In the latest salvo in a thundering barrage of industry criticism, Canadian natural gas and oil sands giant EnCana Corp. [ECA-T]says it will slash its investment in Alberta by up to 40 per cent or $1-billion next year if the province fully implements recommendations to sharply boost royalties contained in a recent review by an independent panel.
"If the Royalty Panel's recommendations are adopted in full, many of Alberta's new and emerging resource plays will simply not be economically viable," EnCana chief executive officer Randy Eresman said in a news release issued before stock markets opened Friday.
And another Alberta right wing rump party chimes in defending big oil in opposition to the peoples interests. Unlike Link Byfield's would be WildRose Party, which also opposes any royalty changes, the Alberta Alliance actually has a seat in the legislature.
And though they agree that the government has used 'Third World accounting' ( a euphemism for money laundering) for over a decade, which has lost us royalties already supposedly paid, they offer no solutions. Rather like the rest of their ilk, they say its fine to sell out our resources at below bargain basement prices for the good of Big Oil.
1. Before it even considers royalty changes, the government needs to get its current royalty house in order. One of the findings of the panel often ignored in the media was that the government's understanding and maintenance of the current royalty system is incomplete and flawed. Evan Chrapko, one of panel members has been quoted as saying about the current royalty accounting structure, "we have record-keeping that works for Third World countries in the 1960s." This need to be rectified before we can move forward.
4.After consultation and with contribution from industry, increase oil sands royalties on the front end by 1% in a progressive four year phase-in. When fully phased in, this would result in an increase of $292 million per year by 2010 and $438 million per year by 2016 when bitumen production will have risen to three million barrels per day (based on $40 per barrel bitumen.) The phase in period will give industry proper time to adjust for the increased burden. The 1% would continue after projects payout as well, in essence be a Gross Overriding Royalty.
Ho Hum that is exactly what is occurring now so this is a non-recommendation.
Don't Let Big Oil Set Our Royalty Rates make sure Ed hears from you.
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