Still not getting our due

The market wonks and pundits are all a flutter about $100 oil. It hit that price last week in two, count em two, speculative deals amongst hundreds in the commodity markets. The price then dropped to between 97 and 99 dollars. This was declared a decline, with much brow wiping.

However the price of oil before last week was $95 at the end of 2007. Again a fact that seemed to be glossed over in the news about hundred buck oil. It hovered between $72 and $80 for most of last year. Then is shot up at the end of the year. Thanks to speculation not real market conditions of supply and demand. Today it is now in the high nineties.

Oil prices rose at a record rate last year a 60% hike . And they will continue to go up. It is one of the conditions of a Peak Oil marketplace.

Which means that Albertans are still getting short changed on our royalties. Since Stelmach's Royalty regime will not come into effect until 2009 and as an uncensored Alberta Energy Report reveals we have been short changed even under the existing royalty scheme.

Oil prices in 2007 rose 57% and wholesale gasoline prices climbed at a similar rate

Oil prices breached a record $100 a barrel several times last week, as falling inventories, geopolitical tensions, strong demand from developing countries and a weak dollar pushed futures above the psychologically important mark.

David Pumphrey Deputy Director, Energy, Center for Strategic and International Studies

"Fundamentals are still quite strong, and would support oil prices in the $90 to $100 range, but not much higher. The wild card is the financial markets."

Daniel Yergin Chairman of Cambridge Energy Research Associates

"Prices won't hover around $100 unless some bad things happen in oil-producing countries. Last year, oil averaged $72

Oil, gas price forecasts
Raymond James analysts are predicting that crude prices will again exceed Wall Street's consensus in 2008. "The global oil markets must push oil prices high enough to slow global oil demand growth in a supply-constrained market," they said. Accordingly, Raymond James raised its forecast of crude prices to an average $90/bbl in 2008, up from a previous estimate of $80/bbl "to reflect a tightening, supply-constrained oil market." Analysts said, "Additionally, we are raising our 2009 forecast from $85/bbl to $100/bbl due to our belief that additional oil supplies will be even harder to find in 2009 and beyond."

Raymond James analysts noted continued strong growth in domestic gas production—"primarily Barnett shale and Rockies driven"—and increased LNG imports should again push US gas storage levels to record highs in 2008. Therefore, they said, "We believe 2008 gas prices will be even weaker than originally anticipated and are revising our 2008 US gas price forecast down from $7/Mcf to an average of $6.50/Mcf for the full year, the lowest since 2004. We are also initiating a 2009 price forecast of $7/Mcf. While US gas prices could remain relatively weak through 2009, the build-out of global gas infrastructure should eventually drive global gas prices closer to BTU parity (6:1 price ratio) over the next 5 years."

Censored report shows gov't was told in 2006 Alta. missing out on oil billions

EDMONTON - Alberta Energy told the provincial government in 2004 that the province was missing out on billions of dollars in resource revenue, newly released documents show.

In a 2006 report, the department estimated that since royalty rates were capped at certain price levels, Alberta had lost between $1.3 billion and $2.8 billion in "uncaptured economic rent" for natural gas alone in 2003 and 2004, or between $700 million and $1.4 billion a year.

The department's cross-commodity resource valuation team called on the government to "increase conventional oil and gas royalties to restore Alberta's fair share at high prices."

Another section of the report, comparing Alberta with eight U.S. oil-producing states, showed the province ranked lowest in the percentage it took in royalties and taxes.

Premier Ed Stelmach announced last fall that he was hiking royalties, but not until 2009 and not to the extent called for by the royalty review panel headed by Bill Hunter.

In the documents, information about oilpatch returns against reinvestment between 1990 and 2003 show that despite higher returns for companies and record drilling, the ratio of reinvestment has declined. The words "higher returns, record drilling, declining reinvestment" were stricken from documents previously released to The Journal.

Alberta's NDP joined in the fray Friday by attacking Stelmach's new royalty framework as a massive giveaway to oil companies.

"When oil hits $100, this new royalty framework will forgo tens of millions of dollars a day compared to Alaska," NDP Leader Brian Mason said.

"When the time comes that oil regularly trades at $100, the Tory royalty system will cost Albertans over $4 billion a year."

Stelmach's oil royalty plan called inferior to Alaska's

Premier Ed Stelmach's new oil royalty revenue scheme will generate chump change compared to the system used in Alaska, says Alberta NDP leader Brian Mason.

"The two areas face similar challenges in terms of costly operations to extract crude oil and have similar right-leaning governments, yet Alaska has managed to come up with a system that generates far more money from oil than we ever could under the new royalty regime," he said yesterday.

By Mason's math, Albertans are foregoing $4.3 billion in extra oil revenue by not charging higher royalty percentages and capitalizing on $100 per barrel oil prices.

Mason said under the new royalty regime, Alberta will take in $7.4 billion, but that could jump to $11.8 billion if Alberta took a bigger piece of the pie.

"Alaska takes $42.24 on each barrel of $100 oil and the sky didn't fall as Big Oil warned us it would in Alberta just a few months ago.

"Alberta takes just $26.51 from a barrel of $100 oil. There is a huge gap there and a lot of room for us to earn more money. The price of a barrel of oil isn't going down much any time soon. As far as I can tell, the world only has so much of it to go around."

SEE

The Economist On Alberta's Fair Share


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Technocracy In Canada

The Beaver, the Canadian History magazine has a great article on Technocracy Inc. in Western Canada. Here is a short excerpt.

Walter Fryers lives in Edmonton and leads the Technocracy chapter here. Which meets at the Stanley Milner Library Tuesdays and Sundays at 1:30 Pm

THE LAST UTOPIANS
by Ray Argyle

Technocracy promised Depression-weary Canadians an end to their hardship. But the offer came with a catch.

The abandoned farms and empty streets of Depression-ridden rural Manitoba filled the view through the windows of the railway coach as Walter Fryers, a twenty-three-year-old university student, journeyed back to Winnipeg.

