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?
Showing posts with label royalty review. Show all posts
Showing posts with label royalty review. Show all posts
Monday, October 22, 2007
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.
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.
Wednesday, September 19, 2007
Alberta's Royalty Review - A Different NEP?
Words can be frightening. There is a shudder going through many people in Alberta this fall. Is Alberta about to announce its own NEP?
This week's report by the panel appointed by the Alberta government to investigate the provincial oil, gas and bitumen royalty is being greeted by some as an intrusion into the free enterprise system.
Can you imagine the reaction to this panel's report if its members had been appointed by politicians in Ottawa instead of Edmonton?
A careful readying of the report reveals the shocking assumption that the people own the resource. That they have not been getting a fair share of the profits - for many years. It suggests a modest increase in royalty "take" of about 20% more, if the price of petroleum stays stable.
It calls for government to pay closer attention to the numerous complicated forces that affect the petroleum industry. And for a new government agency to report more frequently and in a clearer manner to the public. For new levels of taxation to make sure the owners of the resource do not lose billions of dollars that is their due.
The panel's report even calls for a Crown Land Conservation Tax on all petroleum, forestry, mining and agricultural activities on government land. The $750 million raised each year would fund research and innovation programs to assure that resource extraction in the future is done with careful consideration for the environment.
And it calls for cumulative effects monitoring. Tens of thousands of oilwells do make a difference.
Had these recommendations been forced on Alberta by Ottawa - like climate change - we could blame it on the Liberals, the NDP or the Green Party. But these suggestions, and many more, came from a business savvy panel of Alberta residents.
Alberta's new premier will respond to this report in a few weeks. Perhaps October 2007 will be remembered as the month when the people of Alberta finally stopped blaming others for their problems - Ottawa, interest rates, the strong dollar, the American economy.
If the people of Alberta are brave enough to create their own Natural Energy Plan that takes charge of the development of their resources, they could provide leadership to the whole country.
Alberta's NEP of 2007 could accomplish what the NEP of 1980 failed to provide - a comprehensive, flexible and responsible reaction to high world oil prices.
For more details on seven previous national energy programs, dating back to Sir John A. Macdonald, and on the forces that create the booms and busts, see the chapters on these topics in PUMPED: Everyone's Guide to the Oil Patch.
This week's report by the panel appointed by the Alberta government to investigate the provincial oil, gas and bitumen royalty is being greeted by some as an intrusion into the free enterprise system.
Can you imagine the reaction to this panel's report if its members had been appointed by politicians in Ottawa instead of Edmonton?
A careful readying of the report reveals the shocking assumption that the people own the resource. That they have not been getting a fair share of the profits - for many years. It suggests a modest increase in royalty "take" of about 20% more, if the price of petroleum stays stable.
It calls for government to pay closer attention to the numerous complicated forces that affect the petroleum industry. And for a new government agency to report more frequently and in a clearer manner to the public. For new levels of taxation to make sure the owners of the resource do not lose billions of dollars that is their due.
The panel's report even calls for a Crown Land Conservation Tax on all petroleum, forestry, mining and agricultural activities on government land. The $750 million raised each year would fund research and innovation programs to assure that resource extraction in the future is done with careful consideration for the environment.
And it calls for cumulative effects monitoring. Tens of thousands of oilwells do make a difference.
Had these recommendations been forced on Alberta by Ottawa - like climate change - we could blame it on the Liberals, the NDP or the Green Party. But these suggestions, and many more, came from a business savvy panel of Alberta residents.
Alberta's new premier will respond to this report in a few weeks. Perhaps October 2007 will be remembered as the month when the people of Alberta finally stopped blaming others for their problems - Ottawa, interest rates, the strong dollar, the American economy.
If the people of Alberta are brave enough to create their own Natural Energy Plan that takes charge of the development of their resources, they could provide leadership to the whole country.
Alberta's NEP of 2007 could accomplish what the NEP of 1980 failed to provide - a comprehensive, flexible and responsible reaction to high world oil prices.
For more details on seven previous national energy programs, dating back to Sir John A. Macdonald, and on the forces that create the booms and busts, see the chapters on these topics in PUMPED: Everyone's Guide to the Oil Patch.
Tuesday, May 29, 2007
The Next Sixty Years
The Alberta government's Royalty Review Panel passed through Calgary last week and got several earsful of comments about what should be done about the income the people of Alberta get from oil and gas.
Individuals, companies and associations made good points, but each perspective was also short-sighted and preoccupied with a narrow agenda - making money for one just one group.
Sixty years ago drillers discovered a new oilfield at Leduc and today its all over - the oil and gas is gone.
Where do we want to be sixty years from now? Will new technology have replaced oil and gas, coal and hydro? Not likely.
But we know the easy work is in the past. New sources of oil and gas are harder to find, more expensive to produce and demand a much higher price at the pump.
Let's take the long view, for a change. We need leadership at all levels - in industry, all levels of government, and in social groups too.
Albertans want plans that are sustainable, encourage innovative technologies, that are environmentally responsible and that show us to be careful stewards of our wonderful birthright.
Prosperity, stability and predictability - these were all requested at the Royalty Review Panel. Let's all think about the big picture, not just our individual interests, and find innovative new ways to share the wealth and assure our future.
Individuals, companies and associations made good points, but each perspective was also short-sighted and preoccupied with a narrow agenda - making money for one just one group.
Sixty years ago drillers discovered a new oilfield at Leduc and today its all over - the oil and gas is gone.
Where do we want to be sixty years from now? Will new technology have replaced oil and gas, coal and hydro? Not likely.
But we know the easy work is in the past. New sources of oil and gas are harder to find, more expensive to produce and demand a much higher price at the pump.
Let's take the long view, for a change. We need leadership at all levels - in industry, all levels of government, and in social groups too.
Albertans want plans that are sustainable, encourage innovative technologies, that are environmentally responsible and that show us to be careful stewards of our wonderful birthright.
Prosperity, stability and predictability - these were all requested at the Royalty Review Panel. Let's all think about the big picture, not just our individual interests, and find innovative new ways to share the wealth and assure our future.
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