Government in Alberta has driven oil and gas investment fears to a new low

[Sundancefisher]

http://www.marketwired.com/press-rel...ng-2180883.htm

Fraser Institute News Release: Alberta increasingly unattractive for oil and gas investment, according to annual global survey


CALGARY, AB--(Marketwired - December 06, 2016) - Alberta continues to look less attractive for investment in the eyes of oil and gas companies, while neighbouring Saskatchewan keeps looking better, finds the annual global survey of petroleum-sector executives released today by the Fraser Institute, an independent, non-partisan, Canadian public policy think-tank.

"The Alberta government has introduced policies that are confusing and possibly costly, creating uncertainty for the oil and gas industry, which can invest elsewhere," said Kenneth Green, senior director of the Fraser Institute's Centre for Natural Resources and co-author of the 2016 Global Petroleum Survey.

This year Alberta dropped 18 spots to 43rd out of 96 jurisdictions worldwide on the Policy Perception Index, a comprehensive measure of the extent to which policy deters oil and gas investment.

Saskatchewan -- which ranked seventh last year -- this year ranks as the fourth most attractive jurisdiction in the world to invest in petroleum exploration and production, behind Oklahoma, Texas and Kansas.

In 2014, Alberta ranked in the top 15, but tumbled last year to 25th before continuing its downward slide to 43rd this year (lower than British Columbia, which maintained its 39th spot overall).

Notably, the survey was completed before the Canadian government last week approved two pipeline expansions (Kinder Morgan's Trans Mountain, Enbridge's Line 3). And with President-elect Donald Trump supportive of Keystone XL, Alberta's score could improve in future years.

Still, Alberta earned low marks for regulatory duplication and inconsistencies, high taxation, and uncertain environmental regulations.

Saskatchewan earned high marks from petroleum executives in the areas of fiscal terms, the cost of regulatory compliance, and clear environmental regulations.

In a separate ranking, which only includes jurisdictions with the world's largest reserves, Alberta has also dropped from 2nd in 2014 to 4th this year behind Texas, the United Arab Emirates and Qatar.

"Increasingly Alberta is competing with jurisdictions that are more attractive for investment from the oil and gas sector -- a worrying trend that will likely negatively impact Canadian jobs and government revenue," said Taylor Jackson, policy analyst at the Fraser Institute and co-author of the study.

Canadian jurisdiction rankings from the Global Petroleum Survey:


Province 2016 Rank 2015 Rank
Saskatchewan 1 1
Manitoba 2 2
Newfoundland and Labrador 3 3
British Columbia 4 7
Alberta 5 4
Nova Scotia 6 9
Northwest Territories 7 8
Yukon 8 5
New Brunswick 9 10
Quebec 10 11*

*NOTE: Ontario was included in the 2015 ranking, but did not generate sufficient survey responses in 2016.

MEDIA CONTACT:

Dr. Kenneth P. Green
Senior Director, Natural Resource Studies
Fraser Institute

For interviews with Dr. Green or for more information, please contact:
Bryn Weese
Media Relations Specialist, Fraser Institute
Tel: (604) 688-0221 Ext. 589
E-mail: bryn.weese@fraserinstitute.org


The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of think-tanks in 87 countries. Its mission is to improve the quality of life for Canadians, their families and future generations by studying, measuring and broadly communicating the effects of government policies, entrepreneurship and choice on their well-being. To protect the Institute's independence, it does not accept grants from governments or contracts for research. Visit www.fraserinstitute.org


Governments need to think strongly about the importance of being competitive for resource investment.

[Map Maker]

$500 million in royalty credits for new petrochemical projects in Alberta.
I think thats a great move. PC have done this as well, but Nova chemicals always got the credits. The government gave it to two different companies which will bring more competition to the space.

The Canadian oil-producing province of Alberta will offer $500-million ($377.84-million) in royalty credits to Pembina Pipeline Corp and Inter Pipeline Ltd for their petrochemical projects, the government said on Monday, as it seeks to diversify its ailing economy.

The provincial government said the companies were the approved applicants of its Petrochemicals Diversification Program, which supports construction of facilities that use propane or methane, components of natural gas, as feedstock to produce materials for products including plastics, detergents and textiles.

Although petrochemical facilities do not pay royalties, the credits they earn can be traded or sold to oil or natural gas producers, who in turn can use them to reduce royalty payments to the government.


Pembina’s project is a joint venture with Kuwait’s Petrochemical Industries Company and has been approved to receive up to $300-million in royalty credits to build a propylene-polypropylene facility, Minister for Economic Development and Trade Deron Bilous told reporters in the province’s capital of Edmonton.

The project by Inter Pipeline, which would process propane into propylene, has been approved to receive up to $200-million in royalty credits, he said.

