...?? The oil companies may leave or slow down in some areas ... they will be back. The resource is in demand and it is limited. Other sectors of the economy would be quite happy with a "year over year" rate of return less than 10%.

The big rant over the royalty review is fueled by BIG OIL. They want to maximize their profits, and lets face it they have a lot of political clout in this province. Every time the Encana ad comes on the radio any more I change channels ... they obviously have lots of cash to throw at trying to persuade the public.

I hope Premier Stelmach makes some fair changes to the O&G royalty system. I doubt it will cause the big bust that some people are fearful of at current market prices. BIG OIL may slows things down a tad to prove their point, but responsible O&G operators still have a lot of excellent opportunities in this province, even if royalties are increased.

[AbAngler]

Bottom line, the royalties can't be bumped up as much as was recommended by the review panel. Oil companies and the province have to meet somewhere in the middle. And they will. Is is political suicide to increase royalties as much as was recommended. The good times will end abruptly.

Right now, things are on hold on the operations side, even for the company I work for (junior). We're buying mineral rights like we've never before since the big boys have slowed down. This is a positive sign, as down the road, we will be drilling all that land.

Let's just hope the boys at the top make the right decision, and I'm sure they will.

[steveo10]

The oil companies have been slashing work for the last work now.... and now the gov't is the scapegoat for the slowdown

[Jamie]

All I am interested in is how much does a comparable province, State or country charge these company's? And that should include the fact Alberta is a very stable environment to work in. We have skilled trades, modern transportation, a friendly Government and other than Wiebo we have no terrorists or people looking to kidnap you.

I see no need to be the most expensive.. But I damn sure we can not be the cheapest.

Now if the report agrees with what I say and was done in a responsible manner... Screw the Oil company's, they will drill here any how. I would love to see a report with no spin on it and easy to read facts and figures. (Unlike a certain Grizz report)

Thanks
Jamie

BTW didnt we reduce royalties back in the mid 90's??

[russ]

Alberta acheived no net debt back in the 90's. they acheived no debt period, a few years after that.

Not if you apply real accounting rules.

[chuck0039]

Just a question here and may be a little off topic but why does the alberta gov not create an oil company owned by the Alberta goverment. kind of like they had when the province owned the liquors stores back in the day? This way they won't need to raise the royalties, and it will i think be a good invesment for the future of alberta because they won't be restricted to work just in alberta. I still believe that gradualy raising the royalties will not affect alberta if done slowly and not to greedy.

[The Elkster]

The thing the people have to remember is that Gov't take/Royalties are only part of the economics companies face around the globe. Ya can't just say "Hey Sudan gov't is getting 70% on their oil and gas" and then claim we're getting screwed. One has to consider that their finding/development/operating costs are a fraction of what ours are. The reserves are bigger the labor cheaper and the low hanging fruit (reservoirs) is still around. That is still the case in many countries in Africa and South America and while AB is a stable environment that only goes so far in dictating where a company will plug holes....at some point they look at the risk Vs gain that other places offer and say its worth the risk. They are not gonna say "hey we're loosing money or making a measly 2% return BUT hey we're stable". They will take the money and go somewhere else...and no its not petty pouting...its common sence economics.

Most AB companies have AB people leading them and they don't want to see AB hurting and that is why they are speaking up. In the end they have to do what is best for their shareholders if they don't they are in big trouble. They are simply warning that while they don't want to move operations they will have to if the economics are pushed into the red. The news of course portrays these to be "threats" and "intimidation" and the general public work themselves into a lather because of course oil companies make lots of money so they must be evil.

Its funny I don't see many people selling the house they bought for $150K for a modest price of $200K. They are selling right now for a big gain of $500K...does that make them evil? Funny how we conveniently villify things when it suits our needs.

[bearbait]

i guess you have to be in the patch to see it first hand hey elkster...
if it gose through all the critics that dont understand will be saying how did this happen?well greed!!!

as i said before what benifit dose it have for the avrage albertan???
none...we have had surpluses for years and no tax cuts no free health care..
give your heads a shake and when the province crashes you will understand!!
rob

[russ]

Its funny I don't see many people selling the house they bought for $150K for a modest price of $200K. They are selling right now for a big gain of $500K...does that make them evil? Funny how we conveniently villify things when it suits our needs.

Yup and that profit looks really good until you try to replace the house. I think it's comparing apples to oranges.

[bearbait]

russ,
just curious what u do for a living?

[Jamie]

Quote
"Its funny I don't see many people selling the house they bought for $150K for a modest price of $200K. They are selling right now for a big gain of $500K...does that make them evil? Funny how we conveniently villify things when it suits our needs."

Thats exactly the problem...You just have it backwards
The Oil/Gas belongs to Alberta.. Not the Oil companys. Its Alberta who wants to make sure they are selling it for the market price...


Jamie

[russ]

russ,
just curious what u do for a living?


I work in an industry that requires an understanding of inflation and how it affects real purchasing power. The term for Elkster's example is Phantom Profits.

What do you do for a living?

[Duk Dog]

I had heard from someone familiar with when Leduc was discovered (late 1940's) that it was decided that an energy and utilities board was needed to regulate this new found wealth. Supposedly at the time Imperial Oil huffed and puffed that it wasn't required and it would kill any forward momentum and that they would have to leave Alberta. If this is in fact true here we are what 60 years later the province is booming more then ever and Imperial Oil is still very much here. Sound familiar to the tune from Encana and other similar corporations?

[bearbait]

russ,
i am the area sales manager and dispatcher for a large trucking co in whitecourt swan hills and fox creek.

[bearbait]

hey duk....esso has pulled the better part of there operations out of alberta.

[Duk Dog]

hey duk....esso has pulled the better part of there operations out of canada.

I just pulled this off the Imperial Oil web site.....

Imperial Oil is one of Canada's largest corporations and a leading member of the country’s petroleum industry. It is one of Canada's largest producers of crude oil and natural gas, is the country's largest petroleum refiner, and has a leading market share in petroleum products sold through a coast-to-coast supply network that includes close to 2,000 service stations.

[bearbait]

sorry duk....i ment alberta...:zzz:

[Duk Dog]

Hopefully this map link works....it shows almost all of their key production/development areas being located right here in Alberta and 3/4 of the refineries being out east.

http://www.imperialoil.ca/Canada-English/ThisIs/Operations/TI_O_Coast.asp

[bearbait]

they still have stuff down south i wasent aware of, i know the sold off most of the northen stuff..looks like 10-15 prouction facillity's in alta.service stations and chem plant's arent part of the royalties.

what i ment was there oil and gas fields...this is where the royaltie's matter.the drilling and compleating of new wells and the costs that go with it.tryed to find there drilling program or forcasts but couldent.if you can find them can you post it?
thanks
rob

[The Elkster]

Quote
"Its funny I don't see many people selling the house they bought for $150K for a modest price of $200K. They are selling right now for a big gain of $500K...does that make them evil? Funny how we conveniently villify things when it suits our needs."

Thats exactly the problem...You just have it backwards
The Oil/Gas belongs to Alberta.. Not the Oil companys. Its Alberta who wants to make sure they are selling it for the market price...


Jamie

And regardless of who owns it its worthless unless someone brings it to the surface and that cost has to be subtracted from value of that oil/gas regardless of who's finding and developing. These are not proven numbers but an approximation and based on a record oil price not the average...AB oilsands value $80/bbl - 50bbl finding and development = $30 net value. Saudi oil $80/bbl - $10 finding and development = $70 net values. Take 50% royalty off the saudi profit and they are still way farther ahead than if we take a 25% royalty on AB oil. Problem is royalties come off the top so that screws up the AB economics even more. Probably the most important and misunderstood factor in all this is that Oilsands are not the only game and in fact have less impact than Gas which is a whole other commodity and not at record prices. At present Gas costs are such that we are at best breaking even at current prices even without an added royalty burden...and gas still provides a majority of jobs and royalty income for Albertans.

There is a fundimental lack of understanding on just what finding and development takes, what risks are involved and how many jobs that process provides directly and indirectly and the value of those. There is also a lack of understanding of just how mature our Gas basins are...believe me I see it first hand. Basically what people don't factor into the value they get from OUR oil other than royalties is one massive job creation program paid for by companies.

I have been in the industry for +10 years and I can't believe the huge change in the costs for finding and development in that time. Most people have no clue and think your BSing but its true and it matters big time. Only 10 years ago we could make a buck on $2 natural gas. Today we need over $6 just to break even! The reason is cost...a cost that ends up being a huge benefit to the province as a whole. Because of ever smaller finds and less of them we are having to do more seismic more drilling more pipelining to tie-in little wells...that equates into more jobs and more money dumped into the economy rather than funneled into company profits...basically a bigger jobs creation program paid for by O&G companies so the people are getting more out of the resource than they have in the past. If people don't think that has value and doesn't benefit most everyone at some level then they have their head way to far in the sand.

If royalities were based on the oil value on the open market minus true costs I don't think you'd hear nearly as much bitching. Companies know that Albertans deserve a good cut of net oil profits...no they are never going to like making do with less but if they are indeed still making decent NET returns they will live with it.

[getasheep]

Okay, I have read this post often, and just want to clarify that everyone posting has read the report? I get a sense that a lot of peoples information is the coffee room facts. For example, I don't see it hitting all sectors the same (Oil vs Gas etc). The report actually reccomends different royalty systems for the different areas. The report on page 9 says that 82% of natural gas wells would actually pay less because they are lower producing. Similarily 57% of conventional oil would pay less with the revised royalty system. I get zero indication from the report of an across the board increase. It is variable depending on the profitability of the resource of focus. There will not be a royalty take so large it makes anything unprofitable.

As well, the report includes comparisions to other jurisdications (there are figures and descriptions throughout) and in all of them Alberta still looks attractive.

I get a completely different sense from reading the report than what is stated on this board.

www.albertaroyaltyreview.ca

[bearbait]

this is from the report.

right now oil sands- 47% government 53% oil and gas co's.
new - 64% 36%

oil wells -44% -56%
new -49% -51%

gas wells -58% -42%
new -63% -37%

now the oil co pays for the well 2-3 million, pays to pipeline,pays to refine, pays to truck fluid.the govenment pays nothing.
figure their cost and the profit margin is very slim.

right now the gov makes 9.6 billion a year in oil and gas royalties the changes will bump that number up 1.9 billion a year.

seems extreme to me when we see no benifit from it.
rob

[Okotokian]

seems extreme to me when we see no benifit from it.
rob

Comments like that floor me. What do you and a few others mean when you say you see no benefit from oil royalties? How much provincial sales tax did you pay last year? What is your provincial income tax compared to... oh, I dunno... almost every other province.

[bearbait]

well i payed 64,000 in tax last year.we pay for health care where as other provinces do not, no tax breaks, huge surpluses that sit in bank accounts and no spending on education health care or extra policeing, fire services, ambulances.

[sirmike68]

I read in the Edmonton Journal today that 3 brothers got together and incorporated their farming business to save on taxes. You don't want to know how much tax they paid on half a million. I'm sure bearbait didn't make that much but they only paid $5000. It doesn't seam fair does it?

[Okotokian]

well i payed 64,000 in tax last year.we pay for health care where as other provinces do not, no tax breaks, huge surpluses that sit in bank accounts and no spending on education health care or extra policeing, fire services, ambulances.

You paid 64,000 in provincial tax last year? You are doing very well indeed. And what would you have paid in Ontario or Manitoba or elsewhere? I hate to break this to you, but the answer is MORE, especially when you throw in provincial sales tax. You pay for healthcare? What, you mean your AHC premiums? Yes, and people in other provinces get it for free.... So lets get rid of your AHC premium and just include it in your taxes like other provinces, then you will be happy because you will be getting your healthcare for free. My goodness, how do you make enough money to pay $64,000 in tax and still think like that? LOL ;) . Premiums or taxes, it all comes out of the same pocket my friend... ours. :)

[sullijr]

With Daishowa-Marubeni, it was 100% Japanese investment 0 % Alberta Government. Unless something has happend within the last 3 days, should still be going strong in Peace River. Actually the Daishowa people were pretty ticked when they did not get the same loans that Alpac did.
Alpac has a penalty assessed against them for their loan default. They had a portion of their landbase taken away. Landbase to a forest company is long term production.

Didn't mean to hijack, had to clarify this up

Sorry I must have been misinformed.Thanks for the correction.

[spurs]

They are setting up to buy an election out east. Mark my words.

[bearbait]

never said that was provincal tax....
this is alberta never had sales tax...look at the big pic here, loss of patch = loss of jobs= lower wages= poeple and companys go bankrupt= everyone suffers.i hope that all the people who support this can just think for one minute about all of us who rely on the oil and gas industry for our livelyhoods..we work hard long hours to get where we are and make the money we make and this could put alot of familys on the streets.
guess you dont work in the patch so you cant understand or see it.
im done but when the sh** hits the fan dont say well how did this happen..

[Okotokian]

BB, I think that is the essence of the argument... some of us don't think it will drive much away...

I work in the industry too, and make good money. I just think royalties are a way for those who don't work in the patch and make much less to share in the wealth that the resources we ALL own provide.

I guess we will see what happens. I bet the governement picks a point somewhere inbetween the recommendations and what we have now.

[bearbait]

hope your right...what scares me is that alot of people support the increase and dont see the affects it has already had...
we have gone from 20 trucks out a day to having 2 or 3 out sence they came out with the report...oil co's are waiting for the decision before they continue the work they had planned..our guys are already seeing the affects now..

[getasheep]

Just a side comment on the tax differences between AB and the rest of Canada, save this link, it will help you figure out what you pay in tax in a year:

http://www.cra-arc.gc.ca/tax/individuals/faq/taxrates-e.html

Alberta has the best tax rate (unless you are low income, then you are paying more than other provinces). (sucks to be low income in Alberta, everything costs more and you pay the same % of your income into provincial tax)

Other provinces have health care premiums (ie. Ontario).

