Friday, October 5, 2007

What Was Said to Panel in Calgary

I don't really see much public cry to increase the conventional royalty rates. So much for public consultation. The closest I could find is outlined below.

R. A. Chisholm spoke as a private citizen, but from an excellent knowledge and experience base in petroleum economics. He essentially said that the royalties in "oilsands could use a tuneup". The increase he describes is dramatically lower than the "Our Fair Share" recommends.

In addition, he said that the additional revenue from the oilsands royalties: "this revenue could be used to increase drilling for conventional oil and gas". What I believe he's saying is that it could be used for additional royalty relief structures from the struggling conventional oil and gas industry in Alberta.

The Pembina Institute spoke only to increasing the royalties on oilsands. It said that from the royalty scenarios it was contemplating that developers would receive a rate of return of 23 to 26% for in-situ projects and 12 to 15% for mining projects. Interesting, that. I'd agree that those are fair rates of return. So let's develop a fiscal system that delivers them. The "Our Fair Share" document certainly doesn't. The Pembina Institute's silence on not increasing royalties for conventional production I interpret as an assention that the existing scheme is satisfactory.

The Alberta Federation of Labour made a presentation protesting the shipment of raw bitumen, and stated that oilsands royalties could increase. Pretty sensible things said all around. Like the Pembina Institute, he was silent to the topic of conventional royalties, to which I interpret as an assention that the existing scheme is satisfactory.

Pandell Systems made an excellent proposal stating the royalty structure was too complicated and that the conventional business was deteriorating so don't increase the royalties.

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