“Once these two projects are up and running, they will support more than 1,400 direct and indirect fulltime jobs,” Bilous said, adding the facilities will be operational in 2021.

There are no plans to extend the program, according to a government statement.

Alberta is the largest source of U.S. oil imports and its previously booming economy has been hard hit by the global crude price slump, with companies slashing billions of dollars in capital spending and laying off tens of thousands of workers.

[ETOWNCANUCK]

Is it not possible for the NDP to realize that this is a problem?

I get the need to want to stick to their plan,
But at what point is it better to save face, realize that what they are doing is neither economically beneficial, nor going to get them a second term ,and expecting taxpayers to carry the brunt of the load is not good.

Solid investment is the way to go.

How do you not see the failure in other parts of the country albeit the world , when it comes to these strategies?

What can one possibly get out of forcing their agenda if it yields poor results.

I mean it's not like it's just the Opposition disagreeing, its everybody.

Is it really that possible to have one's head so far shoved up into dark places that they can't see?

What can it take if anything for these people to change their ways.

Even a business will bend to public will, if it afffects the bottom line enough.

[petew]

http://www.alberta.ca/release.cfm?xI...C3B3BEDFB06497

[Newview01]

Originally Posted by ETOWNCANUCK

Is it not possible for the NDP to realize that this is a problem?

I get the need to want to stick to their plan,
But at what point is it better to save face, realize that what they are doing is neither economically beneficial, nor going to get them a second term ,and expecting taxpayers to carry the brunt of the load is not good.

Solid investment is the way to go.

How do you not see the failure in other parts of the country albeit the world , when it comes to these strategies?

What can one possibly get out of forcing their agenda if it yields poor results.

I mean it's not like it's just the Opposition disagreeing, its everybody.

Is it really that possible to have one's head so far shoved up into dark places that they can't see?

What can it take if anything for these people to change their ways.

Even a business will bend to public will, if it afffects the bottom line enough.

In the 12-16 months prior to the next election they will change their tune and become as business friendly as possible in the hopes of being elected again. If elected again they will continue their agenda of driving Alberta into the dirt.

[Scott N]

At least our overlords I mean NDP Government are single handily saving the planet from global warming I mean climate change.

[Big Grey Wolf]

Notley is taking a page from Peter Lougheed management of the province. He was the last visionary Alberta premier. Petrochemical plants are major job multipliers. Better to add value hear in Alberta and not export jobs with raw bitumen. No value adding no significant Alberta jobs.

[elkhunter11]

The only question is whether the NDP can completely destroy the oil industry in Alberta before the next election.

[hal53]

Originally Posted by Big Grey Wolf

Notley is taking a page from Peter Lougheed management of the province. He was the last visionary Alberta premier. Petrochemical plants are major job multipliers. Better to add value hear in Alberta and not export jobs with raw bitumen. No value adding no significant Alberta jobs.

So...in your perfect world..how are you going to move the refined product for export???

[KinAlberta]

Originally Posted by Big Grey Wolf

Notley is taking a page from Peter Lougheed management of the province. He was the last visionary Alberta premier. Petrochemical plants are major job multipliers. Better to add value hear in Alberta and not export jobs with raw bitumen. No value adding no significant Alberta jobs.

Here's more on Lougheed's position a few years ago:

Former Alberta premier opposes Keystone pipeline
Andrew Topf | Sep. 13, 2011


The former premier of Alberta says he doesn't support the proposed Keystone XL pipeline project because it will take away jobs from Albertans.

I would prefer…we process the bitumen from the oilsands in Alberta and that would create a lot of jobs and job activity," Peter Lougheed told CBC morning radio talkshow host Anna Maria Tremonti. "That would be a better thing to do than merely send the raw bitumen down the pipeline and they refine it in Texas that means thousands of new jobs in Texas."


http://www.mining.com/former-alberta...tone-pipeline/

[KinAlberta]

A bit more on Peter Lougheed's thinking. Here's what he was saying before he swept to power in the 1970s.

