| Random Nbr |
Released Comment |
| RRE2000 |
In regard to feedback on the royalty review I personally feel that between the price of oil and the value of the canadian dollar right now that this would harm us greatly. I am president of a trucking company and also of an oilfield filtering company who emplys 65 people and we need a busy winter. If this is not handled properly we could have a lot of hungry on our hands. |
| RRE2001 |
My husband and I have worked in the Well Servicing industry for [Information Removed]. The industry has enabled us to build our lives to a level that we are happy with, and many other families in the [Information Removed], can agree. However, the Government must ensure that the Oil Industry is held accountable for all expenses it is causing and will cause in the future to Albertan tax payers. The proposed Royalties would be available to address the immediate and long term costs incurred directly by the Oil Industry. For example, up-keep of County roads used by the Industry, and addressing the Province's growing water shortage (Oil Industry plays major role in causing this problem) etc. After having seen the ways of the Industry first hand for over 6 years, it is foolish to believe that the amount of industry the Province is experiencing would be free of detrimental environmental and social impacts. To allow Royalties to exist at the current level would put all future financial responsibility in dealing with these adverse effects onto our children. The children of the Albertans who are prospering now from the "zero responsibility Oil and Gas Industry" |
| RRE2002 |
The royalty review was there for a reason, the reason, the questionable health of the royalty regime. The prescription for a return to good health has been given, medicine is to be taken as prescribed to have the desired effect, therefore implement the recommended measures completely as given in the report. [Information Removed] |
| RRE2003 |
This reminds me of the dreaded National Energy Program when Ottawa stuck it to Alberta , now it seems we will be doing it to ourselves. |
| RRE2004 |
Albertans do deserve a fair share, but at current gas prices there is no room for a bigger government share. Implementing recommendations from the royalty review will result in more harm than good for Albertans and the Alberta economy. Increased royalties for the province will create an even more adverse operating environment for oil and gas companies who work in Alberta. This will result in a significant decrease in the amount of oil and gas activity in Alberta, and thus, less royalties for Albertans and the provincial government. Wells you don’t drill don’t pay any royalty. If the recommendations are implemented, what is your plan for effectively, effficently and intelligently utilizing the royalty money? How can you expect Albertans to support the recommendations of the review, and the government who benefits from them, without providing any indication of your plans for this royalty money? The multi-level benefits which almost every Albertan sees from oil and gas activity in Alberta far outweigh any one-time cash distribution the government could provide in response to a surplus. |
| RRE2005 |
I strongly agree with the findings in the report. This province needs long term sustainable development of its resources, not the pillaging that has gone on over the last couple of years. A few people and corporations have reeped in a windfall, but the vast majority of Albertans have suffered with significantly higher costs on everything and substandard service due to many people looking to make it big in the oil/gas industry. Talking with those individuals now, I have discovered that many are starving for work since so many people flooded into the oil/gas industry to make a quick buck. The development of Alberta's resources must slow down and increasing royalties is an excellent way to do that for the long term future of Alberta. We cannot let this sprial out of control any further. Please heed the comments in the report and bring the necessary changes forward. |
| RRE2006 |
I would prefer to see this money left with industry rather than to the government. I am employed in the oilfield and am very concerned with the potential outcome if the recommendations are followed. Consider what a great idea Trudeau's NEP was at the time and what it did to the entire industry. |
| RRE2007 |
Why is the goverment of Alberta destroying the oil/gas industry with outragous tax and royalty premiums? I agree that Albertains need to understand the royalty forum but I don't agree with the recommendations. What we tend to forget is the currency exchange rate has moved 33% in the last few years and diminishes net backs to oil and gas producers. (Oil and Gas is bought and sold in US $). Increasing Royalty payments should not be a means of slowing down Alberta Red Hot economy. I vote conservative and a proud Albertain...Where are the Day's of Traditional Alberta Leadership gone? Where are the Ralph and Peter's that made this Province Great. Is there not a Leader in Alberta that can lead in a manner that can balance industry's needs and lead to public soical and economic prosperity for all Albertains?? |
| RRE2008 |
The largest concern around implimentation of the new Royalties is both a slow down in projects, and an out right cancellation of "fringe" projects that rely on certain economics. Given the current conditions of the Alberta market (especially in labour) there is an excess of projects leading to escalated costs. It may not be such a bad thing to slow down a few of these projects for a longer term sustainability. Other than a few corporations located in Alberta, I do not see other larger corporations caring about sustainability in Alberta. Implimenting these royalties might lead to industry planning that spans greater years and leads to a more sustainable, longer term, economic growth. I am in support of the royalties partially because of this reason and partially due to the huge profits corporations are seeing from investment in Alberta. |
| RRE2009 |
While I agree that there should be a more balanced approach to managing and collecting provincial royalties, I would strongly urge the government to carefully consider the inevitable negative impacts on energy industry suppliers (everything from drilling companies, to small catering suppliers). I fear that while many government representatives have taken far too lightly the oil and gas companies' threats to move their capital investments elsewhere if the government fully implements the report's recommendations. Capital is very mobile and Alberta is one of the most expensive fields in which energy companies can operate. Please consider your response carefully and take a broad social and economic view of the implications of any decision. |
| RRE2010 |
If this Government wants to distroy Albertas economy ratify this proposed royalty change. After calculating the effect on my companys operations, we have decided that most of our oil and gas production will be un profitable. My job will be at risk. If this Government follows the wishes of the estimated 75% of missinformed Albertans it will be a biger mistake than the NEP. Does anyone remember that one. Oh ya maybe there is only 25% of us that were here and working at that time, and are still in the work force. Interesting demographic project for some of the intelectual socialists out there that beleive we can tax our selves into prosparity. My vote on this is dont touch it. If we change the royalty structure as proposed we should shut down every rig and close the valves on every well. Take a well desurved holiday and when we are all bankrupt we can all apply for a well fare cheque. Im tierd of working hard and supporting this country anyway. Maybe I should try sitting back with my hand out and expect the Government to take care of me like the 75% of Albertans that support higher royaltys. Lets assume that production remains the same and according to the estimates royaltys go up by 2 billion, will that really improve life for the average Albertan? Likely half of that money will end up in Ottawa to be squanderd away by the Feds. It is estimated that a dollar that stays in the economy creates eight dollars and fifty cents in growth and taxes. A dollar that goes to Government is still just a dollar at the end of the day. The best way for Alberta to grow and prosper is to create an enviroment that allows buisness to make profit. Higher royaltys or taxes is not the way. Im wondering if a proposal to raise personal income taxes or impliment a Provincial sales tax would be as popular with the average Albertan. Our former Premier was a man who did not always do what was popular but he did do what was right. I hope our current administration can show some back bone on this issue. |
| RRE2011 |
I feel it will have a huge impact on drilling / well servicing programs.It has the possibility of bringing the Oil patch to a halt,which in turn would be devasting for all of us Oilfield workers,as well as all the service companies. Thx for listening... |
| RRE2012 |
This will directly impact all my family, friends and co-workers who have put blood, sweat and tears into what they have because of the oil field today. If you make this change it will change all our lives for the very worse. Non of us will be able to afford to live. Please do not change the way Alberta is. |
| RRE2013 |
I am sure you are all receiving many of these emails. From what I can see is that the panel is not looking at the BIG picture of the Royalty Increase. The panel’s proposal will lead to many oil and gas operations in Alberta failing. I call on you our government to examine these proposed numbers and find a balance between a fair share of revenue while maintaining our oil and gas industry. Alberta is prosperous let’s not ruin Alberta. Many jobs in the oil and gas industry will be terminated. This affects our friends, family and neighbors. This will in return affect businesses throughout all of Canada and could ruin Alberta. As much as some believe “Alberta does not need the Oil and Gas industry to survive”, these people are blind. This industry defines Alberta and in turn makes business within Alberta thrive due to the dollars in the economy. We need a balance between the Royalties to maintain the industry and also give Alberta what we need regarding dollars for roads, schools and hospitals. However there NEEDS TO BE A BALANCE. YOU CANNOT RUIN ONE INDUSTRY TO BUILD ANOTHER. A COMPRIMISE WILL CONTINUE TO MAKE ALBERTA PROSPEROUS. Thank you for your time. Sincerely, [Information Removed] |
| RRE2014 |
all gas & oil leaving Alberta should have levy added to a barrel of oil or a gigjoule of gas.This should be used to lower the price at the pumps which belongs to albertans not the oil company who have been double charging us at pumps for some thing albertans own they don't!!!!They are well paid for what they receive maybe to much,fuel in the USA is alway $.20 a L cheaper when is this going to equalize???Maybe all albertans should buy in the Montana way cheaper,sure could upset the Alberta businesses. |
| RRE2015 |
New gas well drilling in deeper horizons is the only way that Alberta can maintain its place in the supply world. The new royalties on conventional gas are going to crush the economics of pursuing such drilling (deep, expensive, risky). Do not change the natural gas royalty structure or at least provide the potential for a higher return on such high risk expenditures. Also remember that when oil and gas companies bid on Lease rights in Alberta, they do the risked economics using current royalties and bid a great deal of any potential profit margin on the land price itself! Raise the royalty rate, reduce the land sale take - Rob Peter to Pay Paul! [Information Removed]Proud and Concerned Albertan! |
| RRE2016 |
I have skimmed the full report and read the oil sands sections in detail. Although the panel has some impressive credentials as someone directly involved in economic evaluation of oil sands projects I am clearly working with a different set of data than the panel is. There are a number of heavy oil projects that are economically marginal under the previous royalty structure (example [Information Removed]) which are likely to be cancelled if the new rules are implimented. The reality is that many of these projects don't disclose that they don't have acceptable economics because many of them are progressing towards selling the asset ([Information Removed], [Information Removed], [Information Removed], etc.) and cashing in. It appears that the panel has taken all of these press announcements and sales hype as gospel in their forecasts. DO THE PROJECTIONS FOR THESE BIG BOOSTS IN ROYALTIES UP TO 2016 CONSIDER THE NUMBER OF ANNOUNCED PROJECTS THE PROPOSED CHANGES WILL MAKE UNECONOMIC? The panel only makes general statements about 'fairness' and ensuring Alberta remains 'competetive' and an 'attractive' place for investment. Numbers are presented as percentages and other statements are qualitative in nature and in general terms. No consideration is given as to the Finding and Development Costs or Netbacks experienced in Alberta today, nor the operating costs which make oil sands in Alberta very expensive to produce. The netbacks are low and the capital required is high. Sure the percentage take (as calculated by the panel) seems low in Alberta, but the Profit Investment Ratios, Net Present Values, and Internal Rates of Return - some of the key economic parameters used to evaluate projects are undesirably low. This data seems to be conviniently excluded. WHERE ARE THE TABLES WITH THIS DATA? It is the economic parameters that determine how 'attractive' Alberta is to investment and production costs which state how competetive Alberta is globally. A bigger piece of the pie sounds great, but don't place your bets that the pie will be the same size if you cut into the bakers bottom line. Ultimately as someone who is involved in the industry I would like to say that the panel's report is not routed in the reality that oil sands producers face today. It suggests that producing companies and investors will continue to invest and accept a lower return in the midst of hyperinflation of capital and operating costs. The panel has cleary missed the boat on these major issues - instead it cites some convinient and evidently invalid comparisons and tries to use the argument of 'fairness' to draw in the majority of the people who simply don't understand the issue. On another note... There is already a substantial downturn in the drilling and well service industries - any additional driver to decrease activity in Alberta will have adverse effects. Prior to this announcement there have already been houses for sale on my own block. Why you ask? A rig worker who hasn't worked in three months has trouble paying the mortgage. How many times do you want this story to be told? Local service companies (such as [Information Removed] and others) have been laying off employees for months. What will a further slow down in activity mean for these employees? There is not a job across the street at a competing company because they too are experiencing the downturn in activity. The chain, unemployed or undemployed people have less money to spend on entertainment and services and seemingly unrelated industries begin to be affected. We have seen 'busts' before in Calgary - caused by the market and the government... NEED I SAY MORE? |