It was the fall of 1936 and Fryers had spent the summer trapping muskrats in the delta of the Saskatchewan River, working for little more than “board and a bunk.” Now he was anxious to return to his science studies at the University of Manitoba.

During the long train trip from The Pas, the young student took to heart the dark reality of the dust bowl. It had been the hottest North American summer on record. Across the Prairies, dark clouds of dust rose off the drought-stricken land, burying livestock that lay dead and dying in the fields, and caking the faces of the hungry and haggard families who grimly trekked to the cities, leaving their devastated farms behind. Against this backdrop, Fryers pondered the failure of society to provide a better life for the millions impoverished by the Great Depression.

This continued to weigh on Fryers’ mind after he arrived in Winnipeg, with its bread lines and its boarded-up businesses. Here, a chance encounter — spotting a poster for a lecture on something called “Technocracy” — was to rapidly change the direction of his life.

The lecture introduced the young man to a radical new doctrine that seemed to satisfy his yearning for a scientific solution to the world’s problems. Technocracy’s adherents claimed it would eliminate want by putting power in the hands of a capable few — not politicians, but an elite group of engineers and technicians, known as the Technocrats.

Within months, Fryers was himself preaching Technocracy’s merits to the media. The Winnipeg Free Press gave front-page space to his declaration that the existing economic system was the root of the problem, because, in order for it to work, “a scarcity must be created and maintained. That is why, in a world of plenty, we have widespread poverty.”

Technocracy flared like a comet in the darkness of the dirty thirties, promising to replace a collapsing capitalist system with a non-political government of scientists and technicians. It attracted thousands of members in Canada, survived a wartime banning, and enjoyed renewed, but brief, popularity after World War II amid short-lived fears that Canada might return to Depression-like conditions.

Of all the protest movements that flowered in the Depression, Technocracy was a unique creation. Largely overlooked by historians and neglected by most political scientists, the movement never elected an MP or fomented a riot. But to workers without jobs and farmers without crops suffering through the hungry thirties, Technocracy’s proffered world of plenty seemed a utopian paradise: Unemployment would be a thing of the past and all would share equally in the abundance of the machine age. Sir Thomas More’s sixteenth-century conception of a “happy island” stricken of all poverty and crime might at last become a reality, thanks to modern technology.

Founder Howard Scott’s design for what he called the “Technate of America” did away with borders and merged the United States, Canada, Mexico, and Central America into a single nation under a regime of engineers and technicians. Political parties, along with money and all the trappings of the present price-based economic system — which Scott saw as incompatible with the distribution of industry’s output — would be things of the past. The economy would be based on energy (the capacity to perform work) and the new currency would be “energy certificates,” qualifying every citizen to an equal share of the continent’s wealth. People would work four hours per day, four days per week, between the ages of twenty-five and forty-five.

Technocracy spread quickly in Canada — although its strength here, as in the United States, was concentrated in the West. Eight chapters were soon organized in Vancouver, and the magazine Technocracy Digest was launched. Branches were set up throughout British Columbia, as well as in Edmonton, Calgary, Regina, Winnipeg, Hamilton, and Toronto. For many, Technocracy served as a fraternal organization. The Winnipeg Free Press reported on a 1940 technocratic wedding, noting the groom and his attendants wore Technocracy grey suits and “twelve men in Technocracy grey formed a guard of honour.” In Vancouver, a Technocracy orchestra was formed.

I disagree with the authors claim later in the article that the idea of the Technate, technocracy's model of governance over production and distribution systems, is authoritarian and anti-democratic. He mistakes representative parliamentary democracy as being the only form of democracy.

It is a technical model for production and distribution.Indeed the idea of the technate is the administration of things not people. Technocracy did not offer up a political system to replace capitalism per se.

And in fact in a paper I presented on Technocracy, Socialist Industrial Democracy and Syndicalism, available upon request until I post it, I showed that it coincides with North American models of workers control. That is the Technate can be adapted to be used by worker controlled industries as an alternative to the wage system. Especially in light of the Norbert Weiners applications of cybernetics to industrial production that was attempted in Allende's Chile.

The fact that it was popular in Western Canada shows again that radical alternatives to capitalism were sown here for most of the early years of the twentieth century. And that radicalism was NOT conservative individualism as the right wing pundits and other neo-cons of today assert.

Today many of the predictions of Technocracy about the crisis of energy demand in an advanced industrial society are being accepted as common knowledge; namely their assertion of the crisis of Peak Oil.

SEE:

Technocracy Inc. Predicted Oil Crisis Over 50 years ago

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Peak Oil Will Lead To WWIII

From Defense And The National Interest a Power Point presentation in PDF by Robert Hirsch on the impact of Peak Oil and US national security. Don't plan for Peak Oil then prepare for WWIII says Hirsch.

And he is serious as are the folks who published his report.

Welcome to Defense and the National Interest. Our aim is to foster debate on the roles of the U.S. armed forces in the post-Cold War era and on the resources devoted to them. The ultimate purpose is to help create a more effective national defense against the types of threats we will likely face during the first decades of the new millennium.Contributors to this site are, with a few exceptions, active/reserve, former, or retired military. They often combine a knowledge of military theory with the practical experience that comes from trying their ideas in the field.

Peak Oil is now a given reality. And its potential threat to create a crisis that needs a military response is no longer thought of as the rantings of just a tiny fringe group. Instead it is a crisis scenario being seriously discussed by military and security wonks.

10/23/07 World Oil Shortage - Scenarios for Mitigation Planning, by Robert L. Hirsch. "The more you think about it, the uglier it gets." Stand by for World War III. [114 KB PDF]

Background
“…it only requires a relatively small amount of oilto be taken out of the system to have huge economic and security implications.”
Robert M. Gates. Oil Shockwave. June 2005.

