Selmach Promises Security for Alberta Oil Companies

Stelmach promises security for Alberta oil companies

Promises 'stability' for oilpatch companies

Claudia Cattaneo And Jon Harding, National Post

Published: Friday, October 12, 2007

CALGARY - Alberta Premier Ed Stelmach has indicated he may be willing to give in to intense oil-industry pressure and not adopt the most contentious measures of a report that urges punishing increases in oil and gas taxes and royalties.

In a private address yesterday to about 100 executives organized by the Harvard Business School Club in Calgary, Mr. Stelmach said he "will not trounce existing agreements."

"That would destroy international confidence. That would be the wrong message to the world. I am not ready to give you the full answer on what we will decide on the royalty review, but this is in my heart," he said, according to notes taken by sources at the breakfast presentation.

The Premier's office said he is scheduled to make a formal announcement on Oct. 24 about the direction his government will take on the explosive issue.

Mr. Stelmach also told the meeting he is open to the idea of taking more time to study royalty changes if it means a better result, even though he is feeling pressured to make a decision as quickly as possible so oil companies can get on with their plans.

So far, the Premier has remained silent since the report came out on Sept. 18, even as oil companies and investors expressed outrage and threatened to pull billions of dollars out of Alberta and in effect unravel the province's energy boom.

"I am feeling better today," said one executive who attended the breakfast meeting. "The main thing you don't know is whether all this information is getting to the guy who is finally going to make the decision. And now I think that he does understand the complexities of the issue."

Mr. Stelmach told the meeting he wants to ensure "fairness" to companies, "stability" and "predictability."

Another executive said the Premier's tone left him with the impression the government would not adopt the full scope of recommendations in the Our Fair Share report.

Tom Olsen, a spokesman for Mr. Stelmach, said the Premier "is not disputing anything" said at the breakfast meeting.

But he said, "It was not the Premier's intent, in case there is a misunderstanding, to make any pronouncements on any of the recommendations. He is not going to let news of his decisions trickle out in this fashion. There will be a full and formal response."

Mr. Olsen said the Premier has heard a lot of negative feedback about the panel's proposals to rip up existing oilsands agreements.

A special panel appointed by Mr. Stelmach in February said Albertans are not getting their fair share of oil and gas revenue and proposed new levies to recoup $2-billion more annually, representing a 20% increase in the government take, even though the government is already racking up huge budget surpluses due to oil revenue and is debt free.

The proposed measures are regarded by the industry as so draconian they are already affecting company plans. Yesterday, Suncor Energy Inc., the largest oilsands company, confirmed it has held meetings with staff to announce it has halted any hirings because of the uncertainty. The company was one of the sector's most aggressive recruiters, hiring 1,000 people a year for the past five years. So far this year, Suncor has hired 960 people; its target was more than 1,200.
"We're looking at the overall business environment and there are a lot of uncertainties and cost pressures," said Suncor spokeswoman Darcie Park. "We expect [the hiring freeze] to last until the end of the year, but we'll make decisions on that as we go along."

She would not say if the recruiting pause would affect the company's multibillion-dollar expansion plans.

The panel's recommendation to rip up royalty agreements is among the most contentious.
Suncor and Syncrude Canada Ltd., a consortium of oil companies, have Crown agreements lasting until 2015.

But the panel, headed by former forestry executive Bill Hunter, recommended against grandfathering, so that changes would apply equally to all participants at the same time, even if such a move could result in legal action.

Dax Sanders, spokesman for the Harvard Business School Club, would not provide details on specific comments made by the Premier.

"We really enjoyed having the Premier speak to us about the future of Alberta," he said.