Monday, June 08, 2009

Lougheed Confirms Albertans Own the Oilsands But Says We Better Start Acting Like Owners.

With all the turmoil going on in the world - and in my province of Alberta in particular, to read the top Editorial from this morning's Globe and Mail was a gift of clarity and common sense.

Former Alberta Premier, Peter Lougheed cuts through the fog and frustration and states the fundamental truth for Albertans. That is that the citizens of Alberta are owners of the oilsands - not the energy industry. The energy industry companies who are developing the resource are welcome as tenants but only as tenants. This issue of Albertans needing to act like owners of the oilsands was the key message coming from the Royalty Review Panel Report last year as well.

The old-boys back-channel industry model of dealing with and influencing government is over and that will be confirmed this November when the Lobbyist Act finally get Proclaimed into law. The government has to rethink its mindset around oilsands too. It has pandered and capitulated to the industry demands on royalties and taxes and subsidies for generations but as the proxy holders for citizens, the government has to remember whose best interests they are supposed represent.

Shareholder interests can no long trump the interests of Albertans. If certain energy companies wants to leave, the resource is not going away. Others will come to replace them. We know there is lots of international interest to invest in Alberta's oilsands. the big selling features are that we have a know and enormous proven oilsands resource. We have a stable government with the rule of law, a strong investment climate and reasonable accountability controls and no corruption. We have the best proximity of any oil supplier to the largest energy market on the planet and an international treaty with that customer to provide some certainty in the marketplace.

The energy industry is in turmoil too, given the recession, restricted access to capital, volatile commodity prices and issues around cost control and royalties. I haven't even begun to talk about the new environmental standards they will face in the immediate future as we get into a post-Kyoto world soon to be emerging out of the Copenhagen Climate Change meetings come December.

Lougheed says Albertans, as owners, need to insist on a more "orderly development" as we come out of this recession. That means one project at a time to reduce costs, contain inflation and allow for adaptations for environmental and social impacts of oilsands development. Lougheed also says oilsands upgrading has to happen in Alberta, something we at Cambridge Strategies have been advocating as well.

Lougheed says Albertans also need to expand our oilsands markets into Asia and not just depend on the US market. This is another issue we at Cambridge Strategies have been pushing and actively working on. You can review the Cambridge Strategies work in our Economic Outlook 2009. We also have called for the GOA to invest in a merchantile upgrader in our recent Budget Analysis.

Lougheed laments that previous calls for a more sustainable and focused development of the oilsands "...have mostly fallen on deaf ears." The Editorial goes further to the heart of the matter stating: "There has been an unwillingness of the Alberta government, and not enough pressure from the public, to exercise greater restraint."

The old-boys of the energy sector have effectively convinced themselves that the new Royalty Regime is the NEP of the 21st century. They have vilified the Alberta government in the process. Both the industry and the government seems to have forgotten who really call the shots here, the Alberta citizenry as the owners of the resource. The attitude in the pubic is that both industry and government have forgotten their place and have lost their way in the need to create a responsible, reasonable and sustainable oilsands development approach.

The close of the Editorial is what was the most encouraging comment for a Monday morning. It goes to the governance of Alberta and to the roles and responsiblity of Albertans as owners of our natrual resources. Will Albertans take back the power of politicla governance and exercie their proper proprietray ownership obligations in the oilsands? Lougheed is hoepful and so am I.