“The rate of decline after a peak is an important consideration because a decline that is more abrupt will likely have more adverse economic consequences than a decline that is less abrupt.”
GAO-07-283. February 2007.

IEA: There’s Trouble

•“The recent apparent surge in oil and gas investment is illusory, because costs have soared. Real investment in 2005 was barely higher than in 2000.”

•“This energy future is not only unsustainable, it is doomed to failure," because of underinvestment.

•"... we are on course for an energy system that will evolve from crisis to crisis…”
•Excess capacity and demand converge in 2012 (Peaking).

See:

Technocracy Inc. Predicted Oil Crisis Over 50 years ago

Canada Reaches Peak Oil In 2020

Peak Oil: France and Canada Agree

Ontario Succumbs to Peak Oil Crisis

Impeach Bush.....Over Peak Oil

The End of the Oil Age

Caspian Oil

Capitalism Creates Global Warming

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Stelmach Sells Out

Uh oh prepare for a sell out by Prince Ed. He has appointed Ron Stevens to oversee reactions to the Royalty Report , the most negative coming form the self interested oil tycoons, and he announced in Toronto that any decision will be in favour of big oil.

"I've promised Albertans a royalty regime that is fair to the companies who are investing billions of dollars to develop Alberta's resources," Stelmach said, according to a text copy of his speech.

Ron is also Minister responsible for the Oil Sands Secretariat, so the deal is sealed.

Rick Bell commenting in the Calgary Sun wonders too if Prince Eddie will take on the dragon of big oil, and has his doubts.

Now, Premier Ed has this panel report. Those in Big Oil's culture of entitlement who cry catastrophe but still strut the flash-the-cash attitude downtown won't surrender a copper, reminding the Tories who wags the dog.

Big Oil wring their well-manicured pinkies in front of Deputy Premier Ron Stevens, a Calgary lawyer who hears more blues than in the old days at the King Eddy.

Energy Minister Mel Knight, the Spymaster, so named because of the Energy and Utilities Board's hiring of private eyes to spy on citizens opposing a power line, has his deep thinkers give the panel report a look-see.

Those numbskulls couldn't do the math on the existing royalties. Beautiful.

NDP Leader Brian Mason likens the move to handing over the keys of the new locomotive to those who have been asleep at the wheel.

No matter. It comes down to Ed. Does he have the guts to be the leader for all Albertans or is he just the latest dude along for the ride willing to risk a train wreck?

Since Ed wants to hear from all Albertans make sure he hears from you.

SEE:

More Shills For Big Oil

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King Ralph Shills For Big Oil

Well that didn't take long. King Ralph went from Premier to Oil Lobbyist in a blink of an eye. Faster than Lougheed and even Getty, his old big oil nemesis.

Klein slams Alberta royalty recommendation

And luckily he did it in Alberta, where weak tea lobbyist legislation was only just passed this spring. So it doesn't affect him. And he is doing it as they say; pro bono. Yep the Big Guy is out defending the Oil lobby and his own political decisions when it comes to selling out Albertans to the Calgary Oil Lobby.

Remember Ken Kowalski's 1994 appointment to chair the Alberta Energy and Utilities Board? It stirred up so much oilpatch opposition that then premier Ralph Klein had to rescind the post he gave the former deputy premier who'd been freshly bounced from cabinet.

Governments in Alberta and elsewhere have traditionally rewarded loyal supporters with plum appointments, often over the hue and cry of opposition parties and the general public.

The Kowalski appointment enraged a sector with considerably more clout: Big Oil. When it said the position required somebody more qualified and less political, Klein was forced to respond.

For a decade Albertans have been ripped off of profits from our resources, shoring up the oil industry with subsidies directly and indirectly, the latter being our penny on the dollar royalty rate for developing the tarsands. The result was the famous neo-con Klein Revolution, for which he annually collected gold medals from the Fraser Institute, which then went on to hire him once he retired as premier.

Should we be surprised he defends his regimes sell out of Alberta, native and Canadian resources? Of course not. He was after all the Premier the Party of Calgary picked. The Party of Calgary has become the bugaboo of Edmonton Sun columnist Neil Waugh, who describes them as the oil aristocracy.

Which, in a sentence, is Big Oil's strategy as the Stelmach Tories attempt to claw back $2 billion a year in energy revenues - largely from Calgary's oilsands aristocrats,who have been awarding themselves multimillion-dollar annual salaries while the owners of the resource get a penny on the dollar payout until the massive capital costs are recovered.

While Rick Bell his counterpart at the Calgary Sun gleefully pulls Big Oils beard in his column. Reminding us from his window view of Petro Plaza,

The outrage from the highest offices in the tallest towers is so loud it is being heard all over the provincial government.

Tory MLAs are being reminded of who runs the show, or who think they run the show, or who did the show until now.

On Tuesday, mere minutes after a report called for the province to hike oil and gas royalties and get a fair share for the resource Albertans own, the oil industry sent the provincial powers a simple one word e-mail.

It read: "Disaster."

Interesting the oilpatch isn't commenting on the fact, on natural gas alone, Albertans are out about $6 billion. That's $6 billion that could have gone to affordable housing, schools, health facilities, other public building projects, a tax break, savings to the Heritage Fund and on and on.

The reality is that the Hunt Report outright says that Albertans have been shortchanged for a decade when it comes to oil royalties.

Royalty review calls for massive jump in oilsands payouts

A panel reviewing the fairness of Alberta's royalty take from oil and gas development said today Albertans are not collecting a fair share and recommended a massive jump in royalties paid by oilsands projects.

The six-member panel headed by Bill Hunter recommended that the government's overall take from oilsands projects be raised to 64%, from 49% today. The panel recommends leaving the 1% pre-payout royalty unchanged, but that the post-pay out royalty be increased to 33%, from 25%.