PST = sucks arse

I just moved to Ontario (out here for school for 4 years) and bought a house, on which I paid a land transfer tax (we didn't have this in Edmonton) of a couple grand. Plus my property taxes here are ~30% more than they were in Edmonton.
oh and then theres Insurance out here, but I won't get into that...

ha ha, lets just say I miss more than the rockies!

[TreeGuy]

So what's the solution? My position is such that I want to get 'fair market value' for a resource that as an Albertan, I have a vested interest in.

I demand that my government makes the best possible decisions on my behalf, that will see my children and future grand-children still benefit from the wealth of our natural resources.

Do we say 'screw 'em' and jack the rates by 20%, weather the storm knowing that eventually they'll be back?

Do we leave things the way they are, which has its problems, but has resulted in Alberta being the economic powerhouse of North America?

My guess, after much work with the O&G companies, stelmach et all, will do an 8% jack up publicly, coupled with a 'behind-closed-doors' complex tax adjustment that will for the most part off-set the increase, and it will be linked in a way to the fluctuations of the world markets.

The best solution will come when EVERYONE is publicly unhappy. All I ask for is more transparency, and what is the best for Alberta. In stelmach, I HOPE!:scared:

Tree

[steveo10]

Well said Getasheep!

I dont like to do this, but i have to stick up for th gov't

How quickly we forgot that Albertians dont pay for provincial "GST". Hmmm what is that?

Our royalities are one of the lowest in the world. Next time you bitch about schools/roads and you didnt want royalities to go up, hold that thought.

All i gotta say i have to get on the post-production of a well! Then i have no worries :)

[Guy Smiley]

There was an article in the journal by Pedro Van Meurs who was one of the people on the royalty review panel. One point he makes that is interesting is:

"The uncontrolled boom in oilsands development has damaged the non-oil sectors of Alberta's economy. It has also caused significant losses in future oilsands revenues through excessive cost increases. If costs go up, the profit share goes down. For every dollar of cost overrun during construction , Alberta loses 40 to 50 cents in royalty and tax revenues."

I'm not going to argue about the validity of his numbers, I know nothing about them, but, it looks like to a degree the die has already been cast. The current royalty structure has created an overheated economy (especially in Fort McMurray) which has substantially inflated prices and costs, and will continue to fuel inflation in the future which will severely limit what we can take in in oilsands royalties due to continued cost overruns.

With increasing demands on infrastructure caused by the boom, it is nice to know that continued inflation will mean higher property taxes and likely cuts in services because the PC's idea of managing growth has been limited to getting all of the oil out of the ground before the whole world goes solar.

Of course, we could do what Ralphie suggested recently, and wait for a recession to build anything.

Cheers

[spurs]

What I'm saying is that GST is bull****, PST is bull**** and as far as I'm concerned the royalty increase is bull****.

saskatchewan since they have dropped the royalty is a better place of business already because we (companies) don't have to jump through the loops we do in alberta. It takes less man hours to produce a bbl of oil in sask than it does in AB.

OH yeah and the farmers are happy to have us too.

For all of you who support an increase don't forget why you live in alberta. Jobs and good paying ones at that.

[Nationwide]

WOW I have to say after reading this thread i have to say there is some very good info.:wave:

[The Elkster]

My biggest point is that Oil and Gas are two very different commodities and should not be lumped together as they always are. Unbeknownst to most Gas is still the main driver in AB and it is mature and in decline (some won't believe that and think big bad companies are just BS'ing but I see it first hand) while the oilsands/bitumen production is just ramping up. It isn't uncommon for a country to lower royalties for mature reservoirs so as to encourage development of the tougher more expensive stuff...realizing that royalties mean nothing if the stuff doesn't get drilled.

Someone made mention of only a fraction of gas wells getting more royalty charges under the new plan...problem with that is that a minority of big wells (that are the target) make a majority of the gas and its those big wells that pay off all the duds of which there are many. I believe the number is something like 20% of the wells make 70-80% of the gas but I can't remember the exact number. Take a bigger cut of the big producers and the overall economics can go downhill quickly. Producers can't just take the good wells and write off the bad ones...every one costs good money regardless of production.

[russ]

saskatchewan since they have dropped the royalty is a better place of business already because we (companies) don't have to jump through the loops we do in alberta.

Funny, how much business have you done in Sk., I was talking to guy the other day and he said the red tape there was beyond silly and he wasn't going to bother.

[Sakoman]

The rules and regulations in Saskatchewan are far less cumbersome in regards to drilling conventional oil and gas wells. It is actually quite shocking.

[AbAngler]

The rules and regulations in Saskatchewan are far less cumbersome in regards to drilling conventional oil and gas wells. It is actually quite shocking.


x2. I've drilled quite a few wells in Southern Sask and more recently in the Weyburn area. I even operated for a summer years ago during school. It IS quite shocking! Alberta is one of, if not THE most expensive and red tape laden areas to drill in the world.

[spurs]

Funny, how much business have you done in Sk., I was talking to guy the other day and he said the red tape there was beyond silly and he wasn't going to bother.

approximently 700 wells not really a bother at all.

[Tredeb]

Not if you apply real accounting rules.

So who does alberta owe money to?

[TreeGuy]

x2. I've drilled quite a few wells in Southern Sask and more recently in the Weyburn area. I even operated for a summer years ago during school. It IS quite shocking! Alberta is one of, if not THE most expensive and red tape laden areas to drill in the world.

AbAngler, that's a pretty silly statement. If what you are claiming is true, then why is Alberta so much more developed than Sask. or BC? Come on! What about Venezela, Norway or the Middle East. How about Sibera? Big oil has it pretty good here in a politically stable environment. Red tape is alot better than red BLOOD!

Tree

[archdlx]

Tree...I don't think Ab was saying it was a bad thing, having the one of the most stringent, red tape driven areas in the world. I work for one of the companies, (Talisman), that has to follow these rules. Sometimes they seem a little overboard, but it is for our own good. Some of these laws raise our lifting costs, but they also help in keeping our enviroment clean and us safe.
Most of Sasks' oil is deeper, and B.C.s' has all those 'bumps' to deal with,(read access), that is quite a bit of the reason they are not as developed as AB..
Elkster you are absolutely right about gas and oil being different commodities. I have a letter from our VP of North American Ops' that I will post when I get back from days off.
Royalties in other countries cannot be compared to ours, because in most of the other countries, especially Middle-East, the oil fairly flows from the ground! At worst, they MAY have to use a pump jack or screw pump! Their lifting costs CANNOT and SHOULD NOT be compared to ours.
I know that Big Oil is making BIG money, but that is what our world is all about. The resources are Albertans, but we need someone to pull the stuff out of the ground. And if we tax the s&@t out of them, they WILL 'git outta dodge'. TLM has properties in Sask., mainly Weyburn and Shaunovan(again sp?), so it would not be a stretch for them to put more R&D into Sask, as well as our properties in Northeast B.C....and just quit our drilling program here, (already cut back on).
I hope that there is someone sane on these committees(sp?), and a fair deal for everyone is found.

MY two cents....archdlx

[getasheep]

Energy royalties: responding to the critics

Gary Lamphier
The Edmonton Journal


Saturday, October 20, 2007


Oil and gas companies have waged a furious assault on the recommendations of an independent royalty review panel since it submitted its report in September. Gary Lamphier sat down with panel member Evan Chrapko and royalty expert Pedro Van Meurs -- who was retained by the panel -- to get their responses to the industry's charges.

- - -

Q: Alberta is widely known as a stable place to invest. By raising royalties, won't this put Alberta on par with places like Russia or Venezuela?

A: "The vast majority of countries change their fiscal terms regularly. I take great exception to Alberta being compared to Venezuela or Russia, countries that rip up existing contracts. Alberta is absolutely not doing that," says Van Meurs.

Wood Mackenzie, a global energy consulting firm, says 18 countries have altered royalty rates since 2001, transferring $260 billion US to government coffers, Van Meurs adds.

Q: Instead of gaining $2 billion (Cdn) a year in royalties, as the panel suggests, won't Alberta lose billions as companies like EnCana slash spending?

A: "I've assisted in changing the fiscal terms in at least 20 jurisdictions around the world. Every time terms change, companies say they'll go elsewhere," says Van Meurs. "Yes, some oilsands projects will be deferred. But Alberta needs a slower level of development" to curb inflation and maximize its oilsands resources, he argues.

Q: With natural gas prices down, the Canadian dollar above $1 US, drilling levels depressed and foreign LNG (liquified natural gas) supplies rising, isn't this a terrible time to raise royalties?

A: "The panel recommended lowering royalties at low natural gas prices. With lower royalties, there's more support for industry," says Van Meurs.

"At $7 (Cdn) per gigajoule, all royalties would be higher. At $6, 82 per cent of all gas wells would pay lower royalties. And at $5, royalties on all wells would be less."

Q: So how much would industry save from these lower royalties?

A: "At $6.20 gas prices, the royalty savings on low productivity wells would be about $227 million," says Chrapko.

Q: The energy sector is already grappling with the end of the Accelerated Capital Cost Allowance and the elimination or scaling back of several royalty programs. Why didn't the panel take this into account?

A: "We did extensive analysis on this. There are practically no countries in the world that permit a 100-per-cent writeoff for major capital expenditures. So ACCA was an unusually rich program that was no longer in keeping with Alberta's healthy oilsands industry," says Van Meurs.

Q: Even if most gas wells pay lower royalties at low natural gas prices, what does it matter if, as some say, the entire basin is now uneconomic?

A: "Drilling is down, but we had very active drilling going on, even at $5 (per gigajoule). So are all these companies dumb? To say the whole basin is uneconomic at $5 makes no sense," says Van Meurs.

Q: According to Tristone Capital, five per cent of Alberta's gas wells account for 50 per cent of production and generate about 40 per cent of all provincial royalties. Under the panel's recommendations, won't these critical wells -- mainly in the Foothills -- take the biggest royalty hit?

A: "We don't deny that at all. The most profitable wells will bring in most of the (additional) royalty revenues," says Van Meurs.

According to the panel's report, higher royalty rates on such wells would generate more than $900 million a year in additional royalties, roughly half the projected $2-billion total increase. However, even at a gas price of $9 per thousand cubic feet, Tristone reckons returns on such wells would be cut sharply.

Q: Won't the panel's recommendations, if implemented, kill any incentive to drill these high-cost wells?

A: "Some of the reaction of the industry, particularly EnCana, was I think largely related to the deep well (royalty incentive) program. It's true the panel recommended cancelling a number of royalty programs. But it never recommended cancelling that one," says Van Meurs.

Q: Ziff Energy estimates that "full cycle" natural gas supply costs in Alberta have doubled to $7.90 per thousand cubic feet (Mcf) since 2000. If so, isn't there very little incentive left to drill expensive deep-basin targets in Alberta?

A: "Under the current royalty terms, deep gas wells are paying as much as a 20-per-cent royalty. These wells are being drilled today at $6 per Mcf. So this argument doesn't make sense. And remember, the (deep-basin gas) royalty holiday only applies to the first $500,000 of royalties," says Van Meurs.

Q: But if full-cycle costs are really $7.90, as Ziff says, why does the panel recommend that all wells pay higher royalties at just $7?

A: "The full-cycle view means you account for everything, not just the successful wells. So you factor in all the costs of exploration, and the denominator is your total production," says Chrapko. "But it's the commodity price that's the key to profitability. Royalties are not a magic wand that are meant to address all ills. In the capitalist system, every inefficient operator isn't entitled to a profit -- especially in an industry that's already one of the most subsidized in the province."

Q: Sure, there's drilling even at low gas prices. But aren't lease holders forced to drill their prospects while gambling that prices will rise?

A: "Each well has a different break-even price level. As the price declines, more wells are less economic. Do some companies drill because their leases are running out? Of course. But I can't think of anybody who would actually deliberately lose money by drilling a well," says Van Meurs.

Q: Let's turn to the oilsands. CAPP president Pierre Alvarez says today's high oil prices are somewhat meaningless. Yes, light crude is now above $88, but bitumen is worth less than half that. More importantly, it is returns that matter, not commodity prices. Your response?

A: "The answer is very simple. In all the economic analyses we did, the panel assumed bitumen prices would be 45 per cent of light crude oil prices. So that's the basis of all the economic analysis," says Van Meurs.

Q: OK, but what about the returns from these projects?

A: "First, I suggest you take a look at the market values of these companies, if you don't think these oilsands projects are highly profitable," says Chrapko.

"Suncor's stock price just hit an-all time high. So did Canadian Oil Sands Trust, and Canadian Natural Resources (CNRL) shares are just below their all-time high."

Q: But oil prices are up about $7 a barrel since the panel's report came out, close to a record high. Doesn't that explain it?

A: "In part. As I like to say, it's the oil price, stupid. That's always the key factor. And that's why these companies are racking up record profits. But on top of that, let's talk about the sweetheart deal these producers get under the current generic oilsands royalty regime," says Chrapko.

"They not only deduct their startup capital costs, they also deduct their R&D costs and their operating costs, as incurred. And on top of that, they get another six per cent on their capital invested," he adds.

"During this whole period, they pay a one-per-cent royalty until all such costs, plus six per cent, are recovered. That's the sweetheart deal. If that's not looking at returns, I don't know what is."

Q: But what about the huge cost overruns companies have absorbed?

A: "The reason they're able to absorb the multi-billion dollar hits is that you and me, all of us, are paying for it. That's why they can agree to 24-per-cent increases (over four years) in their labour agreements, as Suncor and CNRL just did."

Q: Still, the panel proposes two major increases to current oilsands royalties, including a hike in the ultimate net profit payout to 33 per cent, and a bitumen tax tied to oil prices that scales up to a high of nine per cent at $120. Won't this severely impair returns for oilsands projects?

