Alberta Oil Patch Will See a Spring Miracle

After a global recession which affected the Alberta oil patch dramatically, according to Mr. E Hare, President and CEO of Easter Hare’s FInancial Forecasting, “we can expect a spring miracle”. “The provincial government has conducted a robust flurry of studies and consultations, and, in 2010, Alberta will regain its rightful place as the star atop Canada’s economic tree,” he says.

In a follow-up interview, the Day-by-Day Oil Bulletin reports that Alberta has decided to revise its royalty regime, attract global financial capital, stimulate trade and commerce, and enable the oil and gas industry to create challenging jobs for the unemployed.

“Evidence of this phenomenon will soon be seen across the province,” Mr. Hare told the Bulletin. “I anticipate the cold weather will cause a spike in natural gas prices, drilling contractors will be hired to explore for oil and suspended wells will be pumping once more.” He chuckled and added that “By next spring, Alberta will be well-positioned as a leading energy super-power.”

The Calgary Chamber of Commerce commends the province for undertaking its Natural Gas and Conventional Oil Investment Competitiveness Study. Most, if not all, of our members benefit from a healthy energy industry – including our dry cleaners, car dealerships, computer teckies, hair salons and engineering consultants.

Chamber members are pleased that the government is developing a long-term energy vision. They like the fact that Alberta is working to establish an attractive framework for all investors and producers.

Our companies believe that the certainty of rules and competitiveness in the fiscal and regulatory regime will attract the global capital markets to fund projects. They are encouraged by the potential for technological innovation.

Our members are eager to have all Canadians understand the benefits of this dynamic sector.

According to the Canadian Energy Research Institute (CERI), the oilpatch has the potential to create a $2.9 trillion GDP impact on Canada’s economy (2010-2035). This amounts to $311 billion in taxes to the federal government and $189 billion to Alberta, plus $12 billion a year in royalties to the province.

Today, the industry represents 42% of Alberta’s GDP, with $23 billion (or 15%) coming directly from upstream operations.

Once the oilpatch gets busier, CERI estimates it will create 13,750 thousand person-years of employment within the province and another 4,780 thousand person-years of work across the country. These jobs will generate prosperity locally, regionally and nationally, so Canadians will also profit from Alberta’s energy wealth.

The Chamber offers these recommendations to help Alberta once more become the engine of Canada’s economy:

• Attract investors by ensuring adequate upside return potential to compensate for investment.
• Build investor trust and confidence by creating a predictable and stable royalty regime (fewer short- term incentives and wait at least five years before conducting another major review).
• Establish a royalty mechanism for the development of emerging unconventional resources (shale, tight and sour gas).
• Develop alternate fiscal and regulatory frameworks to recognize the fundamentally different nature of various extraction methods (enhanced oil recovery, shale gas) and resource plays (from one-well to multi-well projects).
• Consider a consolidated approach to environmental assessment, public and Aboriginal consultation for intensely developed regions.
• Encourage the development of new recovery and environmental technologies through various taxes, royalties and other incentives.
• Create a permanent and on-going forum for constructive dialogue with industry, investors and regulators.