"Albertans do not receive their fair share from energy development and they have not, in fact, been receiving their fair share for quite some time," Mr. Hunter said in a letter to Alberta Finance Minister Lyle Oberg. "Royalty rates and formulas have not kept pace with changes in the resource base, world energy markets and conditions in other energy rich jurisdictions. Albertans own the resource."

Billions of dollars have been pocketed by the private interests while Ralph declared debt and deficit hysteria, cut jobs, delayed infrastructure, destroyed the health care system by laying off nurses and reducing graduates for their jobs and those of doctors, contracting out services, etc. He told us we were broke, and had to tighten our belts, the debt and deficit crisis was described by King Ralph as the need to not renovate our house, but to demolish and rebuild.

One of his would be heir apparent's is our current provincial treasurer Lyle Oberg, a true believer, who says dark days are upon us. Of course he too opposes asking for what belongs to the people, a just royalty for our resources.

In that wonderfully twisted world of social conservatism the politics of giving unto Caesar has become the economics of giving unto Big Oil. The logic goes like this, if it weren't for big oil the PC party would be nothing, so it does it all it can for Big Oil. Now like all One Party States this logic is then transformed into what is good for Big Oil is good for Alberta.

The irony is that this royalty scam was not even created by Klein. Rather it was created after the collapse of the global oil market in 1984 by then Petro Premier Don Getty. Don being the oil boys insider for the moment, Klein was able to scape goat him for all of Alberta's economic problems which were a result of the market melt down, the recession of the eighties. So when the momentary debt and deficit crunch came world wide, Klein was ready to step in. Rather than end the tax and royalty holiday for Big Oil, he continued it and turned on the people of Alberta to pay for the deficit.

Deficits are not permanent, they are a year by year accounting phenomena. A debt on the other hand exists and transfers from year to year. A debt is what you owe someone else. You cannot have a debt to yourself. But in the wonderful Wizard of Oz Topsy turvy world of neo-con logic, government financed and owned infrastructure was seen as a business cost rather than as an asset.

The wailing and gnashing of teeth from the industry lobbyists, including Klein, and those in the investment business is predictable if somewhat disingenuous. After all this is Alberta, not Saskatchewan or Manitoba. This is a Tory run one party state at the beck and call of the Petroleum Club in Calgary. And the panel doing the review well it was stacked with capitalists.

The report was written by a six-member, blue-ribbon panel named by the government. The members included two economics professors, a chief economist for an Calgary-based energy research firm, a businessman, a forestry executive and a former senior executive with an oil company.

If anything, the panel was seen as too pro-business. In fact, the appointment of Sam Spanglet to the panel caused a stir back in February when news broke that the former oil executive still had "a couple of million" dollars worth of stock options with Shell Canada.

As if to bolster the opposition's accusation, the Canadian Association of Petroleum Producers was reportedly pleased with the panel's members and their credibility.

It seemed just about everyone was predicting the panel would deliver an industry-friendly conclusion.

One of the funniest comments comes from an one of those dime a dozen investment newsletters;

"Do they really wish to kill this golden goose with one fell swing of the tax axe?" said economist Dennis Gartman, editor of the Gartman Letter, an influential investment newsletter based in Virginia, who was "shedding tears" about Alberta going "socialist" and wondering whether the provincial government has "gone mad."

Socialist, well gee where has he been. Let's see Alberta is dominated by one party, a party that has been in power so long it naturally thinks it is the government. One that has subsidized the oil industry at the cost of the owners fair share. That spells socialism to me....well state capitalism actually, but for the rabid right they are the same. As ex- King Ralph pointed out;

"It was a regime created by industry and government. Those kinds of rules don't change on a whim. Companies are nervous."

And then there are those who, like our Treasurer Lyle Oberg, are doom and gloom proponents who claim that the sky is falling and once again are declaring impending debt and deficits. The reality is that it was the royalty holiday that Getty gave the industry that led to the deficit crisis of 93-95 that gave Klein an excuse to implement the Fraser Institutes neo-con revolution in Alberta.

On page 23, for example, the report points out "The panel was constantly told by companies and by energy industry trade groups that Alberta ranked very high in Government Take." However, those companies and groups were citing from an outdated 1997 report by an international expert. The review panel commissioned the same international expert who compiled new data and concluded "the very opposite is now unequivocally true."

In this case its also the oil and gas industries who are claiming a crisis in their industry and again have their hands out asking for more state subsidies.

Yet, because of public expectations, it's unlikely the panel will recommend what's needed at this time: a reduction in royalties to salvage what's left of this vital part of the sector. Indeed, there are indications the slump is not just another cycle, but a structural change that will require new thinking from everyone -- industry, government and labour -- to reduce costs so it can compete with the cheap imports of liquefied natural gas invading the U.S. market, once dominated by Alberta producers.

Oh you didn't know there was a slump in the oil and gas business? It didn't appear that there was according to the markets this week.

Oil prices hit record highs

Oil dips, but gas prices set to rise

Taking Cues From Fed, Speculators Bid Up Oil

More oil firms hike fuel prices

Crude oil sails over $80 buoyed by bullish mkt

Oil near new high amid tight supplies

Well there is. It's called peak oil and the industry is panicking over its potential impact. Alberta's conventional oil and gas reserves will peak in 2020 and begin to decline, as will provincial revenues. And so the oil business in Alberta is focused on developing the tarsands output, regardless of costs to the public or the environment, by then.

A litany of Canadian investment banks also pulled no punches in their assessment of the proposals in the Our Fair Share report.

FirstEnergy Capital Corp. warned the proposed measures, in a report entitled "Albertastan? Misguided Intentions and the Fair Share Option," would be "negative if adopted, and will slow down the development of oilsands."

Well frankly that's a good thing since the boom is artificial and has caused untold problems in Alberta. We need a planned economy from our 'socialist' government, since the oil sands development has gotten out of control.