A: "My work for the panel was precisely to measure, to ensure, the linkage between profitability and royalty rates. So in all my reports I analyzed the rate of return, the profitability ratio, and the net present value per barrel of oil equivalent for every feasible price-cost combination for oilsands as well as conventional natural gas and oil wells," says Van Meurs.

Q: All right, but as you know, J.S. Herold, an industry consulting firm, says returns from the oilsands aren't as high as other jurisdictions, correct?

A: "J.S. Herold makes a basic mistake in calculating returns. They only looked at a five-year timeline, instead of the entire lifespan of a project. The economic rent -- or royalties -- have to be looked at when the project is done, not just in advance. Otherwise you end up with a castrated view of the revenues," says Chrapko.

Q: Suncor and Syncrude operate under special Crown Agreements that don't expire until 2016, and which enable them to opt to pay royalties on lower-value bitumen in 2009. Isn't it wrong to recommend tearing up these contracts?

A: "The panel under no circumstances recommended any ripping up of contracts. The current agreements with Suncor and Syncrude are there, and all the forecasts in the panel's report are based on those agreements," says Van Meurs.

"You can see that even in the forecasts on page 17 (of the report). Clearly, oilsands royalty revenues are projected to drop to $1.7 billion from $2.2 billion by 2010, under the current system."

Q: But what about other oilsands producers that have made big investments, such as CNRL, which falls under the current generic oilsands royalty regime? Even if royalties are changed, shouldn't CNRL be 'grandfathered?'

A: "The oilsands division of the Ministry of Energy and its utter incapability of monitoring the current system -- as shown in the recent auditor general's report -- would suggest that you don't want to start setting up two sets of rules when they can't even monitor one," says Chrapko.

"But I want to make it clear that our problem is with the oilsands division, not the whole energy department. Dave Breakwell and his team, including Barry Rogers and Matthew Foss, were beyond exemplary. Our whole report could not have been done without them."

Q: You say you're not in favour of ripping up the current agreements with Suncor and Syncrude. Yet, they'd be subject to the proposed new bitumen tax.

Isn't that the same thing?

A: "No. The Suncor and Syncrude agreements only apply to royalties, not absolute fiscal stability in the province. So any tax -- whether it's a bitumen tax, a water tax, or a carbon tax -- can be imposed, just like any tax. That's not ripping up an agreement," says Van Meurs.

Q: OK. But isn't a bitumen tax just another name for a royalty?

A: "No, they're two different things. As we've said, Suncor and Syncrude won't be subject to any new rules on oilsands royalties, yet they account for about 50 per cent of all bitumen production. So that's one reason why we introduced this new bitumen tax," says Chrapko.

"Ideally, you always like to work towards a level playing field for all investors," says Van Meurs. "The bitumen tax does that."

Q: Let's get back to oilsands project costs. As you know, the industry says costs have skyrocketed, and the panel's numbers are outdated. Any response?

A: "In January, Wood Mackenzie updated all of the cost estimates for all the major oilsands projects. Their study was widely distributed, and I was conservative in interpreting their data. The energy department assured me subsequently they have reconfirmed that Wood Mackenzie still believes the cost data is reasonable," says Van Meurs.

"Since then, Wood Mackenzie has stated that yes, some new projects are 25 per cent more expensive than those we had studied, and these are projects that are on the drawing board, so they're just estimates. Well, give me a break. These are just fantasy numbers that are now being thrown around."

Says Chrapko: "In January, on a conference call we had with Wood Mackenzie, they were estimating oilsands capital costs ranged from $50,000 to $80,000 per barrel, depending on the project.

"Since our report was issued, they're saying it's now $100,000. Well (bleep), whose pocket are they in?"

Q: Wood Mackenzie says the panel's recommendations, if implemented, would reduce the value of current or future oilsands projects by some $26 billion, or 13 per cent of the sector's value. How does that serve the province's interests?

A: "Please understand what this means. It means that if you bought all of the oilsands assets today from all the companies there, you would pay $26 billion or 13 per cent less than you would have paid before," says Van Meurs.

"Why is this in the interest of the province? Because this value is going to be transferred from the companies to the province (in the form of higher royalties). That's the benefit. Alberta will be $26 billion richer on a net present value basis."

Q: But doesn't this imply that some marginal oilsands projects will be killed? Isn't that part of the rationale for the $26-billion figure?

A: "No. Let me put it this way. It's as if you bought a house. Previously it was worth $400,000, but the municipality comes in and says, from this day forward, there's a further $10,000 in property tax on that house. So now, maybe you're only willing to pay $370,000 for it. That's basically what's happening here."

Q: Why didn't the royalty panel include land-lease sales to determine whether Albertans are getting their fair share? Wasn't that a key omission?

A: "No. The panel's task was to determine a fair share of resource revenues, and fair share has to be determined based on a relative comparison with other jurisdictions in the world," says Van Meurs.

"A lot of nations have payments that look like bonuses, but are very difficult to determine and aren't normally taken into account, like import duties. So that's why, by taking these figures out of it, we get an apples-to-apples comparison."

Q: You admit some marginal oilsands projects are likely to be scrapped if royalty rates are raised and a bitumen tax is imposed. Shouldn't the industry decide how fast development occurs?

A: "It's the government's function to create a sustainable rate of development for the oilsands. That's not an industry function. The mandate of the department of energy is to maximize the value of the resources," says Van Meurs.

"If you let the free market completely decide what happens, then every time oil prices go up, more expensive projects get built, which jacks up the rate of inflation even more. So using the revenue minus cost royalty formula that applies to oilsands projects, you wind up collecting less royalty revenue," he adds.

"Since it's the mandate of the department of energy to maximize the value of the resources, therefore, one of the ingredients in maximizing the value of the resources is to establish a sustainable level of development. In a boom scenario, you're destroying that value, rather than maintaining it," he adds.

Q: Some critics say the panel didn't adequately consult industry, and therefore the data you used is dated or incomplete. Your response?

A: "That's nonsense. In many countries, fiscal changes or hydrocarbon tax changes are passed with far less consultation, or no consultation at all. There aren't many places in the world as open to consultation as Alberta. The industry had six months time to make its case," says Van Meurs.

Adds Chrapko: "Now -- after repeatedly hearing from industry, 'If it ain't broke don't fix it' -- we're suddenly hearing 'Well, there's room to move.' Well, I don't know how to put it elegantly, but that just takes the cake. About two-thirds of the public hearings, and probably 90 per cent of the written material, was from industry. We needed wheelbarrows to carry it around."

Q: What are your views on the closed-door meetings the government has had with industry representatives since the panel's report was issued?

A: "What I regret is that this is not part of the official process, where we could have sorted out all these debates about costs in public, rather than behind closed doors.

"That is of course somewhat disconcerting" says Van Meurs.

Q: So have you been asked to comment on industry's objections to the report by the premier and the energy minister?

A: "Four panel members, including myself, Bill Hunter, Andrew Plourde, and Judith Dwarkin, met the premier and the energy minister for about two hours, on Thursday. But we weren't given the data that was being used against us," says Chrapko.

"We were asked only to comment in generalities. So we just made the point that the debate should be based on data that's open to third-party verification, like our own. So the conversation was at a level that didn't offer an opportunity to do a proper analysis."

Q: Any comments on Dwarkin's involvement in the report issued Thursday by her firm, Ross Smith Energy, or her subsequent statements?

A: "It doesn't surprise me if the industry got to her. Her employer's bread is buttered directly by investors in the conventional energy sector. But she advanced the recommendations we adopted as a sector champion of that part of the report."

Q: The hints we're now getting from the premier suggest he'll announce a "balance" between the panel's recommendations and the position that's being expressed by industry, behind closed doors. Your thoughts?

A: "Therein lies my problem. The energy industry has succeeded in leaving the impression that the panel produced some kind of communist-Marxist document that was egregious and outrageous. I think that's the biggest problem now. In fact, we were more pro free enterprise and conciliatory in the industry's favour than much of the independent advice and international comparables indicated we needed to be."

glamphier@thejournal.canwest.com

© The Edmonton Journal 2007

[bearbait]

well i dont know what went on in the closed door talks but bussness has just picked up!!!hope its a sign of good things to come....i think the oil co's know something we dont as my fleet has benn very busy for 2 days now!!!

[BrownBear416]

The oil company i work for has been drilling year round and i have not heard anything about slowing down.:scared:

[bearbait]

hows the slave lake area??busy??

[BrownBear416]

hows the slave lake area??busy??


BB,

Yes it is pretty busy and i see lots of drilling rigs around.I work for a small oilfield company and we are busy developing a new field about 25km west of Slave Lake.

[Jamie]

WOW...
Did this thread die!

So what is everyones thoughts?

Personaly... I think its just about right. Oil companys are not that mad, voters seem ok with it.. Ed came off as sounding like he knew what he was doing. He impressed me a little bit. Still has a long ways to go.. But he did ok.

Jamie

[WCTHEMI]

There may be a few tough years, but even if they do pull out some money, they will be back later, and will pay the toll. The fine line is to make them pay a fair price, and still keep their costs low enough that they can maximize their profits.

[russ]

The sabre rattling is over - even if some development does shift to Sk. it's about time development was tempered a bit any way.

[bearbait]

well iguess there will be lost jobs....

so mabey the loggers should also pay 40-50 % royalties....oh and the farmers...what about the bottled water companys.....oh then there's the mines as well....all resources we as albertans own.....why pick on just the oil co's...we can make billions more....

what a joke....so many so blind.....lets do it across the board....shut down the province compleatly....what ever..
rob

[Hoochie Papa]

Can someone give me the short version of what got decided? I'm down in Utah, and want to know how the drilling forecast looks for the winter?

Did the door get slammed shut, or are we going to drill some holes finally. I have been waiting on that report to aid in a decision of what work I am going to do this winter.

Thanks, Joe

[Walleyes]

1.4 billion for Albertans wow... First of all what a joke,, what do people think all of a sudden we are going to start to drive on streets paved with gold ??? pay no taxes,, please.. This money will be sucked up in short time,, just wait and see,, everybody is going to start to line up at the trough and the general public is not going to see any change in life or our future... When this thing slows down how long is it going to take to suck up that money to just maintain the life style that is enjoyed by the socialist in this country... And 1.4 billion please.. That is peanuts to what is going to be lost by the province, in land sales, taxes from laid off workers who are going to need poggy, bail outs of small companies the government is going to have to help out with.. Lost revenues by countless people and businesses.. Oh so blind they are the narrow minded of this province...

And lets not forget one very important thing.. The province of A.B. has binding contracts with two of the largest oil producers in this Country.. These contracts are good till 2016, what are they going to do ??? rip up those contracts,, sorry that is illegal and if they do what sort of precedence are they setting ???

There is a reason that steady Eddie the pig farmer from Two Hills put it off till 2009... He damn well knows his chances of being re-elected are very slim... When they call an election this spring and they will because they will be told to !!! they will have a vote of confidence and this moron will not get in.. So when Dinning gets in He will do what is best for the province and put through a royalty increase that makes sense... In other words he will do what he is told to do by the people that run this place... Dont believe me lets just wait and see...

[outlaw'd]

Got this in an email.................and yes my job is oilfield related.

Here is a good analogy for the Stelmachistan government to consider while
mulling over their "fair share" conundrum. I think this explains the opinion polls (75% in favor of the Royalty increase) to a tee. Of course,the panel doesn't even consider the possibility that the "size of the pie" might get smaller rather than simply taking a bigger piece of a pie that stays the same size.. Since it is tax season let's put tax cuts in terms everyone can understand.
Suppose that every day, ten men go out for beer and the bill for all ten comes to $100.If they paid their bill the way we pay our taxes, it would go something like this:
The first four men (the poorest) would pay nothing.
The fifth would pay $1
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.
So, that's what they decided to do. The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. "Since you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by $20."Drinks for the ten now cost just $80. The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free.
But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his 'fair share?' They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay. And so:
The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).
Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings."I only got a dollar out of the $20,"declared the sixth man. He pointed to the tenth man," but he got $10!""Yeah, that's right," exclaimed the fifth man. "I only saved a dollar, too. It's unfair that he got ten times more than I!" "That's true!!" shouted the seventh man. "Why should he get $10 back when I got only two? The wealthy get all the breaks!" "Wait a minute," yelled the first four men in unison. "We didn't get anything at all. The system exploits the poor!" The nine men surrounded the tenth and beat him up. The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the
bill, they discovered something important. They didn't have enough money between all of them for even half of the bill! And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

David R. Kamerschen, Ph.D.
Professor of Economics
University of Georgia

For those who understand, no explanation is needed. For those who
do not understand, no explanation is possible.

[getasheep]

As an aside to the royalty debate, I'd just lake to challenge the authenticity of the above email:

"Contrary to Internet folklore, Dr. Kamerschen is NOT the author of "Tax Cuts: A Simple Lesson in Economics." Additionally, he does NOT know who wrote it. "

http://davidk.myweb.uga.edu/

http://www.snopes.com/business/taxes/howtaxes.asp

Speaking about the royalty issue. For what was supposed to be great carnage the stock markets sure took it in stride. Ed actually watered down the report considerably and eliminated the natural gas slow down excuses. I'm leary about how he is going to renegotiate existing contracts since he decided against bringing in a tax. We'll see. If I had to scale this with the Oil companies on one end and the Royalty Report on the other I would say it falls closer to the Oil companies than the royalty report.

[Buckhead]

The Big Oil companies are not going anywhere and they know it.

All I have heard from them is a bunch of propaganda and fearmongering -which is typical.

If they want to take their money and go somewhere else...good riddance.

I'll even supply the cheese to go along with their whine.

They are even sniveling about natural gas prices being too low to make a buck, when they are going to be using up a lot of the gas in their own damn oilsands mines that have been constructed at the cost of the Alberta taxpayers.

