Wednesday, October 24, 2007

Alberta oil royalties - no pressure

I've noted before the ongoing controversy on the royalty issue in the province in Alberta. Latest estimates indicate that $2billion a year of oil and gas royalty dollars are at stake for the province and the companies.

Now the pressure on Premier Stelmach is ratcheting up on all sides.

Recent polls saying 88 percent of Albertans believe they aren't getting enough from energy production in the province as the rewards from record oil prices flow to companies and their employees, while schools, hospitals and roads are strained.

The opposition Liberals have moved to outflank him by unreservedly backing the royalty review report conclusions saying:

“The oil patch isn't going to love any party who raises their royalties, it's pretty simple,” Alberta Liberal Leader Kevin Taft told reporters Tuesday.

“I didn't take this proposal and shop it around for approval in the oil patch, I can tell you that. We'll find out what their reaction is.

“Good, bad or indifferent, this is our position, this is our line in the sand.”

Mr. Taft called his party's position “non-negotiable.”

Industry, led by Calgary-based EnCana Corp. (TSX:ECA) which said it would cut $1-billion from its planned 2008 spending of $3-billion, has gone on the offensive and hit the panic button predicting widespread layoffs and closures. They have even organised protests of hundreds of oil field workers.

Alberta Federation of Labour president Gil McGowan has responded by applying some pressure of his own saying he believes the premier will institute a “watered-down” version of the review panel's proposal if he doesn't outright reject it. “We're worried the Stelmach government is about to cave in to pressure from Big Oil,” Mr. McGowan said. “I'm worried we're on the verge of a capitulation.”

It's bad enough that Stelmach has already misstepped in looking too close to industry.

George Gosbee, chief executive of Tristone Capital Inc., is going after the governing party's , and Stelmach's, base of support outside Edmonton/Calgary by saying that in accepting the recommendations government would make the most prolific natural-gas wells uneconomic and slash exploration activity in rural areas.

And his polling numbers have tanked since taking office. He's now in very real fear of being the last of this line of Progressive Conservative premiers.

It used to be that the Premier's Office in Alberta was one of the most comfortable spots in the nation.

No more.

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