Since Prince Eddies government refuses to adopt such a plan, then if the royalty regime forces a slow down all the better. Alberta is an overheated economy. One that is sure to bust big, because no boom is sustainable. And woe betide Albertans if that happens. The boom of the seventies and early eighties was followed by a quarter century recession in the province. One that was used as an excuse to rack up surpluses at the expense of public services and infrastructure expenditures.

Stelmach says he'd stand up to big oil

Be still my beating heart. Anyone who thinks Farmer Ed is going to accept this report in whole, has missed the fact he has not accepted the recommendations of any public reports that he called for upon his appointment as Alberta's CEO. He has adopted the minimum to make him look good sometimes that has meant rejecting the public reports and making a big deal out of the fact he asked for them.

We need only remember the Alberta Housing Report, which called for rent controls. He rejected this outright. He has rejected the public commission calling for controlled growth and a slow down in oil sands development as well.

A columnist at the U of C student newspaper the Gauntlet sums it up well.

Furthermore, even if the provincial government does go for the whole 20 per cent increase, Alberta’s royalty rates will still be some of the lowest in the world. And don’t try to tell me that all the oil companies will uproot and flee the country the second people start talking about increasing royalties. As a fellow editor commented to me recently, “They’re in the oil business. They’ll go where the oil is.” The oil companies have invested too much money and stand to make far too much money for them to vanish in a cloud of carbon monoxide like the conservatives are arguing.

Anybody who has studied the provincial Conservatives in even the shallowest capacity knows that Premier Ed “Steady Eddy” Stelmach will likely not raise royalties at all come Oct. when he makes the decision. If royalties are increased, it will likely be by just enough for Stelmach to seem like a populist without putting even the slightest dent in Big Oil’s beer budget. This isn’t necessarily is bad thing; the quality of life in Alberta will continue to improve at the same rate it always has if nothing is done. There’s no immediate negative consequence in deferring to the oil companies on this one, and that’s likely why nothing will be done: nobody wants to rock the boat. However, it’s worth considering the possibilities of even a slight increase.

And those who are in the known when it comes to economics agree. Big Oil will stomp their feet and wail but all is for naught. They will go where the oil is and if they don't well there are the Chinese, and Japanese, and....

Alberta premier walks into lion‘s den with business leaders over royalty review

Many of the business leaders attending the event said whether Stelmach chooses in the coming weeks to adopt the report‘s recommendations or not will be his most important decision, not just for now but for generations to come.

“My view is that the province should just out of hand reject this report because ... the decisions that they made are totally out of touch with the economy and what‘s happening around the world right now,‘‘ said Doug Mitchell, co-chairman of the forum.

“I don‘t see any credibility whatsoever in the report.‘‘

But one energy specialist said regardless of what Stelmach decides, the oilsands are too rich and vast for industry to ignore.

Ken Moors, a managing partner of Risk Management Associates in Pittsburgh, Pa., said he has brokered royalty deals around the globe and he believes Stelmach has been smart to make this dispute a public one.

“This is a rare opportunity for a democracy to do things in the open,‘‘ he said.

“But you must remember that every other time these royalty situations have been advanced in other countries, they‘ve been advanced in a market in which the expectation was that supply was going down. This is the only example I‘ve ever seen where these are being introduced in a market where the supply is bound to go up.‘‘

He said the province will still be very competitive with other countries.

"It is not going to take place . . . this is the only major supply side push left in the international oil market, so people either invest here or they see their profit margins dwindling in the future -- there is no other alternative," he said.

That is rich, There Is No Alternative. TINA. The famous neo-con excuse for selling off government services to embrace the Market. And now the shoe is on the other foot for Big Oil. TINA. LOL.

Amongst the sturm and drang of capitalist outrage in columns in the National and Financial Post comes a whiff of wisdom if not prudent observation.

Royalty review just good business

Diane Francis, Financial Post

Published: Saturday, September 22, 2007

It's important to note that what is being discussed is not taxation but the royalty paid to Albertans who own the lion's share of subsurface mineral rights in the province. And they are not getting as much revenue from their resources as competing jurisdictions are, according to the report. Industry spokesmen dispute the numbers and say Alberta's take is already high enough, and any higher will drive away investment.

For instance, conventional oil and gas royalties and taxes in the U.S. average 67% while they are 50% in Alberta, said the report.

Non-conventional oil production -- offshore and heavy oil -- is another interesting story. Heavy oil royalties in Cold Lake are 60% compared with Nor-way's offshore royalties of 76%, California's heavy-oil royalties (and taxes) of 67.5% and Venezuela's 72%.

To me, both the markets and media have been hysterical about nothing. Stelmach is not some fiscal confiscator. He's the CEO of the most valuable jurisdiction in the Western hemisphere and his review of royalties is simply prudent business practice.

Just like Danny Williams is doing in Newfoundland except in order to get his folks the best deal he didn't sell the goose, just a part of the golden egg. Funny thing the same folks whining over the Alberta Royalty report said this about Danny's provincial version of Petro-Can;

Paul Barnes, the St. John's-based spokesman for the Canadian Association of Petroleum Producers, said state equity stakes are common throughout the world beyond North America and Europe. He said his members are prepared to negotiate exact figures for specific deals. "It's not overly concerning to our members that equity participation is on the table here because we experience it on worldwide basis."

Gee you don't hear that from the CAPP when it comes to Alberta's Royalty Revue.

"At first blush," gulped Canadian Association of Petroleum Producers spokesman Greg "Sky is Falling" Stringham, "this is far worse than anticipated."

So what is all the fuss about, why the chicken little exercise in outrage? What does this dastardly commie socialist pinko report say. Well it is damning of years of incompetence by an entrenched and debouched Tory party of Calgary Oil insiders.

A tired old party that instead of collecting what is owed to Albertans by Big Oil for the past decade, forget just the last few years of booming oil prices, gave them a royalty holiday paid for by Albertans. We paid in increased user fees, privatization, contracting out, wage freezes in the public sector, caps on AISH payments and claw backs,kicking the poor off welfare, selling off the ALCB at fire sale prices, systemic mistreatment of seniors in seniors homes, the Health Care premium which is a tax grab, failure to invest in infrastructure, firing of nurses and doctors, capping of nursing and doctor graduates in Alberta universities, not only closing but blowing up hospitals, lack of vocational and technical education that has led to current labour shortages, etc. etc.