| RRE2017 |
You can't possibly be considering doing to Alberta what was done in the early 80's? The royalty review panel has to do everything it can to promote oil and gas exploration in Alberta. We are a prosperous and debt free province because of the past 20 years. Don't mess it up!!! |
| RRE2018 |
I am deeply concerned about the potential ramifications of the royalty review report. As a [Information Removed]working for an energy company, I was too young to know of the NEP of the 1980s, but its devastating toll on the Alberta economy and its people is still fresh in many minds. Now, rather than having a similar program forced upon Alberta by the federal government, we are considering imposing similar crippling legislation on ourselves. Although the royalty review report states that $2 billion more would be added to the provincial treasury, I don't believe it is taking into account the dramatic decrease in activity that would result from the full implementation of this strategy. As an example, in my group alone, after running the economics of our project under these proposed new royalties, only ~25% of our planned new activity for 2008 will be economic. Following this decrease in activity, the overall royalties received from this one property by the government will be lower, simply due to the decrease in activity. And if there's only 25% of the activity, we would only need 25% of the staff, and suddenly we are facing potential layoffs. Layoffs mean less people spending and putting money back into the economy, and an overall economic downturn. One in six people are directly employed by the energy industry, but there is no one in Alberta that would not be affected by the downsizing or collapse of the oil patch. Please ensure whatever action you take does not cripple the industry that so many depend on for their livelihoods and has made Alberta the best place in the world to live. Sincerely, [Information Removed] |
| RRE2019 |
I have tried to send my thoughts to the Premier, [Information Removed] and my MLA directly but I thought I should also send therm via this pipeline 'as well. I have read the report in it's entirety and find it to be fair and unbiased and reflects my thoughts completely. I feel it should be implemented in its entirety with no compromises or back room deals. All this fear mongering about losing the "Alberta Advantage" is just that, fear mongering. The industry has not a leg to stand on and probably fears the accountability issues (the best part of the report) the most. But lets face it. Even after implementation Alberta will still be the most competitive and politically stable place to invest in the oil and gas business. The companies know it. They just want the gravy train to go on forever. But the oil belongs to ALL Albertans and ALL Albertans deserve a better deal than we have been getting. Thank You. |
| RRE2020 |
I know that you are well informed of the slow down in actively in the oil patch now, but I dont think joe-albertan is. We know that if the big companies take their resourses out of alberta it will further impact us in the patch. I live in Grande Prairie and have been in the service rig industry sine 92. We have seen I lot of are emploies move out of are area because of the recent slow down. A number of the people that I work with have only worked a total of 200 hrs since the end of march. I am sure if you go ahead with all the royalty suggestions there will be the further slow down in the patch, like we saw in the 80's. I trust that you will take in to account the families of this great province, it is not about caving into the big oil companies, its about the children our future. thank you for your time [Information Removed] |
| RRE2021 |
Dear Mr. Premier, I support the two billion dollar increase in Royalties to be paid by the petrochemical companies removing our gas and oil. I hear their threats and am not swayed by them. If they wish to leave, then leave. There will be plenty of companies willing to take their places. And if it slows things down, then that is not a bad thing either. It is essential they we not back down now. We cannot allow these businesses to blackmail us. And your government should understand how angry the voters of this province are regarding the deficiency of monies being paid for our oil and gas. Take a stand Mr. Premier. Your political career depends on it. [Information Removed] |
| RRE2022 |
Why would you change a system that appears to be working so well? Our prosperity is the envy of the nation and we are debt free. Maybe we could get just a bit more from the oil companies, but there are obvious economic consequences as well. I don't know what the economice consequences will be, nor do I think you will ever get a concensus among experts. But I do know that the system already works, so why mess with it? |
| RRE2023 |
This whole thing is a money grab. We have a heritage fund that we have for a rainy day. Well it has been raining for to 2 years now. All this will do is pad the your pockets and make it easy for you to less fiscally responsible. |
| RRE2024 |
To the Government of Alberta: We , the undersigned, favour raising royalty rates as recommended by the Royalty Review Panel. We feel that the rate of development, especially in the oilsands, has been much too fast. A temporary slowdown would be a benefit to Albertans and all Canadians, as our overheated economy has too many negative effects. [Information Removed] |
| RRE2025 |
I agree whole-heartedly with the plans to increase the royalties charged to the oil & gas industry. I have heard for years that Alberta is being short-changed on revenues. While it is true that extraction from the tar sands is more expensive than other types of extraction, it should be noted that this is a stable country where there are few / no concerns about sabotage and civil wars. The oil & gas work force is provided with excellent education and good medical care as part of the taxes paid by all Albertans. The impact on communities such as Fort McMurray in terms of the provision of services for the growth associated with the oil & gas industry has been crippling. The multinational oil & gas industry should be paying its fair share to Alberta and not funnelling its (large) profits back across the US / Canada border or into investments in other countries. I am sure that the industry will be whining (and encouraging or intimidating their employees to whine on their behalf) but I cannot see them pulling out of Alberta. Oil & gas are limited resources and the demand is not going to shrink in the long term. Alternatives are still a long way off. |
| RRE2026 |
I think adopting the report as is will kill the great Alberta economy we have going! Take a closer at this before moving forward! |
| RRE2027 |
Implement the report in full and without reservation. The resource belongs to the people of Alberta, not the oil companies and their shareholders. While the oil company's reactions have been predictable and necessary, their interests are not the interests of Albertans. I don't blame them; if I'm a shareholder, I would want them to be looking after my investment. The fact remains the resource is finite and when it is gone, so will be the oil companies. Seriously, where are they going to go if we take our fair share? Pack up their bags and invest in high risk central Asian country run petty dictators? So long as someone does not figure out how to run the world on dandelions, the world will need our oil. Our neighbour and biggest customer is ever more interested in stable, secure supplies. As it get more scarce, the more our resource is worth. So what if things slow down a bit? Maybe we can stretch out the extraction over a few more generations and benefit Albertans not yet born. Anyhow, I am sure this is a familiar refrain on this forum because it is what the citizens of the province want. Listen to the them. |
| RRE2028 |
Take a little more time to make a good decision but do not give in to Big oil. Shareholders in Houston or Toronto have only their self interest. The extra revenue can be used for infrastructure. The highway to Calgary is inadequate in my opinion. thanks |
| RRE2029 |
The decision by the Kleine government to pay off the provincial debt at the expense of improving services around the Province is responsible for a large part of the public's dissatisfaction with the way the government has been performing. The Royalty Review panel's decision has been a catalyst that shows how fed up the public is with poor roads, poor schools, long wait times at hospitals, etc. Unfortunately, the general public is hoping that an increase in Royalties will solve their problems, when the actual problem is the Governments lack of vision. The time to have raised the Royalties was just as the oilsands projects were starting to affect places like Fort MacMurray and starting to add inflation to the costs of services etc. Now that we have a labour shortage and sky high labour costs, inflated housing prices etc., the fix for the problem is more complex. Oil companies are experiencing the same inflationary pressures that the general public are, this means that their net backs are low and many smaller gas heavy companies are practically bankrupt. Their only hope is higher gas prices and lower labour costs. An increase in royalty rates will only make things worse. Hurricane Katrina pushed gas prices to $15 /mcf, which temporarilly made gas companies alot of money. The companies flowed their additional cash through to employees which pushed up house prices in Calgary by 50% in one year. The service companies saw an opportunity to charge top rates and the government got rich as provincial income taxes revenue climbed along with money from Crown Land sales. Hurricane Katrina was a once in 50 year hurricane, gas prices have been back around $6/mcf for the past year and many companies wish they could reduce finding costs by lowering wages, getting reduced service costs and a break from the government. The real reason Encana says it will cut it's budget by $1 billion next year is the price of gas. It costs them $8/mcf to find and they are selling it for $6/mcf. By all means change the Royalties where it makes sense, but the government needs to be sensitive to finding costs and commodity prices. The Heritage Fund was set up for future generations, that was over a generation ago, maybe it is time to spend some of that money to improve services around the province. As far as the oilsands go, since payout on most projects will take until 2020, why not phase in the increased Royalty starting in 2020. The effect on the oilsand guys will be the same, but for the investment community it will sound like the whole issue has been put to bed until a far off date in the future. [Information Removed] |
| RRE2030 |
In business, as in life, you shouldn't get something for nothing....polluting our environment should have some cost other than the obvious. Oil companies have been given a free ride long enough. |
| RRE2031 |
Dear Ed, Obviously the royalties need to be raised. Norway and Alaska do so. The oil companys are getting huge profits, in the billions of dollars since oil went up from $ 20.00. Costs are going up but these companys factor all this into the investment metric. No suprises. Cost go up due to eagerness to get out production fast. Let us keep more money for Albertans instead of most of the money leaving AB. Do the right thing-you live here too. [Information Removed] |
| RRE2032 |
[Information Removed] There is widespread recognition within the industry that there is room to increase royalty rates and provide a larger benefit to the resources owners, however to implement everything recommended in the report will put me, and (hundreds of?) thousands of others out of work or it will drastically reduce our income. You are well aware I am sure of the impact that the resource industry has on the provincial economy; and you are also aware of the impacts of drastic changes to the status quo (remember the NEP?). Consider what might happen to every single Albertan if the 93,000 people that are employed directly and indirectly by the company I work for are all of a sudden out of work or are making significantly less. What happens to income tax revenues? What happens to the discretionary spending these people do? Now consider the impact industry-wide.. how many people are employed by the entire industry? How many people are employed because of the money that those employed directly by the industry spend going to the movies, buying cars, going out to eat? What happens to royalty revenues when no company can afford to produce oil or gas any longer? Some of the capital cost figures used by the panel are not accurate and to my knowledge are understated by a factor of two. How does this present a fair argument for anyone?? No one is saying that the status quo is what is best for everyone. But please, have the government conduct the review again using sound math and numbers. Alberta is unique in that the resources we have are difficult to extract and costs more to do so than it does in most other regions of the world; to compare Alberta to Texas is to compare apples to staplers. An increase in royalties may be necessary. To implement the recommendations made in the report will kill the golden goose; nurturing it will ensure a long, steady, dependable stream of revenue for the province and its residents. Let's figure out what is fair before we unnecessarily behead the goose and irreparably damage the entire province, its economy, and the livelihood of its residents. With utmost respect, [Information Removed] |
