Gonna get a lot of press this one
September 19, 2007
Stelmach ready for oil wrestle
CALGARY — Alberta Premier Ed Stelmach says he “won’t be intimidated” by the oilpatch as his government decides how to handle a report urging the province to grab $2 billion more annually from oil and gas companies.
Emerging from a government caucus meeting on the “challenging” royalty review report Wednesday, Stelmach said he expects it to provoke strong views from the energy industry and all Albertans.
A final decision on the royalty regime will be announced within weeks. To see the report, click here.
“The report’s significance is huge. It’s huge for Albertans, for the future of this province and really for the country of Canada,” Stelmach said.
“We will be listening to all Albertans, but I won’t be intimidated by any positions taken. We’re going to review it, calculate it carefully and see what the implications are because this is really setting a policy for the next 20 or 30 years.”
The royalty review panel’s report, called “Our Fair Share,” said Albertans have been shortchanged by the oilpatch for quite some time.
And it said oilsands projects should pay roughly 36 per cent — with no retroactivity for older, existing facilities. But it said a royalty holiday would continue for new projects to encourage companies to undertake the multibillion dollar commitment required to produce oil in the northern Alberta oilsands.
High-production oil and natural gas wells should also pay higher royalties, although a large number of low-production wells would pay less.
The report also raised questions about how the Alberta government regulates the energy industry, noting that the Department of Energy shouldn’t be responsible for maximizing activity in the oilpatch and ensuring Albertans get their fair share from royalty programs.
Former premier Ralph Klein, who refused to increase Alberta’s take from the oilpatch over the past half-decade as oil and gas prices soared to unprecedented levels, lashed out at the panel Wednesday.
“My province has a fair, clear and comprehensive regulatory regime where the rules are the same for everyone — and those rules don’t change on a whim,” Klein said during a speech to a petrochemical convention.
“Predictability and stability are what separate Alberta from places like Venezuela, where the government holds foreign companies hostage by arbitrarily imposing massive hikes in royalties and taxes.”
Klein refused comment after his speech.
Alberta businessman Bill Hunter, who chaired the royalty review panel, said Wednesday that great efforts were taken to make sure Alberta remains the best “investment opportunity in this world for oil and gas.”
And Hunter disregarded initial oilpatch reaction that said the report was too punitive and would cripple the sector.
“We used international analysis that say our neighbours get much more than we do. We’re in the basement in the rating of our government take,” he said.
“I think the point of our recommendations is that as Albertans, we own the resource and there’s an expectation that we should get 100 per cent of the rent. And it’s up to industry to convince us why we would take anything less than 100 per cent.”
Stelmach said Alberta’s response to the report needs to balance the needs of Albertans as owners of the resource against the energy industry’s need for a competitive fiscal regime in an era of swirling cost pressures.
On the Toronto stock market Wednesday, shares in most of the major oilsands players slid by several per cent.
Energy analyst Andrew Potter said in a research note that he’d expected a “slight negative reaction” in the markets, although most of the news was likely anticipated and already discounted in the share prices.