The government makes more money off gambling then it does off either royalties or taxes on conventional oil and gas and the tarsands.

And no matter what Stelmach does, he cannot make up for being part of a government that at best was asleep at the wheel for two decades, at worst was implementing harsh cuts and reconstructing the state according to a neo-con agenda that was never for the benefit of the people of Alberta but to please the Fraser Institute and its pals.

Stelmach will never, ever, ask for the billions Big Oil owes the people of Alberta who had to pay for Ralph Klein's renovation of the province for their and the Fraser Institutes benefit.

The Conservative regime has forgotten that natural resources belong to Albertans and not developers, says the report from the royalty review panel appointed by the same government.

And the Alberta Energy ministry is bracing for another unsparing probe next month of how it handles royalties from Auditor General Fred Dunn.

His office has chided the government in past years for being unable to effectively track what companies owe in royalties, and suggested the problem was costing hundreds of millions of dollars in royalty losses.

But the royalty review panel took the criticisms much further, recommending a new oversight body and far better reporting to the public.

"During our review we discovered an absence of accountability from the government to Albertans, the owners of resources," panel chairman Bill Hunter told reporters this week. "We encountered significant difficulty in accessing information -- to have even simple questions answered."

"How the administration or public leaders make informed decisions in this vital arena is an open question," says the review report, made public Tuesday.

"In the case of Alberta's multibillion-dollar energy reserves, seen as an enterprise, the onus on government to inform the public should actually be orders of magnitude higher," the report said. "Stated politely, this standard of disclosure is not presently being met.

"The panel is of the opinion that the government has not built up sufficient expertise and capacity to administer and manage this complexity."

It also identified a specific problem of missing money, or "what preliminarily seems like a pattern of material deferral of payments that is not in the interests of Albertans."

Once again the real Alberta Deficit is revealed, the democratic deficit. So the next time some Alberta Conservative MLA or MP, they are after all joined at the hip, talks about accountability, transparency, honest government, usually pointing fingers at Liberals in Ottawa, just ask them if they know where the missing billions from Big Oil are squirreled away.


Read it for yourself.

Royalty Review Panel final report

SEE:

Transparency Alberta Style

Closing The Barn Door

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Closing The Barn Door

Alberta premier promises public input on nuclear plant

Sure but the Nuke Alberta gang has already has announced that it has a site.

Calgary-based Energy Alberta revealed plans for what could become the province's first nuclear power plant yesterday but remained tight-lipped on a consumer who would use the majority of its energy. Energy Alberta announced it has filed an application with the Canadian Nuclear Safety Commission for a license to own and operate a nuclear power plant 30 km west of Peace River.

Public transparency about this company and its links to the Government would go along way to really revealing whose pushing this.And that is not something we will get from this government regardless of 'public hearings'.

An upstart Alberta firm with no experience in nuclear energy has taken its first official step to build the province's first nuclear power plant, saying yesterday that it has the backing of a large but unnamed company working in the province.

The provincial government is open minded on potential future energy sources, said Jason Chance, spokesman for Alberta Energy Minister Mel Knight.

Energy Alberta Corp., run by Calgary entrepreneur Wayne Henuset, has filed an application for a licence to prepare a site for its proposed $6.2-billion nuclear power plant with the Canadian Nuclear Safety Commission. Formed in 2005, Energy Alberta is also backed by Hank Swartout, founder and former CEO of Precision Drilling Trust, the company he built into the country's largest driller of oil and natural gas wells.

Besides the Stelmach government loves public hearings.It's a sop to democracy in by the One Party State. The public can have their say and the government will ignore their recommendations.

Also See:

Nuke The Tar Sands

Dion Pro Nuke

Cutting Your Nose

Energy

CANDU

Peak Oil

Tar Sands



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Nuclear NIMBY

Unlike many opponents to nuclear power use in the Alberta tar sands, I am not anti-CANDU.

I support the use of CANDU as the safest low volume residue reactors in the world. That their need for continuing capitalization for maintenance is what has been problematic in the case of the industry in Ontario. Had the world adopted CANDU disasters like Three Mile Island or Chernobyl would never have occurred, because the technologies are different.

That being said, as a power engineer I oppose the use of Nuclear power in the Tarsands, as inefficient and not cost effective, because it will be used for steam injection of bitumen rather than for production of electricity. This will take up larger volumes of water, and further pollute the existing Athabasca river with heated effluent.

Nuclear power might be all the rage for some interested parties in Alberta's oil patch, but others question the need for such controversial power generation in an industry that requires more steam than electricity.

And let's understand that is what is being proposed for the tarsands, not just an electrical plant but one for steam and electrical production needed for bitumen production.

He was one of a small delegation of community leaders from Peace River, interested in visiting New Brunswick’s nuclear power plant. Whitecourt and Peace River are in the running to host Western Canada’s first nuclear plant, putting it about an hour’s drive from the B.C. border. It’s proposed for northwestern Alberta due to the presence of bitumen trapped in rock west of the main oilsands deposits.

Nuclear power may soon run deep electric heaters to extract that rockbound oil, reduce emissions for conventional oilsands extraction and perhaps light northeastern B.C. homes. It would spur the proposed pipeline to deliver the black gold to the west coast at Kitimat and on to Asia, and further cement the merger of Alberta and B.C. into Canada’s western super-province.

The prize Royal Dutch is chasing is bitumen trapped in hard-rock limestone, rather than the conventional oil sands around Fort McMurray where bitumen is mixed with dirt and sandstone.