| RRE2033 |
I have major concerns with its recommendations. The report disregards external factors affecting the business of oil and gas such as increased costs and changes in the Canada/U.S. exchange rate. In setting up this panel, the government set a clear objective for the review – striking the right balance between providing Albertans with a fair return while maintaining a competitive and attractive investment environment that allows our province to enjoy continuing prosperity and long-term growth. The panel’s report does not strike that balance. Killing the goose that lays the golden eggs is the wrong answer. |
| RRE2034 |
Dear Mr. Hays, I just wanted to send you a note to ask you what you think of the "Fair Share" Royalties Report and what your position on the matter will be. I would like you to know that I will be doing everything in my power to inform the voting public how devastating this report will be to the Alberta economy and the well being of all it's citizens if the government endorses the report's recommendations. I am appalled at how misinformed the government, and the public in general, is with regards to the direct/indirect and spin off benefits the Oil and Gas sector brings to all of Alberta. As an employee of a major Canadian Oil and Gas company and having managed multi billion dollar operations and capital programs in the province I have seen first hand the direct/indirect and spin off benefits to all the Alberta communities in which my company operates. My employer is a strong community based company that works with all stakeholders to improve the communities in which we operate in. I am currently working on a multi billion dollar oilsands project near Fort McMurray and unfortunately people don't realize how low the rate of return is for the risks we are taking to develop this vast resource. An erosion of this return any further will make most investment in the oilsands grind to a slow crawl. Alberta can raise royalty rates if it wants but in the end the financial markets will decide if financing will be available to companies to develop Alberta's Oil and Gas resources. If the rates of return are not aligned with the associated risks the available capital will go to other more favourable jurisdictions or other industries. The report makes a fatal assumption that the forecast of future activity levels under their proposed recommendations will be relatively unchanged. The reality is that capital will go elsewhere in a hurry and in the end a lower government take will result from reduced activity levels. The main benefit to Alberta is not the take on royalties, it is on the sectors activity levels and the spending that occurs to explore, develop and operate oil and gas fields and all the direct/indirect and spin off effects this has on every Albertan. If activity levels reduce every Albertan will be impacted and if they thing that they are immune to this lower activity level they are sadly mistaken. Less spending in the province by the Oil and Gas sector will actually reduce the government take in royalties, taxes and other areas of government revenue. Sadly the public is misinformed and they will only realize the impact after it is too late, when their livelihood is impacted. Alberta is a unique oil and gas basin with unique economic inputs/outputs and comparisons to other jurisdictions must be take into account investment risk and rates of return which the report did not address. The report tries to compare Alberta to Norway which is like comparing an apple to an orange. These are vastly different oil and gas investment environments and the only way to compare them is on an economic investment basis that takes risk into account. Alberta is currently the envy of the rest of Canada, and North America for that matter, and I can't imagine the government wanting to mess with success. If the report recommendations get endorsed by the government you will certainly not get my vote at the next election, nor will you get my families vote, and all my friends and colleagues that I can inform what the actual impact of the report will be if endorsed. I have been in this industry for over 25 years and this report is worse then the National Energy Program. Those that are old enough to remember know what the NEP did to Alberta. I would predict a very short stay in government if this report is endorsed, despite what some of the opinion polls may indicate. Do not be swayed by opinion polls and do what is right for Alberta. If it is not broken, don't try to fix it ! I look forward to hearing your views on the report and the position you will be taking to the other government representatives with respect to royalty changes, if any. Thanks [Information Removed] cc: Ed Stelmach Mel Knight |
| RRE2035 |
I am writing to express my concern over the report from the panel that was charged with reviewing the oil and gas royalties in Alberta and the subsequent interviews and responses to any debate that poses the contrary point in raising the royalty rates. First it concerns me that there is a flippant attitude about getting "what is ours". If the oil and gas industry decides there is no economic value to looking for oil and gas in this province, then there will be no "our share" to get. Secondly, the cavalier attitude that I have seen displayed even by those who were on the royalty review panel that perhaps it is time for a "slow down" in the economy and that raising the royalty rates will help to do this. It is ludicrous to consider that slowing down a business by increasing royalties or taxes will somehow be of financial benefit to us. The leadership and vision on this issue are seriously lacking. This is not a rural versus urban issue. Stalling the oil and gas industry in this province has a profound impact on ALL Albertans, something we all witnessed in the 1980's with the NEP. It was not just the energy sector that suffered but, if you recall, the entire province faced an economic slump that was difficult to turn around. Each Albertan enjoys the prosperity that a thriving oil and gas industry brings to this province. The small town cafe that feeds seismic crews, the newly graduated nurse or physician who can practice at home rather than in the United States, the teacher who can obtain a full time job in the field of their choice because towns and cities are thriving, even subsidies for farmers in times of drought or poor commodity prices. These examples plus the added benefit to each and every Albertan that travels on upgraded roads, has access to the latest technology in health care, and generally enjoys the prosperity that a thriving province displays are testament that each of us benefits when the oil and gas sector is alive and well in our province. It is not a we-they debate. It is about us, Albertans. Please relay my strong opposition to the royalty reviews recommendations in your discussions in the legislature. Sincerely, [Information Removed] Calgary, AB [Information Removed] Email: [Information Removed] |
| RRE2036 |
The report did not recommend a high enough increase. We should be charging at least what Norway is charging!! I think a 200% increase is more in order. I can assure you I & my family will be tearing up our conservative membership cards and voting Liberal should Honest Ed side with Big Oil on this matter. One has to ask: Why does the richest province still charge health care premiums? Why are our tuition fees amongst the highest in the country? Why are our roads so beat up that it reminds one of a third world country? Why are working people ending up on the streets because they can't afford housing? Lots of questions but still no answers or direction!! |
| RRE2037 |
The oilsands are ours. The increase in royalties is long overdue. Backpay would not be out of place considering the billions of dollars earned by the oil companies at our expense. This is an Alberta legacy, that should be used wisely to benefit us all. Would it be possible to use the extra monies to build a refinery in Alberta. It seems that relying on other provinces and the U.S. to provide gasoline is a poor option when we could do it ourselves at a much lower transportation cost. |
| RRE2038 |
I rarely contact politicians as I know you are inundated on various issues, most recently the Pine Beetle issue in K-Country. However as a geologist and officer of a public Energy Trust I thought I would provide feedback on the proposed recomendations of the Royalty Panel. This will be bad news for Alberta if adopted; specifically for our company it will potentially mean hundreds of millions of dollars eliminated from our market capitalization and layoffs. With over 50% of our unit holders being American they are losing confidence in Canada as a place to invest based on the Oct. 31 Federal change to Trusts and now your government's potential royalty increase. If they don't invest, we have less dollars to invest in our province which this year is about $275 million. We have seen the volatility in public markets (Asset Backed Mortgages scandal) and what they can do to our economy. People restrict spending causing significant ripple effects. The Conservative Trust policy wiped out approximately $25 billion dollars of market capitalization from the Trust sector. An investor (typically retired) who held perhaps 10,000 units of our compay prior to Oct. 31 2006 are $80,000 poorer today. Please do not cause further destruction of their retirement income by changing the Royalty structure. A concerned resident from Bragg Creek |
| RRE2039 |
We have been following the news headlines regarding the royalty review. Although we do agree that it should be increased my only concern living and working in the oil industry in northern Alberta is that if it is raised too quickly Alberta as a whole will suffer, our jobs, our homes and our futures are so dependant on the oil industry that even the thought of less money being spent in Alberta is one of great concern. I ask you to consider the average Albertan who is dependant upon the industry for our families and our futures before driving the oil industry out of Alberta. The one thing that has brought our boom and helped many citizen like ourselves is the oil industry, people come from all over Canada just to enjoy our thriving economy, please don't forget that in this issue. I think it is easy for a lot of Albertans living in the larger centres not to see the entire picture but we will be no better off than any other Province if we lose our oil industy, infact with interest rates rising and the slow down over the past year, if not careful you will lead Alberta in to disaster. Thank you for the option to express our opinions and please this is not a black and white issue, it is an issue that affects each and everyone of us!!! |
| RRE2040 |
it will half of Alberta jobless and hungry |
| RRE2041 |
The instability created by the proposed changes have already cost [Information Removed] money. I'm one of thousands in AB employed by an oilfield services company, and I am personally out-of-pocket monthly commissions. I need these commissions to pay my mortgage, that was at a premium becuase the Calgary market was so hot. If these proposed changes go through, I will be one of thousands in Calgary that will be put in a position by our elected officials that will need to seriously consider walking away from a mortgage. There has to be a better way than the extent of those recommended by the commitee. |
| RRE2042 |
The review appears to have incorrect information, and that the royalties proposed will be in fact much higher. This will have a dramatic, immediate effect on Alberta's economy, and may well effect thousands of jobs. Think of the irrepairable effect this will have for many years. Please do not accept the recomendations verbatim; potentially in a reduced increase to be in line with world general policies. The proposed changes are too dramatic. Thanks, [Information Removed] |
| RRE2043 |
Thank you for the opportunity to input. As an Albertan I feel that the funding from royalties should be used to enhance the life of Albertans. If we are truly the richest province in the country why are our roads in poor condition, waiting lines for health services and a shortage of schools. However the most important is the legacy of our province and the beautiful places that we have to share and cherish for the generations to come. I see this funding used in building special places where future albertans can be proud and be able to create memmories for families to come. These places are our provincial parks and large municipal river valley parks. lets pump some money into land aquisition and construction of amenities for the people of Alberta to use and be proud of...... regards, [Information Removed] |
| RRE2044 |
Fully implement the report. Do not compromise on any of it as the recommendations are a compromise position - keeping our "fair share," while still offering an excellent, competitive business climate (what the Premier said was the objective). Do what's right for all Albertans, who have been shortchanged for years because government didn't act while industry enjoyed excessive profits at our children's expense. Industry has (and continues to) act in the best interests of their shareholders - as they should. But the government should also act in their shareholders' - Albertans' - best interests. It's not about "extracting more from industry" but rather being prudent stewards of our non-renewable resources and managing their development, and Alberta's development, well. It is evident from two independent reviews that government stewardship has been disgracefully, terribly lacking. It shouldn't be a tough decision. Industry rhetoric to protect their own interests is expected, and if they do take their investment elswhere, they'll be back: - the oil, oil sands and gas isn't going anywhere - Alberta's got the second largest reserves in the world, they know where it is, so there's little exploration risk - we're beside the biggest consumer in the world - excellent infrastructure, workforce and quality of life - and yes, we are stable and democratic nation. Act decisively now. |