There is no way the big oil companies are going to pull out of one of the largest oil plays on the planet considering Alberta and Canada's political stability and the fact that there is a guaranteed market for the product right next door (the US).

BOO F*&^ING HOO.

[Walleyes]

The Big Oil companies are not going anywhere and they know it.

All I have heard from them is a bunch of propaganda and fearmongering -which is typical

And you know this because you sit on the board of directors for one of these companies rite ???

If they want to take their money and go somewhere else...good riddance.

Yah good riddance eh,, poggy is probably nothing new to you anyways.. Social programs is what you survive on...

There is no way the big oil companies are going to pull out of one of the largest oil plays on the planet considering Alberta and Canada's political stability and the fact that there is a guaranteed market for the product right next door (the US).

Like I said they have binding contracts with these companies which will hold up in any court. And it won't pass anyways once we have an election this spring and we get this pig farmer out of the way.. We will put a business man in there that has the intelligence to see what is happening it don't take much,, a kid with grade 10 economics can see what is happening...

You people don't get it do you... Its not what is going to happen !!! it is happening now.. Projects are all ready getting cancelled... So whats going to happen to that little plant job of yours when there is no demand for you're product ??? you will loose you're job as well... Oh yah that's rite you don't care,, there's always poggy..

[troller]

So you must know Buck personally I take it Walleyes? If not I'm wondering how you can make statements like this?

poggy is probably nothing new to you anyways.. Social programs is what you survive on...

you will loose you're job as well... Oh yah that's rite you don't care,, there's always poggy..

Why do people feel the need to take personal shots at people that don't see things the same way?

[Dick284]

And you know this because you sit on the board of directors for one of these companies rite ???


Time to look at what you write there Walleyes.
So do you sit on a Board or are you the CEO?

Like the rest of us here I suspect your a working schmuk.


I dont know about all the doom and gloom, natural gas has tanked and that in it's self has spawned slowdowns in that sector, and no it does'nt relate to the Royalty issue.
Perto Can is going ahead with it's Tar sands project engineering, so there's a hmmm, for ya.

The contract thing is indeed interesting, and worth looking at when it comes up.
But in all reality if the level of activity goes back to 2003 levels or even 2001 levels, I dont think the world will end.
Lots of toys will be up for sale and a lot of people are gonna figure out that if you buy it on credit you probably dont need it that bad. As for $500K homes for a family of 4 well there in it's self is an example of life lived in excess.
Sorry to burst your bubble Walleyes but if you pizzed away this last boom, go cry somewhere else.

[Jamie]

Quote" And lets not forget one very important thing.. The province of A.B. has binding contracts with two of the largest oil producers in this Country.. These contracts are good till 2016, what are they going to do ??? rip up those contracts"

You are 100% correct. And even if there is a way out of these contracts I dont think the Gov of Alberta should try and renege on them.
It would make us look rather poorly.

Jamie

[Walleyes]

Time to look at what you write there Walleyes.
So do you sit on a Board or are you the CEO

I do not sit on a board nor am I a ceo, But I do talk almost daily with my boss who does. And I do help at times draw up winter drilling programs and help plan some large projects. So I do know first hand what is happening.. I am not at all talking hot air but speaking through facts...

So you must know Buck personally I take it Walleyes? If not I'm wondering how you can make statements like this?


Quote:
poggy is probably nothing new to you anyways.. Social programs is what you survive on...

Quote:
you will loose you're job as well... Oh yah that's rite you don't care,, there's always poggy..

Why do people feel the need to take personal shots at people that don't see things the same way?

I said these things because anyone that says good riddance to stable business and a stable economy and stable jobs for people obviously has no regard for such things and holds them very low in his priorities..

[BEL]

Jamie, I am surprised that you are even remotely impressed with Ed considering you are a Klein supporter. I hope you have noticed all the negative things said about Klein in the last few weeks. BEL

[Buckhead]

[QUOTE) I said these things because anyone that says good riddance to stable business and a stable economy and stable jobs for people obviously has no regard for such things and holds them very low in his priorities..[/QUOTE]

WALLEYES:

I am the one that said good riddance and I say it again.

I am tired of hearing empty threats from the oil companies at the same time as they bring in workers from other countries and get them killed - like the ones at the CNRL mine site.

I would certainly like it explained to me how the economy in Alberta can be called stable. Almost everything I buy has gone up by 50%, 100% and even more - just in the past 4 years. Need I even mention the high cost of housing. This is not stability. This is inflation running rampant - most of it caused by the willy-nilly development of the oilsands and the companies involved.

And for your information I have never drawn a dime in unemployment insurance or received any form of social assistance. When I was unable to find work in Alberta (which is my home) I worked in BC, Sask, Yukon and the NWT. I did what ever I had to to put food on the table and keep a roof over our heads - sometimes at jobs I absolutely hated. I doubt if you could say the same - judging by your attitude.

Just as much of my livelyhood depends on having a healthy economy in Alberta as anyone elses and I have extensive experience in the oil and gas fields of western Canada.

I just refuse to be held at gunpoint by a bunch of large corporations that are raking in multi-billions of dollars every year and are crying poverty.

This is called personal integrity - Mr. Walleyes.

[Walleyes]

When and where have any of these companies ever called poverty ??? They claim nothing but profits !!! Why is profit such a bad word ??? You know why because most people are jealous of it that's why.. Some in this world are smart enough to do what can be done to make money the rest want to live off of them that can.. This is what is happening here and now in this province.. I have chose in my life to live the oil patch life !!! I live away from home 250 days out of the year,, yes you heard it 250 days !!! for that I get payed plenty.. You know how much ??? about $250,000.00 a year so what ??? Do you want to live my life ???? You could not handle my life... I do it because it is my calling,, its what I am good at... Now people stand in front of me and tell me good riddance to you ass hole,, sorry that just doesnt work... I have been feeding this province off of my tax dollars way to long to be told I am not needed anymore.. Don't think so,, lets do a poll how many tax dollars have you been putting in over the last say 10 years ??? what ?? way to much ???.. I have personally paid no less then between 30,000.00 to last year 53,000.00 dollars in personal income tax.. Don't tell me about paying you're fare share.... But I am smart enough to know why that money has to be payed and where it goes..

I have one saying for you people that live on the lower scale of the income bracket !!! you chose you're life style and job not me,, don't make me pay for you're choices and I won't make you pay for mine...

[BrainTan]

I have one saying for you people that live on the lower scale of the income bracket !!! you chose you're life style and job not me,, don't make me pay for you're choices and I won't make you pay for mine...

That seriously has to be the most ridiculous thing I have ever heard. Why don't you go say that to the little guy that makes the food to put in your eccentric belly. You are nothing without them, and they do just fine without you! Once again the spoiled rotten can't fathom the reality that not everyones world revolves around what kind of vehicle is parked in their driveway, or whether they are "high society" doing everything in their power to help the poor unfortunate low lifes (that don't clear some ridiculously overpriced income) by paying their taxes.

The way I see it is that you are clearly not ready to give up your eccentric lifestyle because your too used to the imaginary money that rules you!

:innocent:

[BrainTan]

I should add that yes I chose my lifestyle of working minimum wage, it was either that or starve to F@#$ing death. A concept the elite can't fathom because their to busy counting their crack money!

[TreeGuy]

OK, its time to take a step back and analyze the situation. Enough hysteria.

Walleyes, a while back when I was asking for fishing advice, you PM'd my you number because you wanted to give your expertise to a rookie. I appreciated your advice. Now its my turn to repay the favour.

Walleyes, I have an honors degree in economics from the top undergraduate university in Canada, and I have followed this situation closely.

If you are working for one of the smaller players, you might be in a bit of a bind. Otherwise, I really believe that it's going to be ok. You have to trust me on this.

On the first day, the markets only lost about 0.5%. That's good, and it is a direct result of how Stelmach et all handled the situation. Markets HATE uncertainty, and now they know what's going to happen in a year from now. They have time to factor the added costs into their bottem line. This eases any doubts in the minds of investors and keeps things stable. Petro Canada has just announced that they will maintain their $15b oilsands project, and they are not the only one.

We have the second largest proven oil reserve on Earth. We are about the safest and most politically stable environment also. Oil will close Monday over $92/b, and will close Friday over $100/b. They royalty increases are linked to the commodity price, so EVERYONE will keep making money. If a company cannot turn a profit at $90/b, then they have no business being in the business. Period.

There are easier places in the world to physically bring the crude to the surface, but there are so many other factors involved. ie Oil produced in the middle east still has to get here. As a driller, the middle east stuff (as one example) is easy physically. Everything else is tough......I'm not sure what Blackwater charges these days, but I'm sure it's alot.

Then there is the BC/Sask. argument. Not quite as easy as its made out to be. Alot of infastructure needs to be developed first. The oil sands needs the commuity of FT. Mac., not something set up overnight. Then BC has its rocks and 'bumps'. The rhetoric must be tempered.

Stelmach will win the next election as he took a middle of the road approach. kevin taft is far more hardline, and God help us all if brian mason of the ndp dets in! As an educated voter, Stelmach is the only safe choice. In the back of my 'conspiracy theorist' mind, I believe this move is aimed at maximizing oil revenue on a provincial level prior to a move by the feds motivated by Koyoto. Does Alberta get it, or do the feds.

Anyway, Walleyes, you and your family are in my thoughts and prayers, and I really hope that this doesn't screw you. However, I really believe that you'll be alright. Just wait and see man! Ya gotta trust me on this one. It's going to be ok.:wave:

Tree

[Walleyes]

And now we are really starting to bring out the truth in all this.. Do you people hear you're selves..( All should be equal regardless of will power or drive or education or knowledge ) you are all G@d D$$$m communist's just listen to what you are saying... Big money is bad,, I want more "for their work",, The people have spoken,, we want our share regardless of what I do I want an equal share..

If you want a piece of the pie,, go ahead get it !! trust me its out there... But you have to trust you're self enough to get it.. Or better yet you have to trust the old lady,, you might have to leave er to the neighbor for a night or two.:lol: :lol: :lol: :lol:

[Buckhead]

And now we are really starting to bring out the truth in all this.. Do you people hear you're selves..( All should be equal regardless of will power or drive or education or knowledge ) you are all G@d D$$$m communist's just listen to what you are saying... Big money is bad,, I want more "for their work",, The people have spoken,, we want our share regardless of what I do I want an equal share..

If you want a piece of the pie,, go ahead get it !! trust me its out there... But you have to trust you're self enough to get it.. Or better yet you have to trust the old lady,, you might have to leave er to the neighbor for night or two.:lol: :lol: :lol: :lol:

You sir are a total moron - and you are full of sh&t!!!!!!!!

It's either that or you are just a young punk that hasn't had one of the older guys in the patch take you out back and teach you some manners yet.

[Walleyes]

Originally Posted by Walleyes
And now we are really starting to bring out the truth in all this.. Do you people hear you're selves..( All should be equal regardless of will power or drive or education or knowledge ) you are all G@d D$$$m communist's just listen to what you are saying... Big money is bad,, I want more "for their work",, The people have spoken,, we want our share regardless of what I do I want an equal share..

If you want a piece of the pie,, go ahead get it !! trust me its out there... But you have to trust you're self enough to get it.. Or better yet you have to trust the old lady,, you might have to leave er to the neighbor for night or two.

You sir are a total moron - and you are full of sh&t!!!!!!!!

Well that's about the intelligence I was expecting.. Can you sign an x on the lign for the check please..

[bullwinkle]

$250,000 is apretty average oilpatch income there walleyes...nothing to gloat about.Sounds to me like you must have found a stranger on your mattress after your last hitch.

[Walleyes]

Was not gloating,, just stating facts for a debate that thus far on this board has been left to the leftest to control...

P.S. have been happily married to my oil patch girl for 21 years now thx very much...

[Boss442]

I don't personally work in the patch but my son and son in law do. I have always been amazed that neither of them have any education but make between $100.000 & $150.000 a year (when things are going good) and still at time's I get a call from them needing to borrow money? I hope when all is said and done that thier not left with thier @icks in thier hands with no money and no education and won't work for anything less than $30.00hr when in reality they should not be making much more than min wage. "Then maybe this province will get back to normal" instead of this over inflated economy that the oil patch has created!!

[gunslinger]

3 days till opening morning boys then we all can take the month off and go hunting again, yee haaa thank christ for the oil patch.

[troller]

When and where have any of these companies ever called poverty ??? They claim nothing but profits !!! Why is profit such a bad word ??? You know why because most people are jealous of it that's why.. Some in this world are smart enough to do what can be done to make money the rest want to live off of them that can.. This is what is happening here and now in this province.. I have chose in my life to live the oil patch life !!! I live away from home 250 days out of the year,, yes you heard it 250 days !!! for that I get payed plenty.. You know how much ??? about $250,000.00 a year so what ??? Do you want to live my life ???? You could not handle my life... I do it because it is my calling,, its what I am good at... Now people stand in front of me and tell me good riddance to you ass hole,, sorry that just doesnt work... I have been feeding this province off of my tax dollars way to long to be told I am not needed anymore.. Don't think so,, lets do a poll how many tax dollars have you been putting in over the last say 10 years ??? what ?? way to much ???.. I have personally paid no less then between 30,000.00 to last year 53,000.00 dollars in personal income tax.. Don't tell me about paying you're fare share.... But I am smart enough to know why that money has to be payed and where it goes..

I have one saying for you people that live on the lower scale of the income bracket !!! you chose you're life style and job not me,, don't make me pay for you're choices and I won't make you pay for mine...

Funny, you seem to know what everyone on the board can "handle" or not. Well just to open your eyes a little,


what you made last year, my company paid in taxes. Just to let you know, it has nothing to do with oilfield and can sustain greatly without the oilfield, we did very well through the 80's.. Sorry :wave:


By the way, I make all this yet still get to be with my wife every night. :D

[Buckhead]

I guess some people just don't get it.