The Anglo-Dutch energy giant is the likeliest customer for a nuclear power plant proposed by Energy Alberta Corp., a private company working with Atomic Energy of Canada Ltd.Unlocking the multibillion-barrel bonanza encased in limestone requires an astounding amount of electricity.

The resource has been known for decades but efforts to recover it have failed.

Royal Dutch is working on electric heaters below ground to loosen up the gooey bitumen to draw it to the surface through wells.

The firm is trying to commercialize what it calls a "novel thermal recovery process" invented by Shell's technology arm.

But because companies in the oilsands are now becoming conservationists due to the provinces carbon tax, they are finding alternatives to nuclear power in other fuels they generate as waste.

oil companies are already moving rapidly towards cheaper, more efficient technologies than those used for the past 20 years, one representative said.

''Nuclear may be an option in five to 10 years from now, but in the meantime, people are already moving off of natural gas and moving on to other things,'' Greg Stringham, with the Canadian Association of Petroleum Producers said.

In the meantime, gasification of asphaltines, the dregs of the bitumen barrel, is one process being piloted in the oil sands as an alternative fuel, and underground fires fueled by oily air is another revolutionary technology being piloted to reduce costs in the oil sands, Stringham said.

So the guy who once was the leader of the Young Conservatives in Alberta now has to find a different market for his nuclear power plant. While still hoping to sell it to the oil companies as a possible mode for steam injection processes.

Energy Alberta, with partner Crown corporation Atomic Energy of Canada Ltd., originally targetted the energy-hungry oil sands in its sales pitch, but has moved on to focus on Alberta in general. ''The purpose of this plant is to produce electricity only,'' spokesman Guy Huntingford said. ''Obviously hydrogen and steam are byproducts of it, but that's not why it's being built; it's being built purely for electricity, so we can place the plant anywhere.''

Nuclear power production of electricity is cleaner than coal, even when considering the environmental impact of both its energy source; uranium mining and fresh water, and its waste problems. It is also less environmentally damaging in comparison to the impact of hydro plants.

In fact nuclear power was one alternative source that M.K. Hubert recommended when offering alternatives to oil consumption in his Peak Oil theory.

The Green NGO's and their campaigners target nuclear power because they equate it with two false premises; fear of radiation, and fear of nuclear war.

They equate peaceful nuclear power with the military industrial complex, and they play on peoples fear of radiation.

There are all kinds of other problems with nuclear energy, including safety (even if technology has improved there is no such thing as a 100% accident proof anything, and a nuclear accident is the stuff of nightmares), dangerous waste (there is no way to get rid of nuclear waste at this time and the plant to be built would store all waste on site), environmental concerns (water would be drawn from the Peace River and that could mean pollution or an effect on local ecosystems), security (governments say nuclear power and nuclear waste are potential terrorist targets), and scarcity (uranium is a limited, non-renewable resource).

Facing reality
Editorial - Monday, June 18, 2007 @ 08:00

Not in my backyard. The call is going out loud and clear. In fact, it has been reverberating in both political and community circles ever since it was realized nuclear energy generates waste that must be stored somewhere.

As recorded in Saturday's Nugget, Nipissing-Timiskaming MP Anthony Rota has grave doubts about the whole concept of burying nuclear waste.

Rota is both a cancer victim and survivor. He cannot be thanked or commended too much for having the courage to admit his experience with cancer, and always being at the forefront in every effort to fight this dreaded disease.

Nuclear waste is radioactive. Radiation causes cancer. Rota speaks for millions of Canadians who are afraid of the stuff and do not want it in their backyards

Radioactive waste is the trouble with nuclear power says the right wing Green NGO Energy Probe which opposes nuclear power because they are shills for King Coal.

Dealing with the waste produced by nuclear reactors is one area that constantly dogs the nuclear power industry. Norman Rubin, director of nuclear research for the anti-nuclear organization Energy Probe, believes the waste is the primary problem with the technology.

The real problem is that with Canada's state funded CANDU, uranium industry and its provincial funded utilities,etc. the control lies with a closed group of state sanctioned corporations like Atomic Energy Canada, which have no public transparency, with no public representation on the board; union, consumer, engineering associations, MP's, etc.

The licensing of more reactors would also be a great boon, at potentially greater public expense, to Atomic Energy of Canada Ltd, which has received subsidies of $17.5 billion over 50 years, according to the Campaign for Nuclear Phaseout.

Widespread distrust of existing agencies led Canadians to call for a new independent, non-partisan oversight body to keep tabs on how both government and industry handle nuclear waste.

This message means that top elected officials in Ottawa and the provinces must "revisit the mandates of existing oversight bodies in the nuclear field," concludes the report. Bodies like the federal regulator, the Canadian Nuclear Safety Commission, will need to have a "very public face."

Where our concern has to be is the privatization of nuclear power, it is when plants like that at Three Mile Island or worse; Hanford, are built by Westinghouse and contractors in a P3 with the State that slip shod construction and maintenance leads to critical problems.

The same kind of cronyism that saw the MIC in the U.S. build nuclear power plants was the kind of cronyism that occurred when the Soviet State built its MIC nuclear power plant in the Ukraine. After all Ukrainians were expendable just like the nice folks around Hanford, or those who live in the Nevada desert.

CANDU was a state sponsored engineered and maintained nuclear power process plant different from the Westinghouse and other designs. It was during the Harris and Martin governments rush to privatize and cut back public sector funding that resulted in the Bruce plant in Ontario running into problems. Bruce is now operated by a more public corporation which includes the Power Workers Union.

But in the Post-Kyoto era all that has changed. Those who once talked about selling off government assets now embrace them and are promoting them not only in Alberta but internationally.