| RRE2045 |
do it moderately pls. I know everybody keeping eyes on the oil and mineral. but don't do it so hard core. |
| RRE2046 |
I am very concerned about the proposed royalty rate increases. Oil is at an all time high and natural gas prices are very low right now. The oil prices are in US dollars, so with the increase in the dollar, the increase in teh price of oil is not benefitting the industry as much as most Albertans think. Most new natural gas wells are marginal at best with higher prices and increasing the royalty rate will result in many more wells becoming uneconomical. Production will be suspended uneconomical wells and the gas prices paid by consumers will rise with a decrease in supply. The majority of homes in Alberta are heated by natural gas. Is the government planning on subsidizing the poor, the elderly and those on fixed incomes to heat their homes? Oil companies spend a lot of money finding and bringing on new production. They also spend a lot of money developing new technologies to produce more effeciently and with less impact to the environment. All costs have been going up; labour, building materials, etc. An additional increase in expenses, such as that proposed by the Royalty Review, will negatively impact all aspects of the oil and gas industry. Oil and gas exploration and recovery are very risky ventures. If the government is going to take such a large share of the returns, are they also planning on sharing some of the risk? Proponents of increased royalty rates like to use the phrase "The people of Alberta". How exactly will the common people of Alberta share in all this new-found wealth? Will it be through job loss, higher prices for food, transportation, heating, travel? I sincerely hope the Government takes a very close look at all of the ramifications of such a drastic increase in royalties before implementing any changes. |
| RRE2047 |
I just finished reviewing the Royalty Review Final Report, and I have to say I am sitting here in disgust. All I see in this report is greed. The whole "Fair Share" theme is really funny because it looks like it only includes the Government and not the citizens. I am a citizen, and I can guarantee I have seen my fair share of the oil industry. Its has kept food on the table for my children and a roof over thier head which I am not not sure is going to happen when/if this Royalty Review goes through. No, my job has not been threatened, but I am an intelligent person - if I was the owner of any business and I had to pay excess millions of dollars a year to anyone, I would be looking to reducung costs and one of them would be job cuts. I am a single mother and life is hard enough as it is living in Fort McMurray, the rent is outrageous and life is hard, but I stay, because I have a good job and they pay me a generous salary. But I am replaceable. My job can be obsolete if so needed. Are you going to pick up the tab on my living expenses when this goes through and I get laid off? I can tell you Fort McMurray will not be my hometown any longer. Please, please, take a long hard look at the repurcusions of what they are proposing. Are we going to have another year like in the early '80s in Fort McMurray where everybody left? Please, say no. |
| RRE2048 |
What is important is not a percentage increase in royalties, but rather an appreciation of where Alberta stands in the world-wide royalty rankings. If as is reported we stand at or near the bottom and after review we stay there, then we have missed the opportunity to take advantage of the many benefits Alberta offers in other areas such as a skilled workforce and stable government. DON'T BLOW IT. |
| RRE2049 |
I am a 4th generation Albertan and cannot believe the comments you made last night in Calgary. Even though I have lived in Calgary for 29 years I am totally in favour in following all the recommendations made by the recent review committee. I have just torn up my PC membership card and will campaign on behalf of the Liberals. During the leadership campaign I was proud to support you for leader. I see that I made a mistake. I am sick and tired of seeing the last 2 premiers run scared from the oil industry here in Calgary. [Information Removed], am now retired and will spend all my free time and skills to defeat the Conservative Government in the upcoming election. I had to pay $5000 for knee surgery at a clinic in Vancouver or wait for almost 2 years for surgery here in Alberta.My graddaughter does not have a school in her area here in Calgary. Yet the oil barons have multi million dollar homes here in Calgary and also drive massive cars and trucks. It is obvious where the present government has its priorities and it is not with the average person here in Alberta. To the outside world and other parts of Canada we look like a third world country been run by the Oil Companies from the US. Peter Lougheed was not afraid to stand up to the Oild Companies but I guess he was a real leader!!! [Information Removed] |
| RRE2050 |
Its time the oil companies stopped whinning and need a big crying towel. Look at the past when the Lougheed government took on the energy industry over royalties and taxation, they responded with outrage and its been heard over and over again since then. Their responsiblity is only to their shareholders. Not the owners of the resources - all Albertans. They have always reaped billions of dollars in profit and never expect to see them go down, only increase. For Albertans the report provides short term pain, with long term gain. Read article in Calgary Herald opinion by [Information Removed]Wednesday 26th Sept. It states clearly the scenarios of previous royalty reviews. The oil companies are still here and will continue to be here in this stable climate where there are the second largest deposits in the world. Also any business or industry with sound management practices should be prepared for cyclical ups and downs. This will just be another small downer for them. |
| RRE2051 |
I believe that the Royalty Report should be largly implmented as is. The comments of CAPP are understandble, as they are lobby group for the industry. It is true that input cost in industry are escalating on par or faster than oil prices. Working in the construction industry, I see examples of an overheated economy daily. Sub- contractors are hard to obtain and the workmanship now takes a back seat to quantity jammed through the system. The huge backlog of work is driving up labor rates, and material costs, which drives inflation. This is a vicious cycle that needs broken. If higher royalty rates cause a slow down in investment as threatened, this would be fortitous, as Alberta needs a slow down before the economy becomes unsustainible and collapses. |
| RRE2052 |
I iive in Fort McMurray and work for one of the largest companies in the oilsands and can see the mad scramble by various companies to grab a piece of the pie. It's like Dawson City in 1898 and you know that these companies are making termendous profits, especially after their construction costs are paid off. I agree that we need a royalty increase, and if it slows developement down a little in the area, although I very much dought it would, that could also be a good thing. |
| RRE2053 |
I hope that those in goverment understand Albertans do deserve a fair share, but at current gas prices there is no room for a bigger government share. Wells that are not drilled or are shut in do not pay any royalty, and does not pay anyone to work on those wells or project programs. I as an Albertan do not understand why with so much government surplus is this even something the Alberta government would contemplate? I have been within the energy industry of Alberta for 30+ years and now as an independant consultant veiw this Rolalty Review as nothing more than a Alberta born NEP and see no Alberta Advantage to come from it. |
| RRE2054 |
The panel has ignored important details and information given to them regarding actual costs of doing business for oil and gas companies in Alberta (see http://www.capp.ca/default.asp?V_DOC_ID=1226). In my opinion, the amount of royalty increase that the panel is suggesting is extreme and will shut down the small producers, it will also reduce the activity of the larger producers in Alberta. EnCana alone has announced that it will pull $1 Billion of its 2008 investment into Alberta if the increase remains as high. Another thing that is not being thought of is how this will impact the rest of Alberta if companies cannot afford to or choose not to produce in Alberta. Construction companies, Hotel and Restaurant Industries, etc. will also be effected. In layman's terms, this is like a Landlord increasing his apartment rental amount so high that most of his tenants have to move out and live elsewhere, how better off will that Landlord be if he doesn't have anyone living in his building? |
| RRE2055 |
Dear sir or Madam, Please re - consider the increases in royalties. Oil and gas pools are getting smaller and smaller and harder to find. We are having to shoot more and more expensive seismic to find these pools so the finding costs are going up. Add in the huge increase in royalties and suddenly it is no longer economic to explore for oil and gas in this province. i am very concerned that the result of the large royalty increase will be a huge recession. Drilling will slow down considerably (it already has slowed down a lot this year due to the lower gas prices and other factors) and many of us will lose our jobs. i don't think the panel has fully evaluated the impact of the Royalty review. The province will ultimately lose money and will be having to spend more money because those of us working in the oil industry will be on unemployment insurance. thanks for your time, A concerned Albertan - born and raised here, [Information Removed] |
| RRE2056 |
Dear Mr. Stelmach, Although you've carried out your election promise, the recommendations of the recent royalty review are quite one-sided; what the government is "missing" out on under the current royalty agreement. Given increased commodity prices, the review panel wants to ensure Albertan’s receive their “fair share” of the revenue streams generated by O&G development here in Alberta. Under the current royalty agreement the government receives a percentage of every dollar of revenue generated. At high or low commodity prices the percentage does not change, even though company netbacks shrink as commodity prices decrease. The government’s take does not. Since when is government or the public responsible for generating higher commodity prices? Higher commodity prices are simply a reaction to global supply and demand not on the action of Albertans. So why do we feel we need more of the pie when we’ve done nothing to earn it. No public capital has gone into funding these projects, the public is not at risk if projects don’t go forward or are over budget. Or are they? If the Alberta government were to increase royalties at the rates recommended the Alberta economy would see a severe impact. I’m not concerned with pockets of the rich getting lined with profits. These are the risk takers. They’re going to get rich regardless. The concern is for the middle and lower classes that rely on a healthy industry to make a living. With higher royalties smaller rural communities are going to be hurt. Unemployment will increase as projects are cancelled, provincial tax collection will decrease and economy will tumble. So long “Alberta Advantage”! If the government is set on increasing royalties, which you probably are now that you’ve opened the can of worms, any increases should go directly to back to communities impacted most by the industry. No amount should be spent as general revenue. Any and all of the incremental increase should go to providing infrastructure to communities like Fort McMurray and Fort Saskatchewan. These communities are the backbone to the future of oil sands development and need drastic improvements to keep up with demand. Maintain the "Alberta Advantage" by considering the impact on everyday Albertans by your decision. Implementing the royalty panel's recommendations will be just the beginning of political and social fallout. Concerned Citizen |
| RRE2057 |
This will be a huge hit to small towns in Alberta.For some the oilpatch is all that keeps the alive.More important than Farming. |
| RRE2058 |
I am writing to voice my concern around the royalty review. My understanding is that a lot of the data the panel used is flawed, and thus the recommendations are also flawed. I encourage you to make sure that industry is allowed to present their cases, and that their books are looked at to determine proper numbers and then make a decision. Of course everyone would like a bigger piece of the pie, that the most important thing is that the industry remains sustainable. Too many people’s jobs and livelihood depend on it, and the panel’s recommendations would seriously hurt that. |
| RRE2059 |
As an employee of a major national oil and gas corporation headquartered in Alberta I can be considered biased in any opinion offered, but I caution the government of the day not to create a made-in-Alberta situation where resource investments are in our provice are equitable to all parties. Shareholders of these firms expect a return on their investments suitable to the risks associated. Do not forget that the current economic climate in Alberta is centred on the investments being made by the resource companies. How many jobs and people are you willing to jepordize if the economic situation were to change so that this investment money were to be removed from our province? |
| RRE2060 |
