Shiek Stelmach to Oil Industry: Can I Have Some More?

[Babbler]

Alberta increases royalties charged to energy companies

Energy companies will be charged 20 per cent more for the right to develop Alberta's oil and gas resources, Premier Ed Stelmach revealed Thursday, a move immediately slammed by the industry.

Introducing what he called "a framework for a new century," Stelmach said oil and gas companies will be paying $1.4 billion more a year in royalties starting in 2009.

Alberta Premier Ed Stelmach announced Thursday that starting in 2009, oil and gas companies will pay $1.4 billion more a year in royalties.Alberta Premier Ed Stelmach announced Thursday that starting in 2009, oil and gas companies will pay $1.4 billion more a year in royalties.
(Jeff McIntosh/Canadian Press)

That figure is 25 per cent less than the $2 billion recommended by a government-appointed panel that reviewed the royalty formula, which has not changed since 1992.

Stelmach rejected about half of the panel's recommendations, including a new tax on oilsands production.

However, royalties will increase for conventional oil, natural gas and oilsands projects, with Stelmach promising a simpler framework that reflects fluctuations in market prices.

"We recognize energy is a volatile industry. There is risk and there is reward. So when oil prices go up, the royalty goes up," Stelmach said in a news conference in Calgary.
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The panel's report, released five weeks ago, concluded Albertans were not receiving their fair share of the province's non-renewable resources and called for an increase of $2 billion in royalties.

The report rocked the energy industry, which launched an aggressive campaign against any royalty changes. Oil and gas companies warned an increase will force them to slash jobs and billions in investment in booming Alberta.

Stelmach said existing oilsands projects will not be grandfathered. The province will negotiate a transition to the new rates with companies, including Syncrude and Suncor, who have agreements that expire in 2016.

"We need a bigger pie. We can't just carve up the existing one," Stelmach told reporters. "We are confident we made the right decision for today and for Albertans' future."

Despite Stelmach's rejection of some of the panel's recommendations, the president of the Canadian Association of Petroleum Producers expressed shock and disappointment over the higher royalties announced by the premier.
Royalties considered defining issue for Stelmach

Pierre Alvarez said it appears the province didn't take into account the soaring costs the industry is facing when it decided to increase royalties.

He called the move "a very, very serious day in town and there is a lot of concern about how this announcement's going to unfold as we go forward."

But the energy industry leader expressed some relief that the royalty changes won't take effect for 14 months.

A group that represents small energy producers is also expressing disappointment over the government's decision to hike royalties by roughly $1.4 billion starting in 2009.

Gary Leach, executive-director of the Small Explorers and Producers Association of Canada, said the changes will hurt production and investment in the energy sector.

Political observers believe the royalty decision is a defining issue for the premier, who has had the top job for just 10 months and is rumoured to be gearing up for a fall election.
With files from the Canadian Press

Comment. Will this reverse the PC decline at the polls, and with the oil companies follow through their threats?

 

[Lotus49]

Ah, the black stuff just makes everybody become greedy. It's irresistible.

 

[Esckey]

No idea about the polls, but the oil companies will do what ever it takes to keep making their money, even though an additonal $5 billion wouldn't put any of them out of business, let alone $1.4 billion.


I really wish we(Alberta) had done what Alaska and Norway did. From what I've gathered all three of us have a "rainy day fund" that some oil revenues get put into, but both Alaska and Norway have more in theirs then we do, even though we make more money and have had it set up longer(I believe) Plus we don't get paid out like Alaskians do.

 

[Desmond Hawkins]

MLA Greg Melchin buried a report YEARS ago that recommended a rise in royalties. Sure would be bad if the public found out, hey? Then there was Klein's comment that he doesn't give a "tinker's damn" about whether royalties are fair for the people of Alberta. Alberta lost out on, a conservatively estimated, 6 billion dollars. This isn't "hindsight is 20/20"; these guys knew back then. There is no wonder Stelmach is under so much public pressure. Fool me once, shame on you... fool me 19 times, shame on.... um.... WE WON'T BE FOOLED! I just find it amazing how these people haven't been held to task for their obvious corruption. I bet if everything were shown the light of day, the corruption would be an order of magnitude higher than anything the federal Liberals ever did.

"Sobieski, how does this relate to royalties today?" It relates to my skepticism about anything the energy companies say. Anyone know how much profit EnCana made last year? 6.4 billion dollars.

 

[Valka D'Ur]

I really wish we(Alberta) had done what Alaska and Norway did. From what I've gathered all three of us have a "rainy day fund" that some oil revenues get put into, but both Alaska and Norway have more in theirs then we do, even though we make more money and have had it set up longer(I believe) Plus we don't get paid out like Alaskians do.

I can't stand Stelmach. I hated Klein, and kept hoping he'd get kidnapped by aliens, or something.

Any Albertans here remember "Ralphbucks?" Some people wrote in to the papers saying how they didn't need the money, and those on welfare would only blow it on alcohol, or "beer and popcorn."

Well, I'm not one of the rich Albertans. I spent my Ralphbucks on 3 months' worth of property taxes and a couple of months' of phone bills. I think I might have also purchased a paperback novel.

 

[El_Machinae]

El_Mac to Alberta:

Make hay when the sun is shining.