Alberta royalty review ends with fallacy: bankers
Reuters
Published: Monday, October 01, 2007
CALGARY -- International oil producers will flee Alberta if the Western Canadian province's government implements a proposed hike to oil and natural gas royalties and taxes, an investment bank said on Monday.
Going ahead with a recommended 20%, or $2-billion, hike to Alberta's take from oil and gas production in the province will actually cause government revenue to drop as production falls by half-a-million barrels a day, according to Tristone Capital Inc., an investment bank that serves the oil and gas industry.
"The $2 billion increase per year in the government's take is an absolute fallacy," George Gosbee, Tristone's chief executive, told reporters.
Instead of an increase, government revenue would fall by about $1-billion a year if the proposals are adopted, the banker said.
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Bankers warn of revenue drop if royalty report adopted.
(Photo: Getty)
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Font: ****Tristone's study is the latest in a series of industry arguments against the royalty hike proposed last month by a government-appointed panel.
Industry players and lobby groups argue the higher rate will make much of the province's oil and gas unprofitable to produce and will slow development of the province's vast oil sands resources.
Indeed, the biggest Canadian oil and gas explorer, EnCana Corp., said on Friday it would slash capital spending in the province by $1-billion, or up to 40%, if the recommendations were adopted in full.
Tristone claimed the panel report used poor and inaccurate data to back claims that Alberta's take from the oil and gas industry was below that of other producing regions.
Mr. Gosbee said high costs in Western Canada were ignored by the panel and rates of return for oil and gas production were higher in most of the world's other producing regions.
"The data the panel used in its report was either flawed, inaccurate or dated," Mr. Gosbee said.
Alberta Premier Ed Stelmach is reviewing the panel's recommendation and will announce if the government will adopt the proposed rate structure later this month.
© Reuters 2007 |
