Royalty Review "long overdue"

Karlin

Council Member
Jun 27, 2004
1,275
2
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The oil and gas corporations operating in Alberta have been getting windfall profits out of the publicly owned resources there, due to the higher oil and gas market prices.

The energy department workers had been screaming for higher royalties for several years, since about 2003, but the Energy Minister shut them out. The Premier and cabinet members were keeping the advice from being heard.

Royalty payments were re-arranged by the Klein government in the early years of oilsands development, all those years ago, and heavily favoured the industry over Albertans Now that he is gone, the industry has maybe lost some of that control over government. The likelyhood of industry support for Klein's election campaigns [and so on] cannot be ignored, and now that we see that the higher level ministers are keeping the energy department workers advice from being heard, perhaps some of that payola is still going on.

Alberta government hid royalty-hike advice: auditor
http://tinyurl.com/2tv9ag
[2 pages]

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The idea of allowing corporations to get profits from publically owned resources is that they take on a risk of their investment dollars.

However, with the high demand for energy, and the fact that the royalties are structured in such a way to almost gaurantee that they get their money back, it seems a bit too much in favour of the corporate side:
Projects in the oilsands pay a one per cent royalty on gross revenue until their initial investment is paid back, then that number jumps to 25 per cent of profit.
The government received more than $14 billion in oil and gas royalties in the last fiscal year ; The increases recommended will bring in about another $2Billion {now, if only we knew how much profit the corporations were getting from the Alerta operations - a figure that is not being offered up by either side!!

Review reveals Albertans do not receive their fair share from development:

http://www.straightgoods.ca/ViewFeature7.cfm?REF=487





More links -
Review panel member finds Third-World accounting practices:
http://tinyurl.com/2lgnr8



Full Report from Review Panel -

http://www.albertaroyaltyreview.ca/



Corporate View -
"Corporations threaten to pull out of Alberta ; says that Royalties will FALL if an increase is brought in"
http://tinyurl.com/26b4dt
 

Tonington

Hall of Fame Member
Oct 27, 2006
15,441
150
63
Industry bluffing they'll go elsewhere if royalties increase...go where, Venezuela:lol:
 

Toro

Senate Member
Current projects aren't effected. In fact, mature wells will see a small decrease in royalty payments. However, if the royalties are raised beyond where it is uneconomical to invest in marginal fields, then energy companies will deploy their excess capital into share buybacks rather than direct investment.

Roughly half of the direct value of the oil deposits in Alberta accrues to the government, the other half to investors.



That doesn't include all the revenue that is generated from spin-off jobs arising from the oil industry.
 

Canucklehead

Moderator
Apr 6, 2005
797
11
18
Alberta should increase the royalties, no question about it. Encana can bluster about profits and royalty payments all they want but the oil belongs to Alberta, not the Petro companies.

25 years ago noone in their right mind would even consider the tar sands could be profitable, then oil became more scarce and voila, Alberta has a boom. If Encana & friends want to leave now then fine but as oil becomes more scarce, they are going to end up paying a lot more when they come back begging to get at what's left of Alberta's natural resources. Alberta has and will always have the upper hand over the Petro companies... it's just a shame the government doesn't understand this.
 

Kreskin

Doctor of Thinkology
Feb 23, 2006
21,155
149
63
Oil Royalties in Alberta

http://www.theglobeandmail.com/servlet/story/LAC.20071006.ROILPATCH06/TPStory/Business

Do you have an opinion on the oil royalty debate in Alberta? The companies are threatening to do much less business there if the recent proposal of paying higher royalties comes into effect. Is the province getting a little greedy? Does the province already reap enough the benefits from the oil industry? Or should the province demand more from the oil companies, even at the risk of slowing the economy?
 

Lester

Council Member
Sep 28, 2007
1,062
12
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Ardrossan, Alberta
Actually 25 % of the profit isn't that great a deal I would rather see a percentage of the gross as profits can be manipulated come tax time.
 

Kreskin

Doctor of Thinkology
Feb 23, 2006
21,155
149
63
I saw one of the banks today said Albertans can either choose a bigger portion of a smaller pie or a reasonable amount of a growing pie, recommending the growing version. I think wanting higher royalties is a mistake. The province has no debt, incredible growth etc. Albertans benefit from oil comapnies investing capital. Seems crazy to want more, when more may end up being less.
 

Lester

Council Member
Sep 28, 2007
1,062
12
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63
Ardrossan, Alberta
Piss on the banks, one has to look to the future, sooner or later there will be no conventional deposits left the, oilsands will be a key source to providing oil to the U.S., China, India etc. what ever companies pull out, there will another to take it's place. so we decide who gets a piece of pie or not(itsmygoddampie) oilsands are not hit and miss they have been surveyed extensively we know where it is and how much there is, how much? two to three trillion barrels is how much. this is an oil company gold rush and there staking claims like crazy- another thing these oil companies are buiding these plants based on a 55.00 barrel, it's now 88.00 bbl do you really think they are going to stop building them?
 

Lester

Council Member
Sep 28, 2007
1,062
12
38
63
Ardrossan, Alberta
look at it this way then, all that oil contaminates the environment- were just cleaning it up by stripmining the conaminated soil, cleaning it, and returning it toxin free back to the ground, just so happens that the byproduct is oil and we can make enough money to pay for the cleanup (tadaaa)
 

mrmom2

Senate Member
Mar 8, 2005
5,380
6
38
Kamloops BC
I can tell you guys a couple of my rig pig buds are layed off already because of this royalty issue .the rigs are on standbye
 

s243a

Council Member
Mar 9, 2007
1,352
15
38
Calgary
There is at least a 100 year supply of oil in Alberta. There is probably much more. I'm sure by that time we will have figured out fusion power.
 

Lester

Council Member
Sep 28, 2007
1,062
12
38
63
Ardrossan, Alberta
back in the eighties syncrude was still profitable @ 14.00 a bbl it's now @ 88.00 and record highs for our dollar, every company will cry the sky is falling when something comes along that will tke a chunk of their profits, they are still makin big money- I have a funny feeling they will rework the numbers when the smoke clears
 

s243a

Council Member
Mar 9, 2007
1,352
15
38
Calgary
Long before the Alberta deposites are exhausted the process water will run out.

If the issue is about water use then require that the companies recycle a greater amount of water. That would create jobs and is far better then taxing the industry out of existence.
 

Karlin

Council Member
Jun 27, 2004
1,275
2
38
the upside of less investment in oil

Besides giving Albertans a more fair share of 'the spoils of the oils' there, a royalty increase is protested because it might cause a reduction of oilpatch investments, but ironically, that might also be a BENEFIT to Albertans.

The upside of less investments in the Alberta oilpatch:

- less pollution and greenhouse gasses, for which a penalty [carbon tax] may have to be paid anyhow

- saving some resources for the future [boomers have grandkids now]

- using natural gas wisely - tar sands projects are using ONE-THIRD of Alberta's natural gas production to fuel the processes of turning bitumen into crude oil [turning a clean fuel into a dirty one]

- forcing the needed economic diversification for Alberta where other industries and jobs are created so they are not so dependant on the hydrocarbon economy. As long as "easy money" and huge profits can be had in the oilpatch, this change will not occur.

....and I bet there are some more examples that you'all can add?
Don't make Me do all the thinking here!!