This review is long overdue. I work in the industry and have seen the profits that are being taken out of our province and our country. I almost feel that maybe Chavez in Venezuela may have done the right thing. It's depressing to see our province and country kowtowing to the demands of big business and not the people. Yea, business will howl and cry, but they'll get over it and back to work in short order. DO THE RIGHT THING FOR THE PEOPLE! |
| RRE2061 |
This increase will have a dramatic effect on my job. I am very dependent on my job to sustain our farming operation. This increase will also have a drastic effect on my spouses future with farming and the services that is provided with our farm equipment for the oil companies in our area. |
| RRE2062 |
It's obvious from the report that Alberta is being taken advantage of by big corporations. We should not allow them to bully us around and keep what is rightfully ours. We should not be afraid of any consequences of divestment. We are a rich province and they need us more than we need them. |
| RRE2063 |
Dear letters Editor: After riding the gravy train in Alberta for decades, the international petroleum industry could hardly be expected to jump up and down with glee at the prospect of having to pay higher royalty rates. The reaction of the industry has been typical. Their claim that higher royalties would adversely affect the investment climate in Alberta and result in dire economic consequences has little to do with reality and is simply a ploy to influence the provincial government’s reaction to the report of the royalty review panel. Oil royalties in Alberta have been below global standards for far too long. The recommendations of the royalty review panel will not recoup past losses, but would simply bring Alberta royalties in line with global standards. Premier Ed Stelmach would be well advised not to allow himself be intimidated, and to take the advice of the panel seriously. In doing so he would be placing the well being of ordinary Albertans ahead of excess profits for the international oil corporations. Yours truly, [Information Removed] Edmonton, Alberta [Information Removed] |
| RRE2064 |
The concept that Albertans aren't getting "their fair share" of oil revenues is laughable. Given our history of mismanagement and waste, we have no right to the revenues generated by the actual hard-working companies and people developing our resources. Albertans didn't develop the oil sands, foreign companies and money did. Albertans didn't build the upgraders and refineries, Maritimers and foriegn labour did. What did Albertans do besides be born on top of the oil and gas? If we had any concept of fiscal responsability, our Heritage fund would be well in excess of that of Norway's, which now sits at $400 billion compared to our $16. The disgusting display of irresponsibility that was the "Prosperity Cheques" shows how little capacity for good judgement Albertans have. Instead of whining about not getting "their fair share" of oil revenues, Albertans should pay their fair share by implementing a sales tax, increasing income taxes and increasing property taxes. Then we could save our oil revenues for the future when there are no more royalties to be had. Thanks, [Information Removed] |
| RRE2065 |
I am stunned by the lack of understanding of the working of the industry. The report is biased and does not work through the cost of building the oilsands. Adoption of this panel's recommendations will result in lost jobs which will hurt all Albertans. Please reconsider the consequences to come up with something more reasonable. This smells of NEP, only inside of our province. |
| RRE2066 |
I feel that the report is fair and balanced and that the government should go ahead with this plan. Thanks |
| RRE2067 |
I am a younge mother and my husband works in the Oil Industry. These Royalties that the Pannel prposes are rediculous. They want to take far too much of a percentage, and how they get that number is beyond me, because they don't realize that their numbers are from 2005, and since then, as you know costs have gone up. The Oil Industry as we know it now WILL BE LOST!!! Thousands of families will be broke because they got laid off due to the company not being able to afford to pay their employee's and service workers because the Pannel has taken too much money. For example" How can you take money from a gas well that hasn't even been drilled yet?" If these Royalties get put in place, they will destroy Alberta's economy, places lick Fort Mac, will turn into ghost town, families will have to move, go bankrupt, loose their home's why? because they want more money. I SAY NO NO NO to the Royalties |
| RRE2068 |
I am the owner of Freehold Minerals along with my Sisters. Why is the Prov. Gov. so hell bent on making our Mineral Titles useless by putting such extreme taxes upon our potential revenues. We are in a "low" volume natural gas area and from what I understand these changes will prevent Gas prod companies from developing our properties. Please address this error before it does permanent damage to your voters. In general I agree with a Royalty Review but I have seen the slow down in drilling etc in our area already. Don't kill your Golden Goose!! [Information Removed] |
| RRE2069 |
Has Ed Stelmach forgot about what happened after the NEP? The Royalty Review Report is fundamentally flawed in that it assumes that the same amount of capital investment will occur with the new royalty regime. No doubt there will be lower capital investment and jobs will be lost. The Alberta government might get its dime on royalties from existing production, but jobs lost and lower capital investment in new exploration will more than offset. It will be the average Albertan who will pay with increased pressures on labour and services. I would rather the dime be in my pocket not Ed's. Have the conservatives thought about what the impact on voting will be if there are job's lost? |
| RRE2070 |
The proposed changes would have a very negative effect on Alberta's economy point forward. Everyone would suffer from a drop in investment in the Province, not just the oil companies. Remember the carnage caused by the NEP in 1981!! I know because I survived, many Albertan's didn't financially. Please consider your actions very carefully, we owe it to our children. Thank you. [Information Removed] |
| RRE2071 |
The proposed changes recommended in the RRR are based on misunderstandings and unrealistic assumptions that will result in severe negative impacts such as 1/ grossly understated capital costs 2/ low nat gas prices 3/ traditional drilling in NE Alberta will become uneconomical 3/ drilling in NW Alberta's tight & deep basin will be severely curtailed. |
| RRE2072 |
Alot of unhappy people here in Grande Prairie who are already counting down your years and months left in office,... You mess with our job security, we mess with yours. |
| RRE2073 |
I think the oil companies are fear mongering. They are not going to pull their money out of Alberta. If they do reduce their investment dollars it will be due to the fact that the companies could not keep up this pace of growth. In reality the companies will complain and moan and blame their slowdown on the royalty rates rather than their own planned investment reductions |
| RRE2074 |
Hello, I am a student in the Faculty of Business at the University of Alberta and have paid close attention to the ongoing royalty debate. I have even heard members of the royalty review panel speak about the issue in person, but I do not agree with their opinions. I am deeply concerned about the proposals to change the royalty structure, especially at a time when our economy shows such great long-term promise. I believe it is unfortunate that newspaper headlines have degenerated the debate to "big oil is taking our money!" and this has resulted in some bold threats by oil companies. I agree that this places the provincial government in a tough situation where the premier cannot afford to appear to be giving in. However, it does not change the fact that increased royalties and the negative public perceptions towards Alberta's economy caused by this debate will have an economic downside far greater than the $2 billion we were supposedly deprived of. I have lived in Alberta all my life and do not plan on moving when I look for a job. I am hoping to have a career in our growing, business-friendly province, so please reconsider implementing the royalty recommendations, because we may be severely limiting Alberta's economic potential and the wellbeing of the people - things that I do not think we can afford to risk. Thank you for your consideration. |
| RRE2075 |
I don't think the bill should be passed. |
| RRE2076 |
I am against the ARRP royalty changes as currently proposed. As an individual whose livelihood is dependent on the oil & gas industry, I truly believe that the ARRP analysis is shortsighted, and doesn't reflect the true capital development costs, low well productivity, govt land sales revenue, and economic spinoffs from the industry. It is my belief that the proposed ARRP royalties will kill our industry, and have a very negative affect on Alberta's economy. It is my belief that there must be some middle ground, that allows the people of Alberta to get their share of the economic value chain, and allows the oil & gas industry to return a profit, and continue to invest in Alberta and create jobs. So I would urge the Alberta governement to delay making changes, until the whole picture is evaluated, and to open up extensive dialogue with the industry, prior to making any decisions. THIS MUST BE A WIN-WIN SOLUTION FOR BOTH THE ALBERTAN PEOPLE (like me), AND THE INDUSTRY THAT EMPLOYEES SOME MANY OF US ALBERTANS. |
| RRE2077 |
First I would like to mention that I am extremely doubtful this will be read much less taken into account. The royalty review panel consists of highly regarded individuals selected by this government - why not implement this report in full as reported. The oil companies (and similar) would be complaining at anything other than status quo - anything else and they would be doing themselves a disservice. I say let this government show some "[expletive]" and tell the oil companies to quit '[expletive]' and accept this report if you wish to do business in Alberta - it is about time 'regular' Albertans receive a 'fair share'. I have lived my entire 46 years in Alberta and I have not yet benefitted from any 'program' the has been offered by this or any government. I am a regular married family mother, working full time trying to make ends meet. We do not live extravagantly but pay our bills monthly and try to save for a rainy day. I look at this royalty report not for myself but my my children and hopefully for my future grandchildren. The oil companies say they will invest less, leave and the Alberta economy will go down the 'toilet'. I expect oil companies would stop investing or slow down - even as a protest vote.They will be back because where else in the world can the Americans (and oil companies) have a safe way to supply them with the oil required. A slowdown in the economy is not necessarily bad. Maybe then the cost of living will be reduced, there will not be such a shortage of workers and the service industry will once again exist. The investment and development will still be there and the companies will be back - if not them then other businesses will gladly step in - why - because they can still make plenty of money to satisfy their investors. This royalty review was a public review and yet the government has now gone into private discussion with the oil companies. Will they do the same for the royalty review panel.. or another step will the government be willing to hold private meetings with ordinary private citizens like myself. I challenge this government to invite me to participate in a round table discussion with other citizens just like me with the same government officials that are meeting with the oil companies in private. Finally to Ed - stand up and think not just for this generation but future generations of Albertans and what the 'real' Alberta Advantage should be - is it the indivuals in this province or the oil companies. Prove to everyone that 'Steady' Ed is deserved and not [Information Removed] make a decision in a couple of weeks and not keep delaying it (several people I know have a bet that Premier Ed will not make a decision and keep postponing it because he is incapable of making a decision) - please prove this wrong. Do the RIGHT thing and implement the review as written/proposed. Like I said at the beginning - I really doubt that this will be read or responded to (and if it is a general reply sent to everyone will be issued). I would love to meet and discuss this - but alas I am not an oil company executive - only a regular law-abiding Albertan. Thank you for letting me 'vent'. |
| RRE2078 |
The Government of Alberta may wish to survey some of the Oil & Gas service industry companies specifically outside of Ft. McMurray for their assessment as to the current economic environment with respect to upsteam invesment activity prior to considering changing any of the royalty rules for conventional oil & gas. |
| RRE2079 |
The royalty report outlined what we, as albertans, need to do for the future of our province. We need to gain the full value of our resources, while maintaining a competitive system in place. The Royalty review's conclusions should be implemented immediately. |
| RRE2080 |
I strongly believe we are not getting fair equity for our resources. I feel we are being threatened and bullied by big business to avoid a royalty change. Do not succumb to these threats and please receive a fair and equitable royalty payment for our (the people of Alberta) resources. I also ask that you examine the bitumen debacle and ensure this resource stops flowing out of our country. We need laws put into place that ensure we are not selling our non-renewable resources a bargain basement prices. Generate employment and industry in our country. |
| RRE2081 |