I hear the same story over and over. "I am an oilfield consultant and I made $200,000, $300,000, $400,000 last year." And all they have to show for it is a new pickup and a couple of quads.

This is typical patch mentality. Make a lot of money really fast, spend it even faster - and then ask for a handout from someone else when they are out of work.

The patch has been booming for the last 10 years. If these people have not saved or invested anything for a rainy day - I do not feel sorry for them in the least.

I am fortunate that I am very well compensated for my work, I am just not so crass as to try and belittle other folks by bragging about my income here.

There is absolutely nothing wrong with companies making a good profit and paying their employees well. This is just good business and benefits everyone.

Ultimately, the resources of Alberta belong to all Albertans. All people are asking is that the companies that are making huge dollars in profits contribute their fair share so that there is money to build hospitals, schools, roads and other infrastructure that is being stretched to the max in the current business climate and by the large influx of people moving into Alberta to work.

I am sure noone on here wants to see anyone else lose their job. But it is a fact that the economy goes in cycles - always has, always will. What is good today, may not be in the future.

[russ]

1.4 billion for Albertans wow... .

Which brings us to a point that's been conveniently overlooked. 1.4 billiion isn't even a single quarters profits for at least 4 or 5 of the "big" players. There's literally hundreds of small cap operations out there making millions in profits that add up to mega-billions. This has all been a bunch of huffing and puffing over what amounts to pocket change.

[209x50]

From "A Thousand Barrels a Second" by Peter Tertzakian McGraw Hill 2006

"In other words we know a region is maturing when the rate of production cannot be increased no matter how many more wells the industry drills. Such is the case of the United States, the country with longest history of crude oil production. Production out of the once substantial U.S. crude oil reserves peaked in 1970 at 9.6 million barrels per day. In 2004, 145 years after it first began, US production was down to 5.4 million barrels per day."

So where are they going to get it?

He goes on to talk about reservoir maturity and the production shrinkage that comes with it.

"Estimates vary, but the overall average global decline rate is now somewhere between five and eight percent. The implications are profound. If oil companies do not spend money on new drilling, production in 2006 will decline by 4.3 million barrels per day in 12 months, assuming a conservative five percent decline. In two years, 2008, we would be down to 77.6 million barrels per day. So after a mere two years, the worlds production would regress back to where we were 10 years ago."

This scenario only deals with offsetting a 5 percent production decline in existing fields, it doesn't take into consideration the growth in consumption every year which is running about 2% globally.
So where are they going to get it?

[59whiskers]

Cost over runs on many of the oilsands operations under construction far exceed original budgeted amounts, now we have a government implementing another 20% tax expense on companies with high cost over runs and we live like Royalty. There are lots of opportunities over seas for major players to do business while leaving the smaller service companies here in Alberta with no work. Most of the major oil companies doing business in Alberta are not Canadian owned and business decisions are made somewhere else in the world. Share holders of these companies make the final decision as to whether or not how much business will be done here. Sure some of these Alberta projects are to far along not to turn back but there are huge opportunities in Asia, India, Mongolia, Middle East,,etc. Shareholders are looking in that direction for future investment opportunities that could be more economical at this time.

[Morbius131]

Buckhead that is a great post and very well written! Throughout this whole thing I have heard a whole lot of "I this" and "I that". As much as I don't want to see anyone lose jobs, suffer economic hardship or suffer as a result of this review. Ultimately, the natural resources of Alberta or for all Albertans.

If a lot of the "big players" in the oil industry want to leave...LEAVE...quit talking about it and just do it. The natural resources are there and if some of the big guys leave, you can bet your bottom dollar that someone else will move in to get the resources.

Change leads to innovation and cheaper means of extracting these valuable resources. In the end I believe this will turn out to benefit a greater section of the population.

Morb

[RandyBoBandy]

cost over runs???:mad3: how about following the rules all other business's use?? no more than a 10% screw up with budgets!! Going to other countries..WHAT A GOLLDARN laff!! Alberta has a stable political enviroment...go ahead a try an asian country or a middle east country....you'll spending $$$ on security far beyond staying here...and that includes the threats of going to BC,,unions,taxes etc...ROFLMAO...this province of Alberta is a cash cow for properly managed oil companies:evilgrin:

[Chet]

It's definitely a good topic for debate. Personally, as an employee of an Oil and Gas production and exploration company in Calgary, it is an issue that I am very concerned about. I was reserving judgment about it until some kind of decision had been made. After the decision came down, my initial reaction is that I don't think this is a "deal-breaker" for Oil and Gas in Alberta. I think the effect on the company I work for will be minimal. Our exploration levels will probably not change signifiantly due to the royalty rate changes. Our activity level is less this year than it was last year but that is due to a variety of reasons. When we are trying to decide what projects we will go ahead with in the coming months, natural gas prices are still the biggest factor for us.

There are some things I really don't like about the new rules though. One of the biggest concerns I have is the shallow rights reversion policy that the government is adopting. This concerns me as an oil and gas employee as well as an outdoorsman. The governments decision to pull undeveloped shallow rights in producing wellbores and re-sell them will result in drilling many more wells than necessary to produce the same reserves. It drives production costs up siginicantly and creates a bigger footprint on the environment than is needed. I guess the drilling contractors need a carrot too.

Chet

[lurch]

.

[Walleyes]

Read this in the Sun today pretty much sums it up I think..

Stelmach's royalty tax is a victory for the looters, moochers and parasites along with those who want something for nothing egged on by the envious, such as Rick Bell and led by the zeros of the Alberta Conservatives.

:lol: :lol: :lol: :lol: Can you say nail on the head.....

[lurch]

.

[Walleyes]

Ohh so its the oil companies fault that are kids are in over crowded classrooms, and we have to pay for the extras like lockers and text books and such.. And thx I didn't realise it was the oil companies fault that our health care system is in shambles and we have to pay so much for it.. Now I can see it all... And oh yah it has to be their fault that our housing market has gone through the roof keeping hundreds of our contractors working how dare they... And all that crime my goodness how dare they,, they must hire people just to come in and run around the streets and sell dope and shoot each other and steal from one another,, oh wait that's the unemployed and the people who don't want to work for a living, phew I'm sure glad this royalty review isn't going to put anyone out of work..And all those kids that are running around the street at night vandalising and stealing and beating each other up who have parents that could care less where they are or what they are doing,, damn oil companies they should be paying for counselling for all these people how dare they.. And our environment well how dare they drill for clean burning natural gas and coal bed methane gas who do they think they are hell coal works just fine, little smelly but hey it worked before it will work again.. Yup them damn oil companies making this poor little province into the envy of the country.. How dare they give our young adults actual opportunities for decent well paying jobs when they get out of school and a hope for the future.. Man I hate 2% - 3% unemployment it sucks.. Lets get it to where it should be oh I don't know lets say what 8 - 10 sure why not... The government can take care of them hell we will have an extra 1.4 billion to spend.. Oh no that's rite we won't because we are going to loose all the revenue that was created when we were all working.. Oh well lots of them can head back home to the east god knows its booming out there...

Here I thought that our Government that is sitting on billions of our tax dollars was responsible for fixing our schools and building roads silly me..And our health care system well I was under the understanding that that was run by bureaucrats and doctors that charge the government $100.00 for a 15min visit to a clinic that is full to the roof with people with nothing wrong with them other than a cold but hey its free for them,, lets go get some pills ehh,, we can sell them on the street that's what the oil companies are paying us to do..

Man am I ever glad I read that its all so clear to me now.. Thx man...

Here in lies the problem hey guys its always someone else's fault and I am never to blame... Its those guys they have the money its their fault..

Yup I'm sure glad I have people with such vision looking out for poor little old me...

[lurch]

.

[Sakoman]

Lot's of debate still going on here.

As an employee of an oil company I am not as concerned today as I was two weeks ago as on the surface the RR does not look like what the original recommendations suggested. That being said I don't not agree with the Govt. tearing up existing contracts and telling Syncrude and Suncor to step up to the table or we will take other measures to force you to. Not good business but that is my opinion.

As for the above Anti Oil posts, I am sure none of you even have a clue of how oil works and the way the business even runs. I find it amazing how you can be so convinced in your opinions and rationalizations without sitting down and seeing all the numbers in front of you. As for the huge corporations that you like to quote their profits there are only a few dozen of companies like that in the world. Most of the oil companies in Alberta do not make anywhere near that kind of money. The company I work for made 1.5 million last year of which we sank every penny right back into the economy. This year we will probably run a small loss due to gas prices.

One last thing 12% of Alberta's oil production is conventional. Not even all of that 12% gets the $90 you love to chide us for.

[lurch]

.

[getasheep]

I find it amazing how you can be so convinced in your opinions and rationalizations without sitting down and seeing all the numbers in front of you.

I think this statement goes both ways. All of us have our personal lens that we see an issue through. Thus we have different takes on this issue. Oil companies are neither the savior of this province nor the scum of the earth... they probably lie more to the middle. It goes the same to assume that a person posting in support of more royalties knows nothing about Oil & Gas or vice versa.

So thats my stance... we debate in extremes but the best outcome is generally in the middle (do I sound Canadian enough! ha ha)

disclaimer: I have worked in forestry, oil, non-profit, and government... i'm now a student again... so i'm trying to keep my lens as objective as possible.

[Walleyes]

Yup its been very educational,, nothing like a good dust up to get the blood flowing... I love a good debate (in case you guys couldn't tell) ;) ;) ;)

[Copidosoma]

"Don't expect me to feel sorry for you when you brag of "supporting everyone else" with your high taxes, wages etc. Especially when you are doing it with a commodity you do not own."


Wow, very well said.

[spurs]

funny.

Just for information sake the sun is wrote at a grade 7 level. Time to graduate as I see that they are scraping the bottom of the barrel for editorials.

All I'm saying is it is pretty hard for people in VP and President chairs to make a business plan when the government changes the rules all the time. First the Income trust then the oil royalty. Good for them they can scew and lie without repercussions. Bring back Ralphy. Maybe they shouldn't have wasted 5 billion on the gun registry, now I will forgive them if they amend that piece of legislation.

Pigs at a trough.

[lurch]

.

[Win94]

Just for information sake the sun is wrote at a grade 7 level.

Mikehunt read that back to yourself. Your kidding me right???

Try this: Just for information sake, the sun is WRITTEN at a grade 7 level.

PM me and we can have a quick grade 6 math lesson as well.:lol:

[Buckhead]

And, Yes - OIL is the root of all EVIL!!!

Old Beelzebub is mixing up another batch in his cauldron as we speak, for us stupid humans to fight over.

Where do ya think all that sulphur smell (H2S) comes from?:lol: :lol: :lol: :lol:

[Walleyes]

We do live in a province that has all hell for a basement... :evilgrin: :evilgrin:

[bruteforce1]

Mike I agree.

Federal or Provincial the government has still impacted the stability of alot of companies in Alberta. It's one thing to say they are not going to touch trusts and thengo after them.

Lurch I agree responsible spending.

I have taken this time to reflect on the monies oil companies have put into community projects such as pools, skating rinks and educational institutes. I know this does them justice also but it was still what the communities wanted and felt they needed. I would hope that the government listen to what the people want and don't just funnel this money to what they think is best. I'm not covinced that they won't go their own route as has been proven in past performance. Let's say oil goes to 120 dollars a barrel so in alot of situations the government owns 50% of the oil and the oil company is left with the other 50% to pay the expenses. Being Alberta doesn't produce west texas crude the economics are quite a bit different.

As an albertan I would like to thank the oil companies for spending billions of dollars in developing Albertas resource and putting all of the infurstructure in place to make it a viable product. (read history of oilsands) maybe ontario should get some of the money since they were once players in the oilsands in alberta, I presonally think they should as they are having a tough time out there. I think the government in Alberta has done a fine job on this one. Can anyone explain to me where this money is going to be spent or is the plan to be reactive and put it where ever the headline will look the best at the time.

Have fun taking your deer as it is albertas resource so don't be surprised if your MLA would like the tenderloins and the back straps, since it is their resource.

[orca]

I love the coment from the Montana Governor come on down our tax rates are considerably less and we want you . We will not shaft you and get greedy. The same invitation is coming from Sask. So all of the people who said that the oil companies will not pull out be careful what you wish for. When they move it is for a 5 yr time span. So when the oil rigs move out east and south with thier new money and the goose leaves don't come crying when your wages drop and your house is worth half what it is now. I went through the first drop in the early 80's and paid heed to the bumper sticker ( for god 's sake let there be another oil boom and this time I promise not to( p%$^#&&) throw it away)

[AbAngler]

I love the coment from the Montana Governor come on down our tax rates are considerably less and we want you . We will not shaft you and get greedy. The same invitation is coming from Sask. So all of the people who said that the oil companies will not pull out be careful what you wish for. When they move it is for a 5 yr time span. So when the oil rigs move out east and south with thier new money and the goose leaves don't come crying when your wages drop and your house is worth half what it is now. I went through the first drop in the early 80's and paid heed to the bumper sticker ( for god 's sake let there be another oil boom and this time I promise not to( p%$^#&&) throw it away)

We tried drilling in Montana a few years ago. Ended up with a crap load of land and a whole bunch of torn out hair. Very disorganized sytem they have down there. Just finding a well location to go with logs was a major undertaking. The location would read "10 paces west of dry creek bed, 20 paces north". Try putting that on a map! There is a formal system, but it wasn't used very well.... We also sent a guy down there to look at core. The core storage facility was a warehouse with a bunch of core stacked to the ceiling with no order. Depths were anyones guess... He came home vowing never to return.

Sask, on the other hand is a pleasure to drill.

[Reeves1]

Woman in Ford credit claims zero unemplyment in AB right now :mad3:

[steveo10]

Drove home from a rig today. About a hr drive... mustve seen at least 10 (i think 12 to be exact) rigs.