Stephen Harper would seem an unlikely pitchman for nuclear power. When the Prime Minister launches into his familiar spiel about Canada as an emerging "energy superpower," we all think we know what he's talking about -- he's an Alberta MP, after all, and his father worked for Imperial Oil. Yet in a key speech last summer in London, his most gleeful boast was not about record oil profits, but about soaring uranium prices. "There aren't many hotter commodities, so to speak, in the resource markets these days," Harper joked to the Canada-U.K. Chamber of Commerce crowd. Then, noting that Britain is among those countries poised to begin buying new reactors for the first time in decades, he added: "We'll hope you remember that Canada is not just a source of uranium; we also manufacture state-of-the-art CANDU reactor technology, and we're world leaders in safe management of fuel waste."

And in response to the key criticism of waste storage these leaders in the 'safe management of fuels", a state sanctioned private conglomerate of nuclear power companies, have blown the dust off another old proposal from the seventies; using the Canadian Shield to store radioactive waste. Not much of a different plan than that used by the US. And one opposed by the Canadian public.

Canada's Natural Resources Minister Gary Lunn announced Friday the Harper government's endorsement of nuclear power and its approval of going ahead with storing high-level radioactive waste underground.

The Conservatives' announcement allows existing reactor sites to continue accumulating waste indefinitely, and it initiates a search for an "informed community" willing to host a "deep repository" for burial of wastes. It will also explore moving wastes to a central location for temporary, shallow underground storage and recycling of nuclear fuel.

As Susan Riley writes in today's Ottawa Citizen, "Apart from the experimental nature of the proposed solution, many hurdles remain — notably, finding a community desperate enough to become a nuclear dumping ground. It has been long supposed that some remote northern town would be the lucky winner, given the technological preference for disposing of the waste deep in the Canadian shield. But recent research suggests the sedimentary rock underlying much of southern Ontario would also be suitable. That said, the prospect of a bidding war between Oakville and Rosedale appears unlikely."

Lunn said the planned depository would cost billions of dollars but said the cost would be borne by the nuclear industry.

It would take 60 years to find a location, build the facility and then transport in the used fuel.

The Atomic Energy Control Board (AECB) regulates this waste, which is currently stored safely and economically in water-filled pools or in dry concrete canisters at the nuclear reactor sites. While there is no technical urgency to proceed toward disposal right away, the issue needs to be addressed partly because the volume of the waste is growing, and partly because the Government has recognized a public concern that a disposal option needs to be identified. In 1978, AECL began a comprehensive program to develop the concept of deep geological disposal of nuclear fuel waste in igneous rock of the Canadian Shield. AECL, assisted by Ontario Hydro, subsequently developed the detailed proposal that is the subject of a public environmental review process by the Canadian Environmental Assessment Agency. Public hearings began on March 11, 1996, and are expected to continue until the end of the year.

Subsequently, in 1978, the Governments of Canada and Ontario established the Nuclear Fuel Waste Management Program “to assure the safe and permanent disposal of nuclear fuel waste”. In this program, the responsibility for research and development on disposal in a deep underground repository in intrusive igneous rock was allocated to Atomic Energy of Canada Limited (AECL).

As it stands, the AECL concept for deep geological disposal has not been demonstrated to have broad public support. The concept in its current form does not have the required level of acceptability to be adopted as Canada’s approach for managing nuclear fuel wastes.

Ignoring a 1998 recommendation by a federal environmental panel (the Seaborn Panel) to create an impartial radioactive waste agency, the Chretien government in 2002 gave control of the Nuclear Waste Management Organization to the nuclear industry - namely Ontario Power Generation, Hydro Quebec and New Brunswick Power. Also in 2002 the federal Nuclear Fuel Waste Act gave NWMO a three-year mandate to choose between (a) "deep geological disposal in the Canadian Shield"; (b) "storage at nuclear sites"; and (c) "centralized storage, either above or below ground". NWMO must make its final recommendation to the federal government by November 15, 2005.

The Nuclear Fuel Waste Act results from the response of the Canadian federal government (December 1998) to the recommendations of the report of the Environmental Review panel (March 1998) on AECL's nuclear fuel waste management proposal. The report concluded that the plan for Deep Geological Disposal is technically sound, and that nuclear waste would be safely isolated from the biosphere, but that it remains a socially unacceptable plan in Canada. The report makes several recommendations, including the creation of an independent agency to oversee the range of activities leading to implementation. The scope will include complete public participation in the process. (See also the author's March 1998 editorial on this subject, and a detailed critique by industry observer J.A.L. "Archie" Robertson, published in the Bulletin of Canadian Nuclear Society, vol. 2 and 3, 1998)

Over a study and consultation period of three years the NWMO was mandated to choose among three storage concepts and propose a site:

• Deep underground in the Canadian Shield
• Above-ground at reactor sites
• Or at a centralized disposal area

The final report of the NWMO was released in November 2005, recommending a strategy of "Adaptive Phased Management". The strategy is based upon a centralized repository concept, but with a phase approach that includes public consultation and "decision points" along the way, as well as several concepts associated with centralized storage (vs. disposal), and the ability to modify the long-term strategy in accordance with evolving technology or societal wishes. The approach of Adaptive Phased Management was formally accepted by the federal government on June 14, 2007.

The NWMO is financed from a trust fund set up by the nuclear electricity generators and AECL. These companies were required to make an initial payment of $550 million into the fund: Ontario Power Generation (OPG), contributed $500 million, Hydro-Quebec and New Brunswick Power each paid $20 million, and AECL contribute $10 million. The participants are also required to make annual contributions ranging between $2 million and $100 million (one-fifth of their respective initial contributions).

Another important component of the disposal plan is the transportation of nuclear fuel to the disposal site. In Canada this aspect is the responsibility of the Ontario utility, Ontario Power Generation Inc.. Special transport casks have been designed that are able to withstand severe accidents. The battery of tests applied to these casks include being dropped 9 metres onto a hardened surface, exposure to an 800 degrees Celsius fire for 30 minutes, and immersion in water for 8 hours. The development of such specialized containers has proceeded in parallel with efforts in other countries. Sandia Labs in the U.S., in particular, has published some remarkable photographs of severe crash tests performed on one such design.

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