This is from an old "Alberta Business Journal" magazine interview with Lougheed:

"Complains Peter Lougheed: The current administration has concentrated too deeply on the large corporations. The smaller businessman and entrepreneur has been sadly neglected. I happen to believe…” - Peter Lougheed, pg 55


I think that this province is ready for a much greater and varied degree of industrialization. The past government policies appear to have been aimed at giving massive assistance to purely big business, to the extent that the small businessman has been almost totally excluded. We want to continue to attract large corporations to Alberta but we should try to promote and help the small businessman whose biggest need is for expansion capital”. - Peter Lougheed, pg 55


“I really think that there is a growing awareness outside the two metropolitan areas that the governing party has not been occupied with the smaller centres. They are beginning to realize that they have had less of a share, much less in many instances, of what has been going on in terms of industrial development than perhaps they should have been entitled to and have expected.” - Peter Lougheed, pg 55


“We have had no policies from the Social Credit that have helped the smaller centres. All the emphasis has been on the two great metropolitan cities. These two cities have experienced tremendous growth in the last few years. Perhaps there has been too much growth too quickly. The result has been formidable problems. Problems such as very bad congestion.” - Peter Lougheed, pg 55


“The rapid rate of change throughout the world means that governments must also change and have policies that anticipate situations and not merely react to them. In my own view, I believe that a fresh young team which has its attention on the future can do this better than a 36-year-old government that fixes its attention on the past.” - Peter Lougheed, page 63,


Source: face-off! Harry Strom by Marnie Huckvale, Peter Lougheed by Paul Conrad Jackson, Pages 52 - 63 Alberta Business Journal, April 1971

I particularly like the statement I've highlighted below. Here in Alberta we have chosen to live and die based on commodity pricing yet we encouraged massive overbuilding (for the export capacity we had available and approved).

For all of the PC's business orientation and expertise, plus long, continuous institutional memory right through the last oil price bubble and crash - we still faced a crisis when oil prices inevitably dove.

"The rapid rate of change throughout the world means that governments must also change and have policies that anticipate situations and not merely react to them." - Peter Lougheed, 1971

[Bitumen Bullet]

That measurement is based on the idea that Alberta resources should be used to profit others outside of Alberta. That thinking got us here, resulted in deficits and debt when we should have been building an advanced economy.

Albertans and Canadians should want more than the few jobs to be had from extracting and exporting resources.

"The rapid rate of change throughout the world means that governments must also change and have policies that anticipate situations and not merely react to them." - Peter Lougheed, 1971

Hear Hear! Today that means keeping resources here, and exporting the many products that can be made with them. Cheap energy and commodity prices is a good thing for an advanced economy, lets keep them cheap for Alberta business.

[KinAlberta]

Originally Posted by elkhunter11

The only question is whether the NDP can completely destroy the oil industry in Alberta before the next election.

I get so tired of this thinking.

My family has had various Alberta based oil investments for three generations. I personally have invested in publicly traded oil and gas companies and other Alberta based companies on and off since the 1970s. I own property in Alberta beyond just my house so I'm personally and financially affected by the strength of our economy. I also plan to stay in Alberta and not just rape and pillage it for all I can get and then retire somewhere else.

So, as an investor, and I assume most oil and gas investors face similar conditions, we've seen fx rates affected by whopping currency movements (from 55-cents to $1.10 over just a few years!!!), we've seen oil fall to $10/bbl and rise to $140/bbl again over just a few years, we've seen big shifts in corporate taxes, GST, etc., we've seen some shifts in personal MTRs, we've seen federal / provincial assistance programs for driving more investment to oil sands development, we've seen labour and other costs skyrocket, we've seen plant development cost overruns in the tens or hundreds of millions, we've paid double taxation, sometimes personally, because of schemes like the infamous PGRT, etc.

Now, last year we had all the fear mongering over the royalty review. What kind of candy-assed resource/commodity investor or executive gets scared off by marginal potential changes to input costs like anything that would have come out of the royalty review? (The second one no less - after Stelmach's review.) Any ****-poor businessman pooping in his pants and shaking in his boots over that issue needs to get into another line of business. The oil and gas industry is a commodity based business and so is highly volatile - get it.

If you think back a few years, it was Notley saying that the government needed to slow development because rapid growth causes problems - such as a rapid need for schools and hospitals. So think about that. We built for peak construction in Alberta, increased our population as a result and when the inevitable price decline hit, what the heck were the PCs thinking they were going to do? Moreover, by 2005 or so, shale gas development highlighted in the strongest terms the risk shale presented to Alberta. What more did they need to knock there rose-coloured glasses off their faces and start doing something to prepare Alberta for a major competitive threat to our business model?

[Map Maker]

Originally Posted by petew

http://www.alberta.ca/release.cfm?xI...C3B3BEDFB06497

I stand corrected.
PIC is receiving the royalty credits for the Inter Pipeline project. They actually own Nova chemicals and the the Inter line provides feedstock to Nova.

[KinAlberta]

Originally Posted by Bitumen Bullet

That measurement is based on the idea that Alberta resources should be used to profit others outside of Alberta. That thinking got us here, resulted in deficits and debt when we should have been building an advanced economy.

Albertans and Canadians should want more than the few jobs to be had from extracting and exporting resources.