I know the government is going in the right direction with increased royalties. The oil industry will whine and cry for a short while. They will be back because Canada is a the most stable country in the world for there investments in oil. Where else will they go, where else is there this much oil to be developed. BP oil is making $21.75 a barrel profits. Take your share, distribute that back to the people in government programs, help our poor because the oil industry won't. They just want to get as rich as they possibly can at Canada's mineral expense. Never mind the royalties, you should be developing this resource yourself. Mention that and see how they will react. |
| RRE2082 |
I disagree with the conclusions of the royalty review. The analysis should include impact of hogher royalties on the industry activity that would reduce land sales,investment,taxes collected etc, etc. Please, carefully consider all the ramifications of the proposed royalty increase! [Information Removed] |
| RRE2083 |
What does it take to open this government’s eyes to the devastation that is taking place as a result of the out-of-control expansion of the oil industry in Alberta? And to add insult to injury, we are receiving a mere pittance for our troubles. If raising royalty rates will slow the pace, please do so immediately – and not in partial measures, but fully as stipulated in the royalty review. Is it not obvious to a pro-business government that your hands-off approach taken so far has been a disaster to many companies outside the oilpatch? With soaring operating costs and labor shortages, some businesses have actually had to reduce their hours of operation, and some have relocated to other provinces. Meanwhile, the near-collapse of this province’s infrastructure, environment, and social systems has been noted so often that it is extremely frustrating to have to once more try to shake this government out of its comatose state, and urge it to do its job and discharge its responsibilities to its citizens. Yes, you are responsible to provide a better quality of life to the people of Alberta, not to the shareholders of oil companies. I only wish that implementation of all the recommendations of the royalty review would slow down oil production in this province. Unfortunately, I don’t believe it will. Nevertheless, we must stop groveling and demand what is rightfully ours. And the recommendations in the report should be just a beginning to a new era of accountability, responsibility and stewardship. Wake up! |
| RRE2084 |
Im in agreement with increasing the Royalties. The Oil and gas companies are making more than enough, and this may help reduce the acceleration of the economy, which is stretching businesses and personnel to the extreme. |
| RRE2085 |
I wish we had a Government that stepped up for Albertans and and not big Oil Companies. I don't for one minute believe the Oil Companies when they say they will pull out of Alberta, even with an increase in royalities they are still onto a very good thing here. Even if they did pull out it wouldn't be the "end of the World". I believe that things need to slow down so we can catch up to all the people who have arrived "en masse" in our Province and everything that encompasses. I think the Oil Companies should be ashamed of themselves especially Encana the first one to turn on us and one of our own. I believe in playing fair and the Oil Companies aren't playing fair at all they are just plain greedy. It's time we sent them a message and looked after Albertans and Alberta for future generations. Their greed should not be rewarded. Thank you. |
| RRE2086 |
In regard to the plea from the workers who drill for oil and gas and those workers in the oil and gas service industry who have fears of a slow down in drilling activity should the government adopt the Panel's recommendations - it should be noted that a slow down in conventional exploration and development has been going on for the last few years. In comparative data shown on the EUB website, it shows that activity has dropped 23% in the first 8 months of 2007 compared to the first 8 months in 2006 in respect to exploratory and development wells drilled in Alberta. This drop in activity had no bearing on the royalty fee structure but the shift has been the result of high costs of doing business. This awareness is also shared through knowledge that comes from the workers who have become affected by this slow down. This slow down will achieve bidding that reduces the take home pay of many Albertans who work in the oil and gas sector, results that have occured in the past - results that improve the bottom line for the majors while still seeing the ever increasing value of oil. It is noteworthy what the oil industry does for Alberta in regard to continued growth and employnment; however, the province also provides the necessary infrastructure, for example, highways to guarantee the flow of oil and gas - money that actually comes from part of the royalty revenue. These are expensive and important support structures that benefit the oil industry. |
| RRE2087 |
We are grade 9 students at vjm junior high school in st.albert. We dont really care or understand what this is about and we didnt even read your 105 page thing so have a good day! |
| RRE2088 |
Freehold mineral tax should not be doubled-it should be abolished. I am concerned about the protection of private property. I also worked on my parents and grandparents land breaking roots, picking stones etc. Give us a break! |
| RRE2089 |
As a concerned citizen of Calgary, I am appalled at the way in which the Alberta Royalty Review has been conducted. I am not representing any company's view of this matter, but am reaching out as a taxpayer and member of what I feel is the best province in Canada. The way that this review has been presented to Joe Citizen would be hilarious if I didn't care so much. Of course, 99% of all people will answer positively when asked, "DO you think the big bad, greedy oil companies are stealing too much money from our pockets?" Even I would! Conversely, if I used some cause and effect and asked the question, "do you think that we should tax the oil and gas companies to the point where they pack their bags and move to countries where they can increase their rate of return, and in return, we can pay more income tax and lay off 100,000 (20% of the half million) people who, within one degree of separation, get their income from the oil-patch while have an economic recession?" the answer may be different. To use old statistics to provide the rationale for increasing royalties is only going to ensure that this government is blamed for the recession that is ominously approaching... without the royalty increases! Should the government have had a larger piece of the pie in 2004 through 2006 when gas prices were highest? Absolutely! But now that prices have dropped and service companies are laying off personnel daily, don't blame oil and gas companies if you raise the ire of your neighbours, constituents and families for causing the trouble that we're sliding into (but most people haven't figured out yet). The degreed people that are getting laid off in Calgary are marketable globally in the oil and gas business. They won’t be looking for new jobs in , but the people who will be less marketable globally are the relatively unskilled labourers that are being laid off from drilling companies and service companies in rural Alberta. The degreed people will not return once they experience Big Oil in their newfound companies internationally. We are in a mature market. Some of these oil and gas properties require incentivization, not stifling taxation. If you don’t believe me, phone your friends in car dealerships and real estate offices and see what those economic indicators are doing. You missed the boom boat. Hope you don’t own a lot of real estate. Compare houses for sale in Calgary in September 2006 vs. houses for sale in the same month in 2007. In 2007 there was a 62% increase in month end inventory of houses for sale when compared to the prior year. (Over 11,000 homes) Is this not an indicator of hard times in Calgary already? The Alberta government has consistently stated over the past five years that the budget surpluses were due to higher royalties collected due to high commodity prices. The 2004-2007 resource revenue of almost $37 billion needs to be highlighted here. I'm not here to judge, but you would think we'd have better infrastructure for a province with that sort of resource revenue to spend on its people every year. The oil companies AND the province made great profits in the good times. Here's the bad news... The good times were over long before the Royalty review was released using faulty statistics. In August 2006 the activity slide started, with no end in sight. You can’t punish the oil companies for the royalty having a ceiling that was based on old oil and gas prices and cost infrastructure. If you don’t get this correct, I’ll most likely be one of those departing the country. I’m okay with that as I’ve worked globally before. The world loves Canadians. I write this letter in the interests of those who would like to continue to call Alberta home but won’t be able to due to their need for a job. Be fair, work with Oil and Gas companies, service companies, municipalities, etc., to arive at the correct conclusion, but don't be punitive due to your own inactivity in straightening out the system over the past 5 years. They were good times for all. [Information Removed] |
| RRE2090 |
We have watched our Prime Minister publically recend on a promise to leave the Royalty Trust Issue alone, and now we see a new Premier become the first to publically take Alberta's Oil Investments including the Heavy Oil Projects and place that sector in the Red. If both the Prime Minister and our Premier wish to take Alberta back the times of the NEP where thousands were laid off, this is definately a turn for the Conservative vote in the next elections also to the Red. There is one simple rule for Alberta for Politicians, and that is not to play around in the Oil Patch, as the ripple effect takes money out of the pockets of Albertans. You can cover that with all the fluff you wish, but that is the fact that everyone will remember. How will we always remember Brian Mulroney? One guess. The GST, which was the biggest Tax Grab in Canadian History. How will we remember our present Prime Minister? One to took away the Royalty Trust when he could have placed a "Grand-Father" caveat showing some consideration for the small start-up oil and gas companies that are on the verge of bankrupsy as the after-math. That rippled down to millions of dollars of losses for Alberta Investors in who support the Oil Patch by placing trust in our leaders to use their heads. How will we remember our present Premier after he brings down the Oil and Gas Industry and it's Investors to the lows we saw with the NEP with his new royal structure? One guess. Time to call for a new provincial election in this Province! |
| RRE2091 |
I BET THE CHAIRMAN WAS IN THE FORESTRY BUSINESS.... wHAT A JOKE!!!! |
| RRE2092 |
I don't know all the in's and out's of this, but I do know that whatever is being proposed is really scaring the people of my community - Grande Prairie. I shudder to think what may happen to our liveliehoods if this goes ahead. Not very equitable - all or nothing - there's got to be some fair way to do this without going to the extreme. It's the extreme we're scare of. |
| RRE2093 |
This program only seems to benefit the government. It doesn't seem like it supports our oil and gas industry or those who work in it. Doesn't seem like a very good proposal. |
| RRE2094 |
An average recovery cost for producing a bbl of oil should be determined (review on a yearly basis) once this has been set anything above that becomes the amount you base you royalty on. You can then determine and set a percentage for the royalty rate based on the profit only and not on the total cost associated with production. The royalty then becomes a moving target and changes with the price of the bbl. |
| RRE2095 |
I have been listening to the news lately and have become concerned with the tone of the “Our Fair Share” royalty review report. The report seems to claim that the Oil and Gas companies are somehow taking more than their fair share of the provincial resource revenue. I am somewhat puzzled by the premise of the report in that it implies the province is being cheated out of potential resource revenue. The Alberta economy it is the envy of Canada and North America because it has managed to maintain a level of employment and economic growth that is un-matched by any of it’s peers. I believe this has happened because a strong partnership between the Provincial Government and the Oil and Gas industry has allowed the Energy Industry to prosper in this province. The prosperity enjoyed by the Energy Industry is shared with the rest of the province in a symbiotic relationship - meaning the healthier the Oil and Gas sector (more profitable), the healthier the economic landscape of the Alberta Government (more revenue from Royalties and income taxes). Why would the Government want to target the profitability of the Oil and Gas sector as a potential source of future revenues and jeopardize it’s current revenue base? Energy companies are in business to make money…as are all successful business – it is the definition of a successful business! Why not continue to provide a business environment that promotes an opportunity to run a successful business rather than try and manage the Energy sector using a political agenda as your guide. Have we not learned from the experiences of other provinces that “go for” their fair share of the resource revenues…commonly referred to as the have not provinces. Why would the Government start to tinker with a winning formula? I think it’s perhaps the highest form of arrogance and ignorance to assume the Oil and Gas companies will continue to invest 10’s of billions of dollars per year in Alberta with a new “provincial profitability grab” in place. If you think back over the last 10 years, the provincial Government has consistently under estimated the resource revenues and has therefore run excessive Government surpluses. This is positive in that it has allowed us to pay down our provincial debt and accumulate a trust fund for future generations of Albertans…but doesn’t that also indicate we’re already receiving our fair share? At what point would we be content? Do we honestly believe that Oil and Gas companies are funneling off the provincial resources in profitability heaps abroad? Or is it more likely that the hundreds of Oil and Gas companies, the vast majority of which are created in Canada, are re-investing those profits in Alberta to continue growing their businesses? Some will argue that it is impossible to kill the golden goose because big oil is far too profitable to sustain any long term negative effects of increased royalties. Completely true, as is the fact that the large multi-nationals will simply stop investing in Alberta and turn their attention to other global oil & gas opportunities – of which there are hundreds. It is the small and intermediate Alberta grown Oil & Gas companies that stand to be the biggest losers, along with their employees and the employees of the large multi-nationals and …oh yeah the provincial Government because the total resource and income tax revenue will be much lower. Why not be happy with the fact that we are already receiving “Our Fair Share” and look forward to future budget surpluses from resource revenues and full employment income taxes… You’ll never kill the golden goose, but it may fly away. |
