Alvarez of CAPP Speaks to the Calgary Chamber on "Our Fair Share."

Today Pierre Alvarez the President of the Canadian Association of Petroleum Producers gave a speech to the Calgary Chamber of Commerce. His comments reflect the same issues as in the Tristone review of “Our Fair Share” but he does is so much more clearly…but not any more convincingly to my mind.

Again it is all about growth at any cost and the attitude seems to be that in the energy sector right now any cost can be absorbed - at $80 oil. There are concerns expressed about conventional oil and gas and again increased costs are stated to be the reasons Albertans can’t get a competitive rent for its resources.

These costs are not seen as something management has to make hard decisions about in the context of the marketplace doing its job. The attitude seems to be we don’t need to adjust our activity because of high costs. They are merely to be accommodated in the project and, in the case of oil sands, passed on to the citizens of Alberta under the current royalty regime.

If our conventional gas industry is uneconomic and uncompetitive because our costs are too high for the current market price of the commodity…adjustments should have to be made by management too. But again that is just the marketplace at work and doing its job. Why does nat mean all Albertans have to forego a competitive market rent for its non-renewable resource?

A unity trust operation is saying that because of the “uncertainty” of the royalty regime in Alberta it is moving its exploration activity into Saskatchewan. Is that a bad thing? Saskatchewan as a province needs to be a sustainable and reliable “have” province and that investment in its energy sector will help them get there.

You can watch the video or read the speech on the CAPP website. While I disagree with Pierre on many of his conclusions, consequences and he takes a few “shots” at the Panel, he is reflective and considered. He is one of the cooler heads from the industry. We all need that right now if we are to get this right.

What Alberta Needs Now is Leadership - Not An Election

I noticed side by side news stories in the Edmonton Sun today, one by the Auditor General saying the Klein government had let $6B of potential energy royalties slip through their fingers. The next story the Auditor General said the Alberta pubic infrastructure deficit was estimated $6B and growing.

Coincidence? Sure! But ironic nonetheless. Klein said he had no plan…so this is not a surprise is it? Had the previous Minister’s of Energy been on the ball we would have the money to deal with the infrastructure deficit.

We have a social deficit now too because our social services sector can’t keep staff because they can’t keep up with wages in the energy sector.

Premier Stelmach, I hear more rumblings about a potential November 2007 election. That would be a mistake as so many levels. Take the time to get some planning done and some changes made before we rush to the polls.

Why would we go into an election now other than fear of the trends in the current polls? Not a good enough reason. We need leadership and we have already had the campaign to choose you in that role last December. It is time to lead - not run! And besides, polls don’t matter, campaigns do. The consequences of an ill-conceived and poorly executed election result can last for a long time in our Alberta.

Tristone's Rebuttal of "Our Fair Share" is Unpersuasive.

The Tristone rebuttal of the “Our Fair Share” Royalty Review is not all that interesting or persuasive. It at least provides some serious analysis instead the rhetoric of others who have denounced the dire consequences of sharing fairly with Albertans.

They mostly say high costs and low prices for conventional and deep well gas means activity will decline drastically in the Western Sedimentary Basin if the "Our Fair Share" model is adopted and royalties go up for high producing profitable wells. They don’t for a minute suggest that idle contractors might reduce their prices to adapt to the marketplace realities. Tristone just seems to suggest the rest of us have to take a haircut on our economic rents instead.

They also say they make different assumptions and use different methodologies than the review panel did and surprise; they come up with difference conclusions. So what! The assumption behind the Tristone analysis seems to be that we have to keep the overheated economy and growth at all costs as a central goal. They essentially want maintain the status quo or to increase subsidies to aspects of the industry. That simply means the “benefits” are not to be shared fairly amongst all Albertans and the energy industry can continue to enjoy record profits on the backs of all other Albertans?

I love the Tristone quote at page 14 that says the Royalty Review Report “included inaccuracies, incorrect assumptions and leaps in logic that makes the data that drives the Panel’s conclusions highly suspect and requiring independent assessment.”

Fair enough, but the Auditor General Report comes to the same conclusions as the “Our Fair Share” Report. The Auditor General is a pretty independent assessor I’d say.

Tristone goes further to say “Without meaningful and accurate data, debate on royalty reform is not fruitful.” The AG and the Review Panel depended on the data provided by industry to the EUB and the Department of Energy. Please tell Albertans that the data supplied by industry is not “inaccurate.” It is the industry data after all.

Costs are high gas prices are low these days but times of late have been extraordinarily good. Perhaps some aspects of the energy industry have priced themselves out of the market and that is why they are not drilling. Maybe they need to sharpen their own pencils instead of asking All Albertans to forego a more than competitive rent.

Albertans are continuing to face unsustainable levels of economic activity. We need a breather and some time to catch up and to clean up the accountability of our government on energy revenue collections and calculations. If the conventional industry wants to keep busy in the meantime maybe they could start cleaning up the orphan well problems they have created and ignored. Maybe they need to spend some time to reclaim some of the unused roads, seismic lines and well sites they have ignored.

The tone I get from the Tristone analysis is it is all about growth at any cost and for protection of the conventional and deep well gas business in particular. Responsible and sustainable integrated growth is not in their consciousness based on what I read in this report. These are major concerns of ordinary Albertan however. And perhaps that is why this industry is currently having a difficult time earning respect for their positions on royalties.

Why Are There So Many Anonymous Comments Blogs?

I have just rejected two comments that had just forwarded MSM stories on the Royalty Review. They provided no commentary, analysis or opinions of the person posting the comment. I see no value in those non-comments.

I am interested in what individual Albertans as citizens have to say especially in the comments to my posts. Links to news stories are great in comments. To merely expect the entire story to be accepted in total as a “comment” without more form the person sending it - is not going to happen.

I would like to have some reader feedback on anonymous comments too. Some Bloggers moderate comments and disallow anonymous comments. I moderate comments mostly for relevance (like my point above) and legal issues of libel. I have allowed anonymous comments.

I do wonder however why there are so many anonymous comments especially in a free and democratic society like Canada. What are citizens afraid of? Why are they hiding who they are when they speak out on stuff that is obviously important to them? So here is my question. Should I insist that comments on the Blog NOT BE ANONYMOUS?

Bloggers who can be identified as individuals and those who post comments using real names are so much more credible and provide more contexts to their remarks. At least I think so.

Let me know what you think. Should I continue to accept Anonymous Comments?

Tristone Chair Calls Royalty Review Panel "Uneducated"

It is interesting to see the newspaper report in the Globe and Mail today where the Chair of Tristone Capital Inc. is apparently calling the Premier’s hand picked Royalty Review panel members “uneducated.” They panel is reported to include two PhD Economics form Alberta Universities, a professional industry based economist, a retired oil industry senior executive, a technology entrepreneur with a law degree from Columbia and a Chair who recently retired as President and CEO of the largest single line pulp mill in the world with a forest management area the size of New Brunswick…”hardly uneducated.”

Again the angst and aggression of an industry sector that has not been subject to sufficient scrutiny in the past is now showing in this name-calling reaction. This name-calling is not isolated – I am apparently a “Commie” according to one anonymous commenter.

I am reading the Tristone review with interest and will post my reaction to it soon. I trust it will have more substance than the media reported comments on the Tristone Chairman's opinion about the capabilities of the “Our Fair Share” Royalty Review Panel.