"The rapid rate of change throughout the world means that governments must also change and have policies that anticipate situations and not merely react to them." - Peter Lougheed, 1971

Hear Hear! Today that means keeping resources here, and exporting the many products that can be made with them. Cheap energy and commodity prices is a good thing for an advanced economy, lets keep them cheap for Alberta business.

Read up on the old 1970s Alberta natural gas act that limited the burning of natural gas. I believe tt's aim was to reserve it for higher end use purposes. In the early 1990s I believe it was repealed so that more natural gas could be burned for electricity generation. Interesting use of regulation and government intervention/meddling.

[79ford]

Originally Posted by hal53

So...in your perfect world..how are you going to move the refined product for export???

Manufacturing a product like polypropylene plastics will require no pipeline to move the end product and the upstreamer will only have to ship their product to strathcona county vs all the way to the united states for some one else to process into plastics.

Billions to build a plant, local user of propane, local manufacturer employing albertans, alberta propane producers will have a nearby, large predictable user of propane, and another customer for natural gas is created as all these plants guzzle gas for process heating and steam generation.


My idea is generally the notion that it is also much harder to protest against plastics, gasoline, diesel etc..... it is easy to protest bitumin or oil because it will not wrap your sandwich or run your car, lime those dumb dumbs at standing rock, lots of plastic tents and diesel etc being used down there nobody is building sod huts or sleeping in hay stacks

[The Elkster]

If one wants to find sheeple just seek out a Fraser or Pembina institute supporter. Anyone who listens to any group that starts a study with such clear bias toward a certain outcome followed by cherry picking info to support that cause is hardly indicative of a real "thinker".

I'll put the linked report right up there on the high shelf with any Pembina report on global warming.

Value added is good for the country and province. May or may not be good for a company depending on a myriad of factors. I support some gov't intervention to promote development at home. Its either give a few billion in subsidies or tax breaks to make it temptingly profitable or lose many many more billions in offshore wages and taxes over many years. Slow the rate of primary extraction make up for the loss with value added and extend the life of a finite resource. Our children will thank us. Or we can blow it all out tomorrow in mass raw exports and leave them with some stinking big holes (maybe we could market as grand canyon #2) and some farming.

[JustMe]

Without a doubt, you're going to tick off some people on this board, but you pretty much said it like it is IMO....

Originally Posted by KinAlberta

I get so tired of this thinking.

My family has had various Alberta based oil investments for three generations. I personally have invested in publicly traded oil and gas companies and other Alberta based companies on and off since the 1970s. I own property in Alberta beyond just my house so I'm personally and financially affected by the strength of our economy. I also plan to stay in Alberta and not just rape and pillage it for all I can get and then retire somewhere else.

So, as an investor, and I assume most oil and gas investors face similar conditions, we've seen fx rates affected by whopping currency movements (from 55-cents to $1.10 over just a few years!!!), we've seen oil fall to $10/bbl and rise to $140/bbl again over just a few years, we've seen big shifts in corporate taxes, GST, etc., we've seen some shifts in personal MTRs, we've seen federal / provincial assistance programs for driving more investment to oil sands development, we've seen labour and other costs skyrocket, we've seen plant development cost overruns in the tens or hundreds of millions, we've paid double taxation, sometimes personally, because of schemes like the infamous PGRT, etc.

Now, last year we had all the fear mongering over the royalty review. What kind of candy-assed resource/commodity investor or executive gets scared off by marginal potential changes to input costs like anything that would have come out of the royalty review? (The second one no less - after Stelmach's review.) Any ****-poor businessman pooping in his pants and shaking in his boots over that issue needs to get into another line of business. The oil and gas industry is a commodity based business and so is highly volatile - get it.

If you think back a few years, it was Notley saying that the government needed to slow development because rapid growth causes problems - such as a rapid need for schools and hospitals. So think about that. We built for peak construction in Alberta, increased our population as a result and when the inevitable price decline hit, what the heck were the PCs thinking they were going to do? Moreover, by 2005 or so, shale gas development highlighted in the strongest terms the risk shale presented to Alberta. What more did they need to knock there rose-coloured glasses off their faces and start doing something to prepare Alberta for a major competitive threat to our business model?

[Newview01]

From my perspective there is obviously too much politics going on in large corporations, because why aren't they developing the industries to produce finished goods? Have government regulations prevented a large Alberta based oil extraction company from setting up a plastics manufacturing plant? There must be something I am missing..

[KinAlberta]

Originally Posted by JustMe

Without a doubt, you're going to tick off some people on this board, but you pretty much said it like it is IMO....

If you think my opinions go against the masses, read this below. It is long and detailed, historical and largely factual - and above all, FASCINATING.

:-)

http://economics.ca/2005/papers/0289.pdf