Keep a punchin and a pumpin :)

[russ]

Woman in Ford credit claims zero unemplyment in AB right now :mad3:

maybe you need to lower your standards - Walmart's hiring ;)

[Reeves1]

I'm nearly old enough to be one of those greeters :wave:

Except I'm too cranky for that job :lol:

[bearbait]

wow.....alot of tension.....

first and formost....we in the patch make great sacrifices to earn the cash we get....

second the royalties will affect alberta greatly...

third if you dont know what is going on in the patch dont pretend to......

finaly pull your heads out of the sand and listen to reason....royalties hike, the a 33% pipeline tax implimented, then our dollar being so strong, and a big kick in the nuts from albertans.....why would big oil stay???? we as a province are debt free becouse of the patch...you all seem to know something all of us in the patch dont so i ask.....where did you get your info from???alot of opinions being throughen out there but any facts to support them....i just dont get how some can be so blind...well i guess when we are all on e.i. and the province is broke and the social programs can not be supported...then mabey then people will see how important the patch is to alberta...wont happen over night but we are not the smartest investment out there anymore....we always say point your gun in a safe direction.....well they dident mean at your foot!!!

rob
area sales manager/dispatcher for major trucking co in the patch.

[bearbait]

by the way i see no comment to this so ill post again...


so mabey the loggers should also pay 40-50 % royalties they use our trees....oh and the farmers, they use albertas soil...what about the bottled water companys.....oh then there's the mines as well....all resources we as albertans own.....why pick on just the oil co's...we can make billions more....

[russ]

by the way i see no comment to this so ill post again...


so mabey the loggers should also pay 40-50 % royalties they use our trees....oh and the farmers, they use albertas soil...what about the bottled water companys.....oh then there's the mines as well....all resources we as albertans own.....why pick on just the oil co's...we can make billions more....


oh and it's called stumpage fees and land taxes & income taxes and yes the bottled water companies should be paying royalties. :rolleyes: Never MIND that the landowner OWNS the surface rights UNLIKE the oil companies.

[bearbait]

just makeing a point....and the oil co still have to pay tax just like any other companys...

[Reeves1]

bearbait you seeing the same as me, where all (most?) of the pipe line work has ground nearly to a halt ?

I see in my area that CNRL has canceled many jobs/projects: I know a consultant that does the area's work & he has been sitting most of the summer...and still is.
Husky has had a huge "slow down" , although they are still drilling (shallow here) , but any pipe going in is one-three day jobs (short).
I have no idea what the rest of the Prov. is doing, except that my many calls to pipe line companies has done nothing but run up my phone bill....
Been calling other Provinces, even looking at a couple companies in Russia.

Sure hope things pick up soon ! I moved here for more work :rolleye2:

[Walleyes]

Nope its purely a figment of our imagination that its slow guys... Just ask all the guys on here that don't work in the patch they'll tell us... After all they know more about the patch than we do... I mean I have only spent 24 years chasing rigs now what the hell would I know about it ????

They will say its slow because of gas prices,, well yes that speaks for the summer.. But what they don't realise is that this time of the year we are usually gearing up for a big winter.. Well it ain't happening.. Instead we are getting notifications of cancelled projects.. But hey must just be my imagination again...

Reeves I hope you can keep busy.. You are not the only one that moved here for work.. Plenty did and I hope the best to all of them... But as they all say on here,,we deserve it we all wasted our money on drugs, trucks, quads and the rest we just blew.. Hmmm wonder then how my mortgage got paid, wonder how I can afford to send my son through college, hmm wonder where I got the money for my G.I.C's must of fell out of the sky because I've been told many times on here that all us oilfield people do is throw our money away... After all they would all know rite,, just ask them...

The best to you guys and keep in touch,, if I can help I will.. Send me a P.M. with some background credentials never know when I can help...

[BrainTan]

.. Hmmm wonder then how my mortgage got paid, wonder how I can afford to send my son through college, hmm wonder where I got the money for my G.I.C's must of fell out of the sky because I've been told many times on here that all us oilfield people do is throw our money away... After all they would all know rite,, just ask them...

Why bother saving for your kids education? The way they are pillaging our oil resources there will be nothing but worthless scraps to keep this vibrant economy alive in the future. And of course without oil Alberta is nothing so why set your kids up for such a horrible downfall? Such heavy reliance on a finite resource is a bit ridiculous from an economics point of view. Whats the back up plan when we are done with our oil? Just run to wherever the next rig is and leave Alberta with the scars form the oil and gas.

I love how patch workers are the only ones who feel they should have a comment. Most patch workers I know barely have a highschool education, just who I want to represent me in political matters!!! This not to say there are no educated people in the patch, but when you work in it you are blinded by your own bias because it directly affects you.

[Walleyes]

So a few more dollars a year in the governments coffers to blow on useless programs will fix all this... We all know that oil and gas are not here for ever.. So what do you want ??? no one to work in the patch ???

I love how patch workers are the only ones who feel they should have a comment.

We may feel this way because we are the ones that are being directly effected by other peoples decisions.. If this was a farming issue would you not expect farmers to have the biggest say ??? no.. Was it not the forest industry that was directly involved in the soft wood lumber dispute ??? Then why the double standard... Why are the oil companies being told to take it or leave with no regard for the effect it is having on us.. The people... The workers with families and plans and dreams for our children and their future.. But I guess we mean nothing to this province,, we are oilfield trash we are not worthy of respect... People are sitting back and saying good for you people you deserve it.. They are saying good leave we don't care... Do you see the irony in this...

I am a 3rd generation Albertan but I don't count because of my occupation... My grandfather homesteaded in this province in 1913, don't tell me about being here for a quick buck.. I just wonder how many people that are behind this fiasco can claim that... Well thx I am for ever indebted to you all for showing me the light.. Don't know how we all survived till now.. I guess a few scraped by in the province.. But she's all good now... Thx..

[BrainTan]

So a few more dollars a year in the governments coffers to blow on useless programs will fix all this... We all know that oil and gas are not here for ever.. So what do you want ??? no one to work in the patch ???



We may feel this way because we are the ones that are being directly effected by other peoples decisions.. If this was a farming issue would you not expect farmers to have the biggest say ??? no.. Was it not the forest industry that was directly involved in the soft wood lumber dispute ??? Then why the double standard... Why are the oil companies being told to take it or leave with no regard for the effect it is having on us.. The people... The workers with families and plans and dreams for our children and their future.. But I guess we mean nothing to this province,, we are oilfield trash we are not worthy of respect... People are sitting back and saying good for you people you deserve it.. They are saying good leave we don't care... Do you see the irony in this...

I am a 3rd generation Albertan but I don't count because of my occupation... I just wonder how many people that are behind this fiasco can claim that... Well thx I am for ever indebted to you all for showing me the light.. Don't know how we all survived till now.. I guess a few scraped by in the province.. But she's all good now... Thx..

See this is the problem Walleyes. You sit on your high horse above everyone else and throw mud and then accuse us of slamming you for being an oilfield worker. You think you mean everything to this province which is contrary to your statement that Alberta thinks your nothing. I am aware that oilfield workers are directly affected and should be voicing their concerns, but maybe if you come down off that high horse and rejoin regular everyday society you will see that oilfield workers are "NOT" the only stakeholder for Alberta's resources. There is no double standard unless you set it yourself.

Why do you deserve special treatment for being an oilfield worker. Do you cry yourself to sleep when there are government cutbacks and little suzy loses her secretary job and can't afford to feed her kids.

I am amused that you throw in your a 3rd generation Albertan, what does this have to do with the Royalty Review. Are you supposed to receive an award or special treatment because your family was here sooner than some?

In my eyes all Albertans matter, but nobody deserves to be given special treatment just becaused they are used to a fat paycheck that supposedly singlehandedly pays my sorry arse to live.

[BrainTan]

So a few more dollars a year in the governments coffers to blow on useless programs will fix all this... We all know that oil and gas are not here for ever.. So what do you want ??? no one to work in the patch ???

I would rather see a more sustainable development and maintenance of our oil and gas industry. I would rather see our province prosper in the long term not the short term. I would like to see Alberta maximize it's profits off it's oil and gas industry. If it is a piddly few dollars, then the oil companies have zero need to complain!

If you still think the sky is falling, when the dust settles I'll help you pick it up!

[Walleyes]

I stated my being a 3rd generation Albertan because of this statement..

Whats the back up plan when we are done with our oil? Just run to wherever the next rig is and leave Alberta with the scars form the oil and gas.
Sorry been here a while and plan on staying...

And in no way do I expect special treatment where in my statement do you get that.. It is quite the opposite what I stated was why are our views disregarded as nonsense.. Like I said why in the soft wood lumber talks the forest industry was directly involved.. Why on decisions made on farming the farmers point of view is used and respected.. But on the royalty review !! oh no the peoples point of view is biased and does not count... I am not an oil company the other guys on here that work in the industry are not oil companies.. We are working slugs like everyone else.. But time and time again on here we are told we don't know what we are talking about and we are just brain washed... Why are we not allowed to defend our lively hoods and our jobs,, because they are oilfield jobs so they don't count.. I don't do this job on weekends I'm a lifer its what I do,, its what I'm good at.. I don't have a rite to try and protect it ??? I should just shut up and take what ever the rest of the people decide is best for me... This is asking for special treatment ehh the rite to protect ones job and profession..

In my eyes all Albertans matter, but nobody deserves to be given special treatment just becaused they are used to a fat paycheck that supposedly singlehandedly pays my sorry arse to live

I know where this is coming from,, its from my statement about my income.. I did not use that example to brag,, not at all.. It was used as an example of yes we get payed well but to show how many days out of a year I spend away from home and family and the sacrifices that some of us in this industry make.. Its not all just fun and games.. We make plenty sacrifices for it..

Most patch workers I know barely have a highschool education,

So because of this we are second class citizens.. Oh by the way since you're so educated what does "becaused " mean and "singlehandedly" I'm not educated as well as you but I beleive its spelled "because" and two words "single handily"...

[Walleyes]

Anyways this is getting old.. Its done,, you people got you're way.. We will just have to deal with it... I've got more constructive things to talk about... Like hunting and fishing..

Again thank you all for saving us...

[bearbait]

all i can say is 49% of $0 is in fact $0...this will cost alberta 9.6 billion a year...thats 9.6 billion less for all the programs...with the increase work has slowed and alberta will lose money...money that has to be replaced, replaced by riseing taxes...as far as the brain dead oil patch workers go......not even worth wasting my breath on......why sling mud......

[BrainTan]

I know where this is coming from,, its from my statement about my income.. I did not use that example to brag,, not at all.. It was used as an example of yes we get payed well but to show how many days out of a year I spend away from home and family and the sacrifices that some of us in this industry make.. Its not all just fun and games.. We make plenty sacrifices for it..



So because of this we are second class citizens.. Oh by the way since you're so educated what does "becaused " mean and "singlehandedly" I'm not educated as well as you but I beleive its spelled "because" and two words "single handily"...


Thanks for the spell check. It goes to show just how childish some people can be. And if you're going to comment on other peoples grammar maybe you should go as far as to provide the proper way of spelling yourself. It's actually single handedly, sorry for missing the space please forgive my despiteful sin oh holier than thou. You sacrifice yourself for "MONEY". Not the good of the people. How am I supposed to feel sorry for you when you sacrifice yourself for your own greed. you could have just as functional and healthy of a family(or way of life) outside the oilfield

When farmers, foresters, miners, etc encounter similar issues they do not get the only say. They still have to listen to stakeholders of the resourvce much the same as oil and gas. Oilfield workers should have a say just the same as anyone, but they do not deserve the only word. And if you think you're "oilfield people" as you like to separate them form the general public are not being represented then get off your ass and go represent them.



Quietly awaiting your spell check :wave:

[TreeGuy]

Brain Tan, you gotta increase you SPF. Although ideolocigally I lean more toward your arguement than Walleye's, there is no need to be a damn ******* about it! Do you not realize that guys like Walleyes and Bearbait have their livelihoods at stake here? Come on.:mad:

Tree

[bearbait]

brian.....
stop the flaming......walleyes ignore the bs....this ones dead.....cant reson with certian people...the population will see in the end...till then its a waste of breath.....when they can relize we are concerned for alberta not our selfs then they may understand...
rob

[BrainTan]

Brain Tan, you gotta increase you SPF. Although ideolocigally I lean more toward your arguement than Walleye's, there is no need to be a damn ******* about it! Do you not realize that guys like Walleyes and Bearbait have their livelihoods at stake here? Come on.:mad:

Tree

Treeguy, I'll offer an apology to you, Walleyes and Bearbait. Unfortunately a previous post really ****ed me off and I let it affect me personally. I felt rather insulted to say the least.

I do not want to see anyone lose their job, but I do see some potential for good in the royalty review. To make a long story short, I believe it is a stepping stone for a more sustainable Alberta. And if this is completely unreasonable to others then so be it.

I'll do my best to keep the emotions for the football and hockey games!

[orca]

Anyone see the News on En Cana 2.5 billion invested in Texas oil fields . Could be the start

[russ]

Here's the thing, the oil industry has always been cyclical. So please don't expect this to last, it's been a great few years but the end is near and the sky is falling and everyone is blaming everyone else.

[Hoochie Papa]

Anyone see the News on En Cana 2.5 billion invested in Texas oil fields . Could be the start

It's a very good indication anyways. That 2.5 billion was taken from their drilling budget in Canada.

And I am personally feeling it already. I am a Wellsite Supervisor. Where am I working right now? Salt Lake City. It was the only work available, so I took it.
After I am done here, the outlook from my office (pimping firm) is disasterous at best for the winter.

Start saving your pennies.