| RRE2096 |
please, please, please, don't lose site of the fact that the oil and gas companies are prospering here because they view the present royalty & tax structure as adventagious. Sure - the present system has flaws but it works. Have any of these panel members ever had to meet a payroll? a politically correct stance would surely be to admit there there are flaws in the present system but it still is working quite well thank you! |
| RRE2097 |
I expected a difference in opinions between what the panel recommends and what industry recommends. However, based on what I have read, I believe the government should appoint another panel to work with industry to reconcile the differences between the panel's report and industry's assessment. The industry and investment analysts are indicating that many of the panel's assumptions and comparisons are invalid, and they failed to take into account all the necessary factors (such as land sale revenues, differences in cost structures, production rates, reserve sizes etc.). If that is the case, implementing recommendations that do not fully consider for all factors would be negligent and irresponsible. If that is not the case, have the royalty review panel publish a response to industry addressing their criticisms. This is a very serious issue...one that may determine whether Alberta remains a fiscally strong province, or whether it becomes a rusting ground for partially constructed bitumen upgraders. Do not rush to make a decision, especially if it may be based on inaccurate information. Take the time to get it right. Industry seems to concur that there is room for royalty rate increases. Please take the time to listen to their arguements. If, after ligitimately considering their arguments, you still come to the conclusion that the royalty review panel was correct in their assessment, then by all means, implement the review panel's recommendations at that time, and you would the full support of myself, and many others. If the panel's recommendations are implemented before an additional comprehensive review has been conducted or before the apparent discrepancies between the panel and industry have been satisfactorly addressed, and the Alberta advantage disappears or declines, your govenment will be blamed, and it will amount to, at the very least, political suicide. Thanks you for the opportunity to comment. Regards, [Information Removed] |
| RRE2098 |
Dear Sir, I am greatly concerned that if the Government of Alberta implements the recommendations of the Royalty Review Panel the cumulative effect on our province will be disastrous. The list of consequences of reduced capital investment in our province by oil and gas companies is long and very significant. Reduced government revenue derived from personal income taxes, capital gains taxes, dividend taxes, corporate income taxes, land sale proceeds, and royalties are all on that list. To believe capital investment will be unaffected is naïve. Though the reduction in revenue to oil and gas companies resulting from the NEP of the early 80’s is difficult to compare to the proposed reductions that would result from implementing the recommendations of the Royalty Review Panel, the disastrous consequences of the NEP should be well remembered. It wasn’t “Big Oil” that suffered, it was the average Albertan that walked away from the house they could no longer afford. Reduced capital investment will negatively affect all Albertans. There is definitely an emotional groundswell occurring that has pitted a large portion of the general public against “Big Oil”. Unarmed with the knowledge of the cumulative consequences of reduced capital spending by oil and gas companies, it easy to see why many Albertan’s want what they believe is their fair share. If these same people realized the overall government take would in fact decline as a result of implementing the Royalty Review Panel recommendations, I’m sure their views would change. Should they become aware that their personal standard of living will be negatively impacted in a similar, if not exactly the same, fashion as happened in Alberta from 1981 to 1985, that groundswell would surely be reversed. As a bit of an aside, I think it's ironic that [Information Removed]. Remember what the “Big Oil Fear Mongers” said after the royalty trust debacle - foreign interests with lower costs of capital will come in and buy up Canadian energy trusts. Please, for the sake of all Albertans, review and quantify the cumulative impact of the changes proposed by the Royalty Review Panel. In particular, a real and honest assessment of the impact of reduced capital spending by oil and gas companies in our province needs to be shared with the people it will affect – the people of Alberta. Yours truly, [Information Removed] |
| RRE2099 |
October 24, 2007 Hon. Mel Knight, Minister of Energy and Hon. Ron Stevens, Deputy Premier, Minister of Justice and Attorney General Legislature Building Edmonton, AB Dear Ministers; Re: Royalty Review Panel- A Comment from “Small Oil” Most of the comments made to date have been from the so called “Big Oil”. We would like to comment from the perspective of “small oil”. [Information Removed]is a junior public Alberta conventional oil and gas production and exploration company. [Information Removed], and most of its shareholders are Albertans. [Information Removed]This number does not include the large number of contractors who work for us from time-to-time as required for drilling, workover or other activities. [Information Removed] has wells in the Western Canadian Sedimentary basin, specifically in Alberta. [Information Removed] has intentionally stayed within Alberta to benefit from the Alberta advantage (a favorable relationship with a stable government, well understood and stable tax regimes, a reasonable infrastructure and knowledgeable workforce). Our Company’s livelihood, as well as those of many Albertans, depends on maximizing recovery from Alberta’s depleting reservoirs. We are concerned that the Royalty Review Panel does not fully understand the oil and gas industry as the report misstates many fundamental truths faced by junior oil companies in Alberta and as a result reaches flawed conclusions that will do permanent damage to the Alberta advantage as follows: Alberta’s Mature Basin The shallow horizons of the Western Canadian Sedimentary Basin are mature. Other than deeper and riskier drilling, there is very little room for further exploration in this basin. Under the current royalty regime, the industry is struggling to maintain production as conventional production is declining by 500 mmcf/d. To ensure that a fair share of the province’s reserves is available for all Albertans, the focus should not be on the “take” but on what will be “given up” in lost reserves and jobs. It is imperative that industry be encouraged to maximize recovery of existing reservoirs and to find other horizons or ways to replace this production. This will require additional investment to maintain production from wells that are becoming increasingly marginal, to increase the amount recoverable from such reservoirs (tertiary recovery) and to find other (deeper) horizons from which to extract production. Royalty Review for the Oil Sands We believe that the people of Alberta are frustrated with stress on the provinces resources resulting from the development of the oil sands. A major concern was that the 1% royalty rate on the oils sands was attracting this investment and was too low at the current oil prices and should be reviewed. Rather than raising the royalty on the oil sands from 1% to 2% which would have achieved an additional $2.1 Billion of royalty revenue while being an insignificant cost increase to an oil sands development, the panel chose to compromise Alberta’s conventional producing reserves and jobs. Is it any wonder that the Panel has a bias towards the oil sands when the experience of the only oil industry representative on the Panel was in oil sands development. It is obvious that the Panels decision will jeopardize many long term jobs in Alberta in the production of conventional reserves for short term jobs in developing infrastructure for the oil sands. Conventional Production Takes the Hit Of the $2.1 billion forecasted extra take in royalties forecast 90% will come from conventional production, while less than 10% will be from the oil sands. When increases to the current royalty regime are analyzed conventional oil will see a 64% jump in royalties and be representing 43% of the $2.1 billion dollar increase. Natural gas royalties will jump 17% and bear 47% of the increase while oil sands will be up only 9% and bear less then 10% of the increase. This puts an unfair burden on conventional oil production and makes it difficult to justify the exploration for and continued recovery of conventional oil reservoirs in the province. Conventional production (and Alberta’s royalty base) is declining and will have $1.9 billion less to re-invest to replace reserves. When the cancellation of the Alberta Royalty Tax Credit program is included, the drop is $2.6 billion less to reinvest. Industry comments that capital spending will be less are not an idle threat but will be an economic necessity for conventional reserves. How can industry replace this capital? Sources of Capital In order to maintain current production, the industry needs capital. The industry obtains these funds from three sources, being cash flow, bank debt and investment. The Panel’s recommendations will negatively affect the capital available from all of these sources. The increased royalties will result in reduced cash flow. This will, in turn, result in higher net debt to cash flow ratios and lower property valuations. As a result, lenders will decrease the amount they are prepared to loan to the industry and especially to juniors with Alberta base production. Investors, already holding back from the industry in Alberta and Canada due to the change in trust taxation and the cancellation of the ARTC will have another reason to invest in other jurisdictions. Fundamentals Not Considered or Understood By the Review Panel The brunt of the increase will be borne by conventional reserves which will provide 90.4% of the $2.1 billion increase while oil sands will only contribute 9.6%. Much of our conventional production comes from low productivity wells which are only marginal under the current royalty regime and would be uneconomic under the proposed royalty regime. The Panel notes that low productivity wells require relief and comments that these wells will pay less royalty under their plan. This comment is false and based on outdated and improperly calculated cost data. If fact, these wells will be charged a higher royalty jeopardizing recovery of the remaining reserves from these reservoirs. The Panel neglected the $700 million increase in the Alberta governments take from the cancellation of the Alberta Royalty Tax Credit program as of January 1st, 2007. This program benefited primarily the junior oil sector which has largely operated in the red in 2007. The Panel seems to believe that increases to posted oil prices automatically leads to better bottom lines. The Panel neglected the fact that much of Alberta’s crude is of a much lower grade than WTI and the differential between the price received for the various grades has been widening. Although Alberta’s reservoirs are primarily producing natural gas, conventional oil will bear 43% of the proposed $2.1 billion increase and see its royalties jump by 64%. In addition, jobs will be unfairly hit as conventional oil has a higher labour force per boe produced than natural gas or a completed oil sands project. Incorporating such a boost in royalties on conventional oil will limit exploration and severely hamper conventional oil’s ability to continue to produce and employ. The Effect of Escalating Royalties The Panel asserts that low volume wells will be protected. However, these assertions were based on outdated cost and improperly estimated data. These low volume wells will in fact pay higher royalties forcing many of them to be shut in as uneconomic. The Panel did not consider that higher commodity prices increase costs proportionally specifically for power and fuel. In addition many of these wells require frequent and costly workovers, facility turnarounds and pipeline upgrades in order to recover the maximum oil in place. Instituting escalating royalties will not be economically viable and wells will be shut in or abandoned before recovering the entire product that should be recovered under a sensible royalty program. In our mature basin reservoirs are smaller and typically produce flush volumes for a very short time and then production drops to less than a third. This short period of high production and higher commodity prices is needed