Letters October 9th

Tread carefully

Calgary HeraldPublished: Tuesday, October 09, 2007

Royalties - I am concerned about the future of our economy. As an engineer at Peyto Energy Trust, I am aware of the increasing difficulty of drilling successful conventional oil and gas wells in Alberta.

I have read the panel's final report as well as many retorting reports (Tristone, Deutsche Bank, First Energy) which I feel make me knowledgeable about the matter.

As the Western Canadian Basin is entering the decline of its life, it becomes more challenging to economically reinvest capital into new programs. Increased conventional oil and gas royalties would accelerate this challenge to unfeasible.

Similar to statements made by EnCana and Crescent Point Energy Trust, I can attest that Peyto's future development programs will be cut if the panel's recommendations are changed in full. We would also be forced to explore additional avenues that lie outside our province as a matter of pure economics. I know we are not the only company for which this would hold true.

I feel that as Alberta's oil and gas properties age, it will be important to ensure industry is not hindered on its reinvestment of earnings back into the province.

With a removal of holiday programs and increases in royalties, I fear the level of future drilling activity will decrease sharply. Loss of jobs, production and royalties are sure to follow.

Neil Korchinski,

Calgary


Advice for Ed

Calgary HeraldPublished: Tuesday, October 09, 2007

Report - Re: "Public wants oilpatch to pay more," Oct. 3.

How many of the poll's respondents read the panel's report? How many have crunched some numbers using correct data? One, maybe two?

As an energy economist with a prominent not-for-profit think-tank, I've had the opportunity to do exactly that. There is room to move on royalties. You will be hard pressed to find any astute industry observer willing to contradict this statement.

However, the Oilsands Severance Tax, removal of deep gas drilling allowances and a few other aspects of the report could damage the Alberta economy, in a way not seen since Pierre Trudeau's NEP.

Far be it from me to give the premier advice, but here it is: The Royalty Panel failed to use appropriate cost information in their analysis. This is your way out of the mess that is plaguing you. You must lend stability to the markets. Denounce the use of flawed and naive cost estimates. Show leadership and send the report to the Department of Energy and let them review the report.

Good luck, Ed. We don't need a provincial energy policy, unless you want to have as warm a place in Albertans' hearts as Trudeau has.

David McColl,

Calgary

David McColl is an economist with the Canadian Energy Research Institute.


Gap widens

Calgary HeraldPublished: Tuesday, October 09, 2007

Needs - The auditor general has told us our government has failed to collect billions of dollars in royalties from the oil companies which are rightfully due us.

Oil executives can drive around in Porsche sport utility vehicles, build second homes in Canmore, send their kids to Strathcona-Tweedsmuir school, and go to the U.S. for health care.

Then, they whine and threaten to withdraw funding from major projects if the royalties are increased.

Meanwhile, there are buckets in Calgary public schools to catch the rain dripping through the leaking roofs, and dozens of family physicians close their practices because they cannot make a living.

Isn't it about time the citizens take back control of this province?

Charles MacAdams,

Calgary

(Blogger to Charles MacAdams: The province has been turning out huge budget surpluses for years yet the infrastructure shortfalls you describe remain. Increasing the amount of funding to the provincial government in no way will assure that the problems you identify will be fixed. Please don't put your frustrations upon the very people that have enabled the province to have such robust finances.)