[Big Moose]

Gentlemen heres a fact, no where outside of North america do oil companies enjoy set royalty fees. The US system is different then ours but is basically similar it just differs in who gets paid. The fact of the matter is other countries change or cancel agreements with the oil companies all the time and they are still in those countries. The oil companies are going to strut and **** & moan to scare us into keeping things the same to protect their huge profits. This is a stable environment to make money in and they are not going anywhere.

Short term yes we will probably see a knee jerk re-action. The simple truth is that the 2.5 bil going to texas was probably on the books already and because of high labour costs and the proposed royalty hike, it made more business sense to do that investment at this time.

Our slow down has more to do with sky rocketing costs then with royalties.

The drilling programs may be slow but the capital investment projects are still moving forward. So the rig boys are slow and the construction boys get to pick and choose where they work.

Its no consultation to the rig boys that are feeling the crunch, but other parts of the patch are healthy and expanding.

[Tredeb]

One of the most ironic things that I notice is that most people seem to think that a slowdown in the oilfield only affects the oilfield. That is where the first casualties will be, but the worst casualties will be outside of the oilfield.

The issue of main concern is the value of housing. Consider this example:
Someone is holding a mortgage on a house for $300,000 and the house is worth $350,000. Lets say they have a three year mortgage. What happens if house prices fall and houses equivalent to theirs are only worth $250,000 when their mortgage comes due. Does the bank give them a mortgage for $50,000 more than their house is worth, or do they have to ante up an additional $50,000 so the mortgage can meet the appraisal value. Do they even want a $300,000 mortgage when the house is worth $250,000. When is the differential high enough to walk away and leave the bank with the house.

Sure, you may damage your credit rating, but is your credit rating worth $50,000, or $100,000? This is where the difference lies.

An oilfield worker, whether overpaid or not, has the ability to make large amounts of money is short periods of time. If they take a large hit financially, they have the means to recover when things turn around, or by going where there is work. How does someone on a fixed salary recover from a larger financial hit.

To use Walleyes numbers for example, he could probably work half as much and by moving a few assets around, he would be fine. That is that case with many of the oilfield service industry. Sure, some may not have managed their money well and they may have some lean times ahead if there is a downturn. However, their earning potential is what will get them out of trouble down the road.

The average person outside of the industry does not have that earning potential and those are the people that will be harmed the most by an economic downturn.

[Tredeb]

The drilling programs may be slow but the capital investment projects are still moving forward. So the rig boys are slow and the construction boys get to pick and choose where they work.

Its no consultation to the rig boys that are feeling the crunch, but other parts of the patch are healthy and expanding.

That is a huge misconception. If oil companies do not keep drilling new wells, we will see a huge downturn when the production of those delayed wells does not come online. By not drilling wells, the oil companies are going into blowdown mode. They will continue to spend money to get the oil they have access to, but without new wells, the industry will take a downturn.

Are new wells not capital investments? The projects going ahead right now are the ones that are too advanced to cancel. Many new projects have been delayed and may not go at all.

People need to understand that an oil company cannot go ahead with a project based on a peak oil price. They need to estimate the lowest oil price for which a project can be profitable. If that price is above the projected average price, the project will not go ahead. Projects don't go ahead just because oil is $95 today.

[Big Moose]

Of course the industry takes a down turn when drilling and construction aren't happening at the same time. But this is not new. The companies have to play catch up and get new resources on line and into the revenue stream. The point I was trying to make that the sky isn't falling on the patch. It might get alittle grey for awhile but things will pick up again. This industry has a cycle nature.

[Tredeb]

Of course the industry takes a down turn when drilling and construction aren't happening at the same time. But this is not new. The companies have to play catch up and get new resources on line and into the revenue stream. The point I was trying to make that the sky isn't falling on the patch. It might get alittle grey for awhile but things will pick up again. This industry has a cycle nature.

I agree, I don't think things will collapse, but there will be a correction to get costs under control.

Whether this is really due to the Royalty review or due to a combination of things, it will probably be spun as royalty review. As you mentioned, Moose, the oilfield is cyclical. There hasn't been a downturn for awhile and I think the oil companies will use this opportunity to squeeze the service providers.

[Big Moose]

Yes it will probably be spun as a problem from the royalties but what I read in yesterdays Sun seemed more plausable. Basically the article said that the royalties would amount to 1.2 bil extra from ALL companies. While costs have increased in the last 2 years for the Horizon project alone from 4.9 bil to 7.7bil.

The article also said that the cost of drilling in Canada can be as much as 80% more than in the US. That would put the 2.5bil Encana move to texas in perspective.

It sounds like the Alberta drilling boys may have to travel further to punch a hole while the costs of production get beat back to a more sustainable level in Alberta.

[Walleyes]

Just got word that Leader Energy is done.. They were doing our cementing here down south but apparently its over for them.. We heard a while ago that they were selling off assets to keep er going over the slow summer but they had bid on a nice project up north hoping it would pull them through.. But the project was cancelled so they had no choice but to shut er down.. There is about 30 guys (most with families) out of work..

For those of you that don't know Leader Energy is a well cementing and frac company that started out about 2 years ago.. Thay had some of the best guys in the industry working for them.. I knew some of them well.. I hope the best to them.. This is of course not offical I would emagine they are going to keep it quite... Again Thx Alberta...

[steveo10]

Im out in the moutains rite now and cant access a paper... anyone read the "letter to the editor" or whatever its called today in the Edmonton Sun. A friend or mine posted a editorial in there (about the royalities and was another friend seen it and couldnt believe it got published...lol

20 triples workin in my area... keep a punchin and a pumpin :)

[russ]

Just got word that Leader Energy is done.. They were doing our cementing here down south but apparently its over for them.. We heard a while ago that they were selling off assets to keep er going over the slow summer but they had bid on a nice project up north hoping it would pull them through.. But the project was cancelled so they had no choice but to shut er down.. There is about 30 guys (most with families) out of work..

For those of you that don't know Leader Energy is a well cementing and frac company that started out about 2 years ago.. Thay had some of the best guys in the industry working for them.. I knew some of them well.. I hope the best to them.. This is of course not offical I would emagine they are going to keep it quite... Again Thx Alberta...

Yeah that's all the royalties :rolleyes: , what about labour costs? What about the high dollar, what about plain old greed from within the industry? What about just plain crappy management practices? What about taking a good hard look at yourselves before blaming something that doesn't even amount to spit in daily operating costs? Hmm, what about that?

[srp71]

Hey Big Moose,I tend to agree with you on this.There is alot of finger pointing and fearmongering going on here,but I seem to recall that this slow down was started even before Stelmach was voted in as Premier,or a Royalty Review was even thought of.Yes it is a cycle.Since it started to slow down we have heard lots about getting the prices back down to reality.Well this is the OC's own fault.They are the ones that wanted to go ball's to the wall over the last few years,when it could have been on a more level field.Who's laughing?It certainly isn't the service companies.We are moving rig's right now that some of the bids are as low as 40 or 50% of cost.This just to keep the guys workin'.The prices were driven up due to supply and demand.Things look bleak right now but it will turn around in short order.After all,weve had a good run and we all knew it wouldn't last forever.It will come back again.

[Dead Moose]

History has proven over and over again that more $$$ in the hands of a government body is a very BAD thing. They just **** it away.
Like has been said before, "Those who do not learn from history's lessons are destined to repeat them".

[s_buffalo]

Good discussion on this thread. It's great to hear from people directly involved in various parts of the O/G industries, as well as those who know their economics. ;)

Just got word that Leader Energy is done.. ...apparently its over for them.. ...the project was cancelled so they had no choice but to shut er down...

You know, that's happened to me over and over again in my industry. No one sheds a tear for us when the pink slips get handed out.

The way I see it is this:

a.) Alberta's O/G economy is cyclical. If people haven't figured that out, then there's a problem.
b.) I, for one, don't mind seeing a cooling of our economy... There are a few people that are making lots of money now (and yes, I know they are working hard and making sacrifices to do so) but the rest of us are sitting here at the same wage, struggling to keep up with the rising costs of living in Alberta. But I choose to stay here and do whatever it takes to stay employed here, because I know the principle in point a.) to be true, and inevitable.

Cheers,
Stinky B.

[The Elkster]

I was going to write out a big reply but I think one word sums it up ENVY.

We all know the salaries in each sector beforehand and make career choices with that knowledge readily at hand. Everyone has an equal chance to get into the O&G game or other high paying fields. If they choose not to for whatever reason then that's their decision and the resulting pay is a direct result of their decisions. Don't like it then change careers. C'est la vie. If you think the gov't should MAKE it fair somehow then you may want to consider a move to russia or china.

[russ]

I was going to write out a big reply but I think one word sums it up ENVY.

We all know the salaries in each sector beforehand and make career choices with that knowledge readily at hand. Everyone has an equal chance to get into the O&G game or other high paying fields. If they choose not to for whatever reason then that's their decision and the resulting pay is a direct result of their decisions. Don't like it then change careers. C'est la vie. If you think the gov't should MAKE it fair somehow then you may want to consider a move to russia or china.


Have you EVER stopped and thought what it would be like if no one did those menial jobs that you clearly down on?

[steveo10]

Must be nice to be a Driller/push/consultant in Alberta... go work month in month out overseas and would not have to worry about the royalities

[s_buffalo]

I was going to write out a big reply but I think one word sums it up ENVY.

:lol:

Heh, my sides hurt.

Yep, I like my job, and I enjoy what I do... I just find it odd when people get all shocked when the O/G gravy train runs out of, well, gravy. :D

Stinky B.

[The Elkster]

Have you EVER stopped and thought what it would be like if no one did those menial jobs that you clearly down on?


I'm not down on those jobs at all but it's a nice effort to twist words. I'm responding to those that complain about their low paying employment situation and that’s all. I respect that those positions need to be filled and in the end if enough people moved away from them employers would have to pay more to fill them. What bugs me is when the supply/demand dynamic is manipulated by bringing in labor from other countries but that’s another issue. I've worked with many administrative staff and they are as good as any person but the fact is that many don't have the urge to go to that next level and deal with the added challenge or stress or workload...and that’s fine...but there is a cost and I don't think one should whine about money if they themselves have made that decision and not been forced into it or have no alternative.

All I'm saying is that there are opportunities for better paying jobs out there if one has a problem with their current salary. IMO to complain about compensation and whine about others compensation with the opportunities out there is just wrong. All one has to do is take control of their destiny and make the effort.

Problem is that the royalty increases being supported most loudly by low income people are going to take away opportunities for those same people to move up. What many don't realize is that the people that are likely to be hurt most by a slow down are the very same people who are supporting this royalty change. People who haven't made enough to save for a slow time and who are living on a razors edge of finance.

I don't wish anyone ill will or bad finances but your life is dictated by your choices not someone else’s as is often blamed. Nobody wants to criticize themselves go figure.

[lurch]

.

[russ]

I was going to write out a big reply but I think one word sums it up ENVY.

We all know the salaries in each sector beforehand and make career choices with that knowledge readily at hand. Everyone has an equal chance to get into the O&G game or other high paying fields. If they choose not to for whatever reason then that's their decision and the resulting pay is a direct result of their decisions. Don't like it then change careers. C'est la vie. If you think the gov't should MAKE it fair somehow then you may want to consider a move to russia or china.


Yeah - you don't look down on anyone. :rolleyes:

[Deer Hunter]

Russ,
I'm envious of the people doing your so called meaningless jobs. They have lost a lot less money than I have in the past month thanks to Ed and his media sponsered public crusade against what made this province great, hard working people with risk seeking capital. I'm not looking for sympathy, but will instead rethink my investment in Alberta and Alberta businesses.

I thought the risk was in drilling the well, not government involvement in successful industry. I was wrong.

Off to BC and Saskatchewan we go. Remember, big oil is made up of lots of small people. Grandma's, uncle's, kids and their RESP's. I'm glad Ed and the rest of the pro royalty folks like ****ing around in the individuals bank accounts. Maybe those people will remember that next time we tip the waiter, pay to much for an Alberta sold vehicle, buy a gun, donate to the United Way or whatever else you have a choice to buy somewheres else or not spend. Everyone has a choice, even Ed.

[troller]

We all know the salaries in each sector beforehand and make career choices with that knowledge readily at hand. Everyone has an equal chance to get into the O&G game or other high paying fields. If they choose not to for whatever reason then that's their decision and the resulting pay is a direct result of their decisions. Don't like it then change careers. C'est la vie. .

Does this not also apply to all the o/g workers that are up in arms right now? Hell, I have family who did the o/g thing but with all the ups and downs they decided to come work for me, more stable, not feast or feathers, chance for advancement, pretty much equal money. You all knew the career you are going into had very high ups and downs, it has throughout history.

[russ]

Russ,
I'm envious of the people doing your so called meaningless jobs.

I never once called jobs meaningless. It's a response to Elksters comment that we can all go work in the patch and make the big bucks.

Troller hit the nail on the head, how can you not know the patch has ups and downs? It's been this way as long as I can remember. BTW, the further downstream you are, the more protected you job is. The flip side is less money in the short term, more overall in the long run.

[The Elkster]

I never once called jobs meaningless. It's a response to Elksters comment that we can all go work in the patch and make the big bucks.

Troller hit the nail on the head, how can you not know the patch has ups and downs? It's been this way as long as I can remember. BTW, the further downstream you are, the more protected you job is. The flip side is less money in the short term, more overall in the long run.

I only mentioned going into the patch because people are criticizing the patch and what people in the patch make. When I talk about higher paying jobs as a reachable option I didn't mean just O&G it can be in anything from O&G to medical to business to management. All I'm saying is that there are all kinds of opportunities out there so don't sit there and whine about a lower paying job or be envious that someone else has a higher paying job. Use that energy to reposition yourself better. Thats it thats all.