to justify the economics of drilling the well. Deeper targets being explored for today are also smaller reservoirs and are much more costly to drill. The industry has only been able to justify drilling for these reservoirs as new technology reduced costs and risk. Penalizing deeper wells now as recommended by the Panel will result in them being shelved as uneconomical. The oil sands are long term reserves producing at constant rates and consequently royalty indexed to commodity prices does not affect them as severely. Low Productivity Wells The Panel acknowledges that low productivity wells will require relief. However, analysis of the recommendations indicates that royalty rates will increase for all wells. In addition the Panel appears to have not considered the capital expenditures required to maintain and upgrade the necessary facilities so that the low productivity wells can continue to produce. Sometimes these expenditures are totally dependant on higher oil prices to be economic. The operating costs per boe noted in the report are not realistic for low productivity wells which are actually anywhere from 50% to double those noted. The Cost Environment Cost inflation has already increased costs to where the cost assumptions used by the Panel are not realistic. The Panel did not address how future cost increases might affect its’ recommendations. Industry costs increase as commodity prices increase. A review of recent financial statements of junior exploration and production companies shows that most are struggling as a result of the current cost environment. Finding and development costs are higher, operating costs are higher and administrative costs are higher. In spite of higher commodity prices most junior companies are already struggling, many have failed and most are showing either a loss or a very small profit. Much of the production of these companies is only marginally profitable and will be uneconomic under the Panel’s proposal. This will result in increased failures within the junior sector. The Panel does not appear to understand that low productivity wells have higher operating costs per boe than prolific producers. The Panel also appears to have excluded the general and administrative costs associated with producing wells. These costs which are required to supervise, maintain and administer production amount to between $2 and $5 a boe for a junior oil and gas producer. Land Bonuses and Tenure Payments The Panel neglected to include land bonuses and tenure payments received by the Alberta government in its calculation of Alberta’s fair share. Bonuses are paid on the perceived value of the undeveloped PNG rights. These bonuses are received by the government before any drilling or exploratory activity takes place, before one drop, if any, of oil and gas is produced and completely without risk to the government. Many such leases end up being dropped and returned to the province to be sold again! How could this amount be left out of the equation? Other Jurisdictions The Panel went out of its way to compare royalties in other countries with oil and gas basins which have different well productivity, reservoir size, and risk profiles as well as lower labour costs and different tax regimes than Alberta. Why not compare with Saskatchewan and British Columbia which are in the same basin, with the same labour force and the same federal tax regime? While our neighbouring provinces continue to provide incentives to attract investment for conventional oil and gas, it is hard to understand why the Panel would be recommending disincentives to industry in Alberta. Risk Not Adequately Accounted For The Panel gave lip service to risk but did not adequately consider the risk faced every time a well is drilled. A high return on successful wells is needed to pay for the land bonuses and costs of drilling the marginal and unsuccessful wells. The Panel did not consider the effects of income tax and the low depreciation rates allowed for development wells as well as land bonuses and rental payments. The Panel did not adequately reflect upon the risks inherent in implementing their recommendations. In fact, their calculations are based on a status quo level of production. This is patently absurd as there is no doubt that activity levels will be reduced if the Panel’s recommendations are implemented as stated. Industry Benefits to the Province not Considered The Panel’s report was inadequate in its consideration of the following economic benefits currently provided to the province by the industry. - The multiplier effect of industry spending - The property taxes paid regionally for every well and facility in the province - The Corporate taxes, personal taxes and other fees paid by the industry and its employees - The surface leases, access payments and other payments made to land owners (including the province). - The land bonuses and tenure payments - The creation of additional industries rising out of the oil industry - The skilled work force the industry attracts to Alberta - The future of our children and jobs they have training for in the oil and gas industry - How to sustain the current royalty base Related Matters And Risks Not Considered The Panel’s report also did not consider the following - Alberta has a declining conventional resource asset base and the Panel did not consider how to sustain the base opting to receive more now with less for Alberta’s future. With the right incentives industry can maintain that base. - Conventional oil and gas is a depleting asset that requires capital to replace and maintain. - As commodity prices increase, industry can justify the economics on more marginal reservoirs. - Wells drilled in the Western Canadian basin have steep production declines after start up - Return on investment in other parts of the world is already better than Albertans. - Corporations especially larger corporations have the mobility to move their capital spending elsewhere - Fewer jobs in the oil and gas industry as the industry would annually pay an extra $2.1 billion ($1.9 billion for conventional) in royalties while losing $0.7 billion by cancellation of the ARTC - The experienced professionals of the Alberta industry are quite mobile and Alberta may lose not just revenue but also skilled professionals to other jurisdictions. - The careers for many students and recent graduates planning to be employed and trained for positions in the natural gas and petroleum industry will be left in limbo. - The Panel’s recommendations will result in reduced federal taxable income and will likely cause a response from Ottawa. - The capital required merely to maintain production from low productivity wells is increasing. - The gas industry in Alberta competes not only with Saskatchewan and BC but with Canada’s East Coast and increasingly with Liquefied Natural Gas (LNG) which comes from very low cost environments. - The Panel did not consider the differential between light and heavy oil. Nor did it consider the treatment of Natural Gas Liquids. Royalties Not Understood By Many Even within the E&P sector, the royalty regime in Alberta is not well understood. This is not a criticism of the regime. It is complex for a very good reason, and that is that oil and gas extraction is itself complex with different wells exhibiting different economics. The complex system we have has developed over the past 30 years, in part, to incent the maximum recovery possible from a reservoir and sustain a strong royalty base. Given the complexity of the system, the Panel’s task was a daunting one. We would like to suggest that the time period before the Panel was too short for people unfamiliar with the existing royalty regime to understand and appreciate the why of it. We also, are disappointed that the Panel did not include more representation from the oil and gas producers of the province. Such representation would have been invaluable and may have resolved some of the misunderstandings we have addressed in this letter. Summary - The mandate of the Panel was to provide a fair solution. The language of the report and the result would indicate that the Panel took an “us versus them” approach with a pre-determined position that fair meant more. To obtain more they penalized the conventional production which has sensitive economics. It is clear that current cost data or other data that did not support such a position was neglected. - While the main concern from Albertans was that the low royalty on the oil sands was not providing its fair share the Panel hit conventional oil and gas production. This may be because that the only industry representative on the Panel was involved in oil sands development while there was no representation from conventional producers. - While concentrating on a fair share the Panel did not consider sustaining a royalty base which is declining under the current royalty regime which would obtain more for all Albertans into the future. - The Panel had a complete disregard for jobs related to and generated by conventional production throughout Alberta over the last 60 years, the number of people whose jobs presently depend on conventional production or the jobs and careers of our future Albertans - The panel did not consider incentives to maximize recovery from our existing reservoirs to retain ongoing employment in conventional production. - The Panel did not concern itself with providing a sustainable industry base with reasonable returns on investment. Such an industry will grow and lead to a continued and possibly greater take for the province. - Under the current proposal conventional production will bear the brunt of the increases. All conventional wells will pay higher royalties and many will become uneconomical with loss of jobs throughout Alberta. - The Panel did not consider that as a result of changed economics many wells will be shut-in or abandoned reducing the total reserves that will be recovered in Alberta. - The plan as written will result in the government taking a higher percentage of a diminishing pie rather than continued share of a constant pie. We believe that net governmental revenues will drop significantly over the coming years as a result of this plan. - The Panel acknowledges that low productivity wells require relief and yet their recommendations result in higher royalties and unprofitable production. - Finally if the conventional oil and gas reserves in Alberta are, as the Panel believes, so lucrative that these reserves can bear the brunt of the proposed increases, why shouldn’t the Alberta government be investing as a partner in the development of the reserves. - A goal of the Panel was to be open and transparent and yet, it is hard to understand their conclusions or how they were reached given the real world data available. Suggestions - The goal should be to sustain Alberta’s royalty revenues and employment on an asset base that is currently depleting. We would like to suggest that the following be considered: - Incentives that will maintain the size of the pie so that all can benefit. In particular, maintain incentives for reactivations or deep drilling and provide additional incentives for Mannville CBM, shale gas tertiary recovery and recycling of produced water. - Maintain the Alberta advantage by ensuring that we offer a fiscal environment at least as attractive as that of Saskatchewan and BC. - The differentials between heavy and light crude must be considered in designing any royalty regime. - Gas cost allowances should be simplified and should reflect the actual costs incurred by junior producers which significantly affect the economics of low productivity wells. - That the treatment of natural gas liquids be clarified in any royalty review. - That changes when made be open and transparent and justifiable in light of real world data and with reasonable and rational assumptions. - Incentives should be considered to encourage production from low productivity wells so as to maximize the total reserves recovered. - Do not index royalties to commodity prices. As prices increase, so will royalties. The hope for higher prices is one of the reasons that companies continue to drill for gas at all. - Any new royalty should not cause the reduction of production to the detriment of the province. - Any royalty increases should not reduce employment in conventional production. - All fiscal benefits from the oil and gas industry should be considered in calculating a fair share. - The oil sands can bear a greater portion of the fair share of royalties. Maintaining status quo for conventional production while raising oil sands royalty by 1% would achieve the same fair share as the Panel is suggesting. Conclusion “As an Alberta based Junior conventional oil and gas producer we see significant drops in our cash flow which would have been re-invested in Alberta to sustain the royalty base and jobs for all Albertans for now and the future.” We appreciate the opportunity to comment on the royalty review process. We hope that the government will tread carefully, act responsibly and take whatever amount of time is necessary to review all the data available and to seek additional input as appropriate including input from the junior producers. We hope that the final decision made will be rational, reasonable, and promote a better future for the province. We encourage open and transparent debate with results that are supported by data. We personally have had over 90 years experience in all facets of the industry including finance, economics, geology and engineering and we would be happy to participate in any discussions regarding the Royalty Review. Thank you, [Information Removed] Re: Royalty Review-Right Balance We believe that any royalty review decision should create the RIGHT BALANCE. The objective of the Royalty Review should be for the viability and sustainability of Alberta’s resources. Unreasonable and unrealistic decisions can lead to decimating the industry and our leaving marginal reservoirs uneconomic indefinitely. The oil and gas industry has helped create a strong province and they require the encouragement to continue. Alberta needs the “right balance”. To date the Royalty Review Panel has appeared to have a preconceived man |
