Parkland Institute Research: Reports

published October 16, 2007

Selling Albertans Short:

Alberta’s Royalty Review Panel Fails the Public Interest.


Executive summary

Selling Albertans Short

The Panel’s report “Our Fair Share”
seriously compromises the public
interest in favour of corporations. The
recommendations fall far short of what Albertans said they
wanted, and what groups like the Parkland Institute have been
calling for over the past decade.

Even if the Panel’s report is implemented in full,
revenues from oil and gas are projected to fall by $2
billion by 2016.

Public Ownership - We must consider this
investment option. Publicly-owned oil companies
from countries such as Norway, China, Korea, Japan
and Abu Dhabi have made purchases in the tar
sands. It is ironic that the citizens of these countries
are profiting from Alberta’s oil and gas while
Albertans do not publicly own any of the companies

Being competitive can mean more than
having the lowest royalties

Alberta is currently the lowest tax and royalty jurisdiction in
North America and one of the lowest in the world. This will
not change significantly even if the new rates are applied. The
Panel’s stated goal was to remain competitive internationally by
keeping Alberta one of the lowest tax and royalty jurisdictions.
The Panel didn’t consider Alberta’s other competitive
• Most other jurisdictions have already significantly increased
their royalties and taxes (see chart on Gov’t Take).
• Alberta is low in terms of political risk compared to other
jurisdictions in the chart including all of those with over 60%
government take.
• Tar sands costs are a red herring - the proposed tar sands
royalties are based on net profits, meaning costs are already
deducted. Also, conventional oil is harder to find; tar
sands have no exploration costs. Globally, exploration and
development costs are up 50 to 55% while in the tar sands
they have increased by only 26 to 32%. For natural gas,
Alberta basins were all below average costs for Canada and
the US. Out of the 76 basins identified, Alberta’s were all
within the bottom 20 for cost.
• Most of the world’s oil reserves are under the control of
National Oil Companies (NOCs) and off limits to private,
for-profit oil companies. Canada represents anywhere from
50-60% of the investable oil reserves in the world.
• CIBC World Markets predicts an increase to over $100-abarrel
oil within two years. High prices are leading to record
profits for the sector. In 2006, the top ten oil companies in
Alberta made a total profit of $23 billion. (For comparison:
the provincial budget totalled $29. 6 billion) Ironically, CNRL
CEO, Steve Laut told the review Panel, “It’s a myth out there
that this is a hugely profitable business”. But CNRL has told
investors that the Horizon project will produce a “wall of cash
flow” that will be “sustainable for decades”.

ISBN: 1-894949-16-1

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