Neil Waugh of the Edmonton Sun and I are agreeing again. This time we agree on the very inappropriate and bullying intimidation tactics of Encana on the “Out Fair Share” Royalty Review Report. Blaming a proposed 8% increase in royalties from 25% to 33% and based on net profits only. That means Encana shares with Albertans as owners of the resource after ALL capital and operating cost are deducted. And the 8% increase is being touted by Encana as the stated reason to pull back on $1B of capital investment in Alberta! That is ludicrous. See my post on Saturday the 29th to get a sense of just how well Encana is doing.
Stelmach said he would not be intimidated by Big Oil. Encana should have listened.
This is twice Neil and I are on the same page in less than a month this has happened.
I must check tonight to see if it is a blue moon. Something strange is happening…like maybe power is shifting back to the citizens of Alberta. Both Neil and I obviously see that as a good thing. I am sure we are not alone. It is our oil and we deserve a fair share.
The Stelmach government is our trustee to get this done for all Albertans now, and in the future.
Its an empty threat anyway.
ReplyDeleteEnCana has been on tight financial reigns since the massive land purchase back in 2005. As well, natural gas hasn't been trading at a very profitable margin (< $7/GJ) as of late and reserves aren't diminishing out East; they would have likely reduced activity anyway.
The fact that they tried to use these factors as a bully tactic is childish. If Stelmach buys into it, it just means nobody in his camp knows anything about the industry.
I see the Canadian Association of Geophysical Contractors is singing from the same lobbying song sheet as Encana. I will do a separate post on that.
ReplyDeleteDoes the energy business think they only get to take the upside advntages of the marketplace and then the rest of us have to prop them up on the downside? I don’t think so – they are the managers and architects of their own situations.
Royalties are long term rents Albertans – not government based on NON-RENEWABLE RESOURCE. This is the one and only time Alberta can get these rents. Once they are out of the ground it is game over for royalties.
The business of government is to get the best optimal royalty deal for ALL Albertans. The government has not been doing its job there...for some time now if you read the past years of Auditor General Reports.
I'll bet, the one coming out tomorrow will say the same thing..yet again. Maybe the "Our Fair Share Rouyalty Report adn new leadership in the Premier's Office will finally get some serious changes on transparancy and accountability for our royalty and tax revenues from the energy sector.
25 - 33 is irrelevant to the Encana announcement, they didn't address their oil sands investments at this stage. And take it how you will, but they are required to be very public with how any policy changes might affect shareholder return. And i'm guessing that quite a few Albertans and pension plans are dependent on that stock price.
ReplyDeleteAnd its fine to say companies are managers and architects but it is an industry that is affected deeply by international events. China and India expansion is forcing up the price of steel. Hurricane Katrina hits and the price of gas skyrockets. If we find a way to share the upside when those types of events occur, I think we have the solution to the issue. Killing the one industry that feeds us all is not going to help Albertans maintain their future.
I do hope that there is more transparency and accountability in the system but this report will have little to do with it. They have done Albertans a disservice by pretending to have studied the industry when they made no effort to really get to know it all.
We are nothing close to killing this industry. The "Our Fair Share" findings - using GOA department of Energy and Alberta Finance data provided to them by the energy industry sector companies and the EUB. It shows we will be still in the top half competatively of all energy producing countries if all of the "Our Fair Share" recommendations are accepted.
ReplyDeleteAnd we don't have the corruption, political and social problems of those other juridictions either. That is a competative advantage for Alberta that needs to be accounted for.
Judging by the comments on this blog it seems to me taht if they are representative tht this Alberta energy industry has become so insular and so self-confirming it is quite scary.
The fact that every industry based comment on the Blog is ANONYMOUS makes me wonder about what is going on inside the sector too.
If this blog comment content is representative of the entire industry - one thing is very clear. They don't GET IT!
Industry has said for a week now the Review Panel numbers are wrong. BUT they have yet to provide any proof or data to support those allegations.
WHAT GIVES???