Monday, October 22, 2007

This Time It's Permanent

If we can get it right, this boom could last forever.

In the past the Alberta oil and gas booms and busts have been tied to two pivotal details - access to markets and the world price of oil.

But things changed two years ago when the production of petroleum from the oil sands surpassed conventional production for the first time.

No longer is the oil industry in Alberta reliant on discovering oil and gas, fighting for a place in the market, and at the mercy of international oil prices.

Okay, that may be overstating the case, but the oil patch in Alberta is now a commodity like coal. We have an almost unlimited supply of petroleum in the oil sands and the international demand for oil is strong and getting stronger.

The Alberta government has the opportunity to create a stable and sustainable economic climate. Or at least there is more of a chance now than ever before.

The royalty rate issue, so dominant in the daily news, is actually just a temporary distraction.

The real question is much larger. Can Alberta manage the boom, this time, in a way that will create economic, social and environmental stability?

Thursday, October 4, 2007

Reinventing the Energy Resources Conservation Board

History repeats itself so often its hard to keep up with all the examples.

The royalty review process is much in the news these days, but three past chairmen of the conservation board or the energy and utilities board wrote a letter to the public recently, defending the reputation of their august employer.

And venerated it once was, if it is now in for some close examination and criticism in light of the fact that is has not once, but twice, hired private investigators to pose as landowners and spy on the public.

But the really interesting part to the letter by G.W. Govier, G.J. DeSorcy and M.N. McCrank was their passing reference to the plan to separate the Alberta Energy and Utilities Board into its two parts - the Energy Resources Conservation Board and the Pubic Utilities Board.

More than a decade ago, for cost-cutting and political reason, these two very different organizations were amalgamated. It was never a very good fit and the administration of the natural resources and the public utilities in Alberta suffered.

Referring to the current government's plan to give each organization its independence, they wrote: "We support this and we believe it will lead to more efficient operations in both areas."

Efficiency is good in government, as in business. As is wise and knowledgeable personnel.

The Alberta government created the conservation board almost 80 years ago during an oil boom and it is today giving it back its mandate. Times may have changed but the challenges are similar and many because boom times always bring out some of the worst aspects of our greedy nature.

We can only hope we learn from our mistakes. For more on this topic please see my chapter titled OOPS: Mistakes and Lessons on page 137 in PUMPED: Everyone's Guide to the Oil Patch.