I am not complaining about royalties so much as stating what a change in royalties will mean to everyone. I don't think some understand all the cost and impacts and it's important that people have all that info. before they make their conclusions. We compare royalies to other countries with totally different cost structures and most seem to think that makes sense. Ummm not really. That holds about the same validity as comparing the gas price in the UK to the US. In that case unless you compare ALL the taxes you don't get the full picture (ie lower gas tax but higher sales tax perhaps). In the case of O&G unless you compare ALL the costs to get the O&G to market (very different in different countries) then you don't get the full picture of why the difference in royalties and thus the perception that we're being ripped off. In a place where O&G is expensive to get out of the ground that leaves less room to charge royalties and still allow for a sufficient return on capital to attract investment. The stability of our industry only goes so far. Companies aren't going to invest in negative returns just because we're a "safe place". The option is to say "tough beans we don't care about the facts, live with it" to the developer and tax them anyway. Yeah like having them not invest billions here will really be best for ANY albertan including non-O&G personnel. If one thinks that they are living with their head in the sand. Why not ask one of the states or provinces begging for investement if the lack of billions of dollars of cash inflow is helping or hurting the average folk.

O&G is cyclical like almost everything else and it was indeed in a slowdown before the change and I don't think its all bad either. I certainly factored that into my decision and have budgeted accordingly. My worry is that the royalty increase will pile on and really accellerate a bad situation into a really bad one. I'm confident that I have enough to weather a storm but my worry is that many do not and I don't like to see that. That is where I'm coming from when I write. If I didn't care about others I would just not say anything.

[59whiskers]

When this royalty thing goes through I will not wait for a government hand out if the economy goes south. I have learned to live within my means and invested small amounts of money in several different companies over the years. Before the last recession in the 1980's some people were living well beyond their means and they got slammed when the NEP and high bank interest rates got them. A lot of younger people are in deep in debt, most of them were babies during the last recession. People that are lobbying government for more royalties are not investors and have no clue how oil, gas, and agriculture businesses work. Sure the government will get more royalties but the average income person will not reap huge benefits. The best education anyone can get about oil and gas companies is to buy a small amount of penny stock for companies that are doing business in Alberta and abroad. I challenge all the supporters of this royalty review to take a chance to make some real money for themselves by becoming investors and not wait for someone else to do it for you.

[TreeGuy]

I've really resisted getting back into this but....

Firstly, as an Albertan and a Canadian, I want to extend a huge 'thank you' to everyone in the field. Your hard work and sacrifices have made this province what it is today and made us the economic powerhouse of North America. You are paid very well for your hard work and skills, and also to keep you around due to the cyclical nature of the industry. Those of us who have/do support the royatly review have nothing against you. Thank you for doing a job we cannot.

Now, with that being said, it's time for a reality check. Gas exploration and development has been on the decline since before 2006. Even with a 50% reduction this year, development will still be above average on a 10 year scale. Gas producers will loudly proclaim that the increase in royalties have shut them down this year. NOT true. The increase does NOT come into effect until 2009, so this year is the same as usual. The cutbacks being blamed on the government are ones that were coming anyway.

The price of gas has remained stagnent, US storage capacities are at all time record levels, the winters are warmer, the US economy is toying with collapse and the Loonie is the highest it has been since 1870! Now put that on top of a tight labour market and quadrupled consturction costs.........

Here's an example. It's a $1.4b grab. It's a $470m grab from gas. Encana (sorry to keep harping on 'em but its a good model) turned about $6.86b profit last year. CNR were down to $700m this past quarter from (I think) $850m this time last year.

Now, if you take into account Encana has a $1B hole in the ground on 6th ave right now, and add on the ENTIRE $1.4b stemech grab, they would be able to support the entire O/G increase for the industry, build their office tower and STILL turn a $4.46B PROFIT for the year!

Guys, I am behind ya, but start doing the math. I am fully aware that alot of your development capital is raised via stockholders, but to cry poor on the backs of the guys in the field because your last quarters earnings were $700m as compared to $800m last year is bullsh*t. A $0.51 quarterly share loss has almost NOTHING to economically do with a royalty increase that does not take effect until next year! Companies have a year to come up with a game plan for their investors, and the companies that can come up with the best plan will prosper. Numbers will trump emotions, and I wish the best to all who have been burned by this. Just don't blame the government right away and take a hard look at how the company you work for does it's business.

Tree

[Hoochie Papa]

This is a copy of a letter sent to Mr.Ed. Sums up what I have been thinking, and saved me a buttload of typing.

Dear Ed,
We have a small oilfield rental business in Grande Prairie; we've been in business for 5 years. We have 3 children and are very concerned with your recent decision on raising the royalties. We lived through the national energy program nightmare in the early 80's and witnessed many devastating consequences to the federal decision and feel that you have done exactly the wrong thing at the wrong time. Allow me to explain my side of the story.
The dollar is too high to attract US investment; the commodity price is too low and unstable as natural gas is all over the map. The reserves are too high to stimulate new gas drilling along the foothills. The price of labor and services is through the roof as the last seven year flurry of activity has driven costs up dramatically. The US lumber exports are dropping and will continue to stay down as the "Baby Boomers" retire and sell out /downsize their living accommodations. Weyerhaeuser is shutting down the OSB side and will lay off 130 employees. Ainsworth in GP is also shutting down for a period. Calf prices are in the toilet over the US dollar and feed prices are rising, thus we can kiss the Ag industry goodbye for a while longer. In summation, our diverse and boisterous economy is losing ground in the Ag, Forestry, and now the oil & gas exploration/production industry due to your recent push for "Alberta’s Future".
The opportunity to ask the oil & gas sector for a raise is not when they are handing you your lay off notice, the time was 2 years ago when natural gas was $14, oil was $60 and the dollar was $.80. My point is, when the farmer was being beaten down, at least he could get a job working a rig, pipelining, driving cement truck to rigs, seismic work, service rigs, endless service companies, maintenance, lease construction, hotshot driver, mechanic, Kal Tire… hopefully your getting this. When the log truck driver needed a job due to soft wood lumber disputes with the US, he too could find employment in any number of the aforementioned fields. The reason I know this is not from a book or study or any review panel, but from personal experience as a farmer /rancher, class 1 driver, derrick man of 11 years (that’s on a drilling rig in case you don't know), environmental consultant, production tester, small business owner that used to employ 4 people. I know this as I've laid off the guys that did work here before you were so bold as to take on the big bad oil company.
Your timing could not have been worse, the mishandling of the decision making process was unbelievable, why were the decisions not made behind closed doors before getting the entire industry ready to bolt out of the province, did I mention that CNRL shut down 10 rigs in GP in a single phone call, or the 7 in one day in Edson. I understand that Ralphy gave too much for too long and that sucked for all of us, but now wait... we are debt free, lots of money in the account, jobs galore (3% Unemployment) Canada's golden goose that gives lots in transfer payments to other provinces because we seem to have an excess of cash, some of the largest and newest finds in the oil sector throughout the world, let alone what could have happened in Peace River if you would have stayed the course, or did I mention the activity that was planned for Grande Cache south to Rocky Mtn House....not so much now. In second summation, you say Alberta's future is your priority; my future consists of the 3 kids I have to take care of. The bank will let me miss 3 payments, Daimler Chrysler has a thing about there money as well and there's $3000/mth that they want consistently. After that short future, I'm pretty much done as are the rest of the service companies, car dealerships, drilling contractors...etc, all in the name of Alberta having more money 3, 4, 5 years from now, or maybe not even then.
By the way, what is the plan with this windfall you were hoping to get from royalties? Should we use it to bail out the farmer/rancher going down or the lumber industry, certainly it won't go to the oil & gas worker or maybe it will be in the form of a UI cheque. No that’s the Fed's problem. Maybe we can build an 80 million dollar aquatics center in GP that mayor wanted so bad, and we can all go for a swim at $15 admission per adult $12/ teen an $10/youth. I hope through my snide comments that you, your staff, your buddies (advisors), review committee members, professors of economics and party members, etc will realize you've made a grave error in how you went about handling the affairs of the public which you represent. That’s right, did you forget, you work for me as a public official not the other way around! We now are looking at refinancing everything and moving to Colorado or Wyoming for work now as GP is going down. Please advise me on this issue of where the future money is going, and if you say it's for the teachers union, bleeding heart lobbyists, cabinet member raises, campaign expenses, or anything of that nature, you should probably watch your "political back". Where the hell is Ralph anyway?

Signed;
Misrepresented

[First Lady]

Hello everyone. This thread showed up in a google search I have set up to keep an eye on interest in the Royalty Review.
With that in mind I would like to invite anyone interested to the following:



Concerned about Alberta and its future?
The Alberta Alliance is & we would like to meet you!

We invite you to attend a Town Hall style meeting in Calgary

Location:
Blackfoot Inn - Heritage Room
5940 Blackfoot Trail, S.E.
Calgary, AB.

Date:
Tuesday, November 27, 2007

Time:
7:00 PM

Speakers:

Duane Mather, President and CEO of Nabors Canada

John Murdoch, President and CEO of Madison Energy

Paul Hinman, MLA and Leader of the Alberta Alliance Party

The Alberta Alliance was founded on grassroots principles, we welcome all to attend. You will learn more about our party, in particular our stance on the Royalty Review. Members of our provincial council and future candidates will also be in attendance. We look forward to meeting you and sharing our vision for our province’s future.

We would also like to welcome our many new members and thank them for their generous donations.
Through them this event and the advertising have been made possible.
Listen for our radio advertising on QR77, starting on Monday


If you have any questions, please feel free to contact me.

Thanks,
Jane Morgan, CFO
Alberta Alliance Party
1-888-262-1888
www.albertaalliance.ca
info@albertaalliance.ca

[troller]

First Lady


http://www.freakblows.com/forum/style_emoticons/default/thumbsdown1.gif

[First Lady]

http://www.freakblows.com/forum/style_emoticons/default/thumbsdown1.gif

Would that be a thumbs down for the meeting, the party or me personally?

[troller]

Would that be a thumbs down for the meeting, the party or me personally?

None of the above, the post in general. It would be for using google to sign up on boards to promote your political party. This is an outdoors board, very few political discussion on parties, more just venting on issues we come across.

To sign up with the sole intent to push your party, I feel, is in bad taste.

[Buckhead]

Would that be a thumbs down for the meeting, the party or me personally?

The answer should be obvious. You posted in poor taste.

This is the Alberta Outdoorsmen Forum - not the Alberta Political Forum.

Hence it is a site where outdoorsmen can speak their minds and discuss issues with each other.

Not a site where political parties should be able to get free advertising.:rolleyes:

[First Lady]

None of the above, the post in general. It would be for using google to sign up on boards to promote your political party.

I did not use google to sign up.

I used google to identify forums where the issue was being discussed. This thread has over 4000 views, it gets picked up in searches.

This is an outdoors board, very few political discussion on parties, more just venting on issues we come across.

I would say there are quite few. A search of "government" on here nets over 500 results and the name "Ted Morton" over 100.

I think some of the greatest issues faced by hunters and outdoor enthusiasts are caused by government intervention and an over abundance of stupid laws (ie: gun registry)

To sign up with the sole intent to push your party, I feel, is in bad taste.

I am sorry you interpeted it as a push for the party. I was simply bringing an important meeting to the attention of those who might be interested.

I have not tried to push the parties views or even my own in my posting.

[First Lady]

Hence it is a site where outdoorsmen can speak their minds and discuss issues with each other.

Not a site where political parties should be able to get free advertising.:rolleyes:

If Mr. Morton signed up to discuss similiar issues would he have been met with this same disdain?

[troller]

If Mr. Morton signed up to discuss similiar issues would he have been met with this same disdain?


yes, this is an outdoors board, not a political forum.

[troller]

I did not use google to sign up.

I used google to identify forums where the issue was being discussed. This thread has over 4000 views, it gets picked up in searches.


Glad to see you caught on to what I was saying.

I would say there are quite few. A search of "government" on here nets over 500 results and the name "Ted Morton" over 100.

I think some of the greatest issues faced by hunters and outdoor enthusiasts are caused by government intervention and an over abundance of stupid laws (ie: gun registry)

Of course there is "government" and "Morton". They generally come up when someone is ****ed off. This is NOT the gun registry, we have other threads for that.
I am sorry you interpeted it as a push for the party. I was simply bringing an important meeting to the attention of those who might be interested.

I have not tried to push the parties views or even my own in my posting.

To me, the mere fact you posted that shows you are pushing a party agenda.



I'm done discussing this with you. It just keeps bumping your post and I won't do that anymore.

[First Lady]

Of course there is "government" and "Morton". They generally come up when someone is ****ed off.

So in your opinion people would prefer to just bitch to one another, rather than discuss the issues with people who may actually listen and be able to do something.

This is NOT the gun registry, we have other threads for that.

I realize that, I was simply citing it as an example. Just as there are plenty of other politically motivated threads…. Like these three very recent ones.

http://www.outdoorsmenforum.ca/showthread.php?t=8516

http://www.outdoorsmenforum.ca/showthread.php?t=8495

http://www.outdoorsmenforum.ca/showthread.php?t=8169


To me, the mere fact you posted that shows you are pushing a party agenda.

I already apologized for giving you that impression.

Emails and phone calls from other members of this forum would indicate there are those who are glad that I brought it to their attention and do not feel the way you do.

[Bushrat]

First Lady, you need to improve your site if you want input, its to slow, my attention span couldn't handle it. I think the survey is worthy, sooner or later we got to make decisions about the future of this land we live on.

[First Lady]

First Lady, you need to improve your site if you want input, its to slow, my attention span couldn't handle it. I think the survey is worthy, sooner or later we got to make decisions about the future of this land we live on.

What survey are you referring to? We don't currently have one on our website.

[Splitbrow]

My 2 bits... wow what a post...

For everyone a little confused about the royalties do NOT just look at the % taken as a result of royalties. If you look at overall government take, Alberta's is the lowest in Canada even after the recent changes. Do some checking...

So why go off to sask or bc? Thats a poor argument...

Split...