Will oilsands operators balk at royalty review findings?
by Neil Waugh (EDMONTON SUN)
Premier Ed Stelmach was in Fort McMurray last week making a speech tailor-made for the place he calls "the engine that drives much of Alberta's and Canada's economies."
Stelmach said he could feel Fort Mackers' pain, and the "tremendous growth pressures" that the oilsands boom brings with it.
He specifically focused on labour force planning.
"I know that's a big issue in Fort McMurray," Stelmach said. "And one with no easy answers."
Then he revealed how he had turned his new Employment Minister Iris Evans loose to develop a "made-in-Alberta solution to labour needs."
To make sure that Auntie Iris got the message, he also included it as Point No. 1 in her mandate letter. She's ordered to "improve and strengthen" the province's immigration program and to implement a "comprehensive labour strategy."
Mainly because the one that Ralph Klein left him couldn't get much worse. Allegations swirling around Canadian Natural Resources Ltd.'s Horizon project - and the imported Chinese tradesmen assembling the plant's massive tank farm - are bound to hit the floor of the legislature once the session gets going.
Yesterday, CNRL vice-president Real Doucet issued a "progress update" for the fourth massive project in the Athabasca oilsands. He reported that construction was "ahead of our projected schedule" and the cost is still "not marginally different" from the original target of $6.8 billion.
Then Doucet praised CNRL's "well-defined and well thought out" execution strategy, including the "managed open site" concept that has caused a furor in the building trades.
It will likely see Stelmach's Tories lose two of their remaining three Edmonton seats in the next election.
"Fly-in/fly-out continues to demonstrate success," beamed Doucet. "We have expanded our available labour force to across Canada."
55 FLIGHTS A WEEK
He revealed that there are now up to 55 flights a week into the job from "all across Canada," with over 4,000 tradesmen and women onsite in December. Meanwhile, there are disturbing reports of thousands of pipefitters and electricians on the dispatch lists at the Edmonton union halls as the bitter dispute between CNRL and the Alberta building trades continues to simmer. Now Stelmach wants to import more offshore workers as his solution to the alleged labour woes, while Alberta tradesmen sit at home drawing pogey.
The premier also told his Fort Mac audience of his bold plan (except we haven't seen it yet) to review the ridiculous penny-on-the-dollar oilsands royalty to "encourage investment."
More importantly, the review will consider how to "pay optimal economic dividends to Albertans," who, Stelmach reminded the Fort Mac folk, "own these resources."
Yesterday, the oilsands patch began firing back, with the release of the Canadian Oil Sands Trust's fourth-quarter report. It contained the happy news that the income trust outfit - that owns a 36.7% stake in Syncrude - finally started paying a 25% royalty in the second quarter of 2006. Or $8.23 a barrel. In 2005 the average royalty was 72 cents a barrel.
And Syncrude is expected to pay $675 million in royalties in 2007.
But don't cry for Syncrude. Tucked away in the report's fine print is a revelation that the plant's break-even point is $23 a barrel. Yesterday oil traded at $57.30 US per barrel. Nice work if you can get it.
But finally Stelmach's royalty review plan has penetrated the Calgary oil towers.
ROYALTY REVIEW
The trust's document also warned unitholders that the company "cannot determine or speculate" on the royalty changes Premier Ed may have up his sleeve.
"The trust believes the current regime strikes the right balance between the owners of the resource and those risking capital to develop it," the report urged.
And it warned how oilsands plants are "capital intensive and risky."
Then the report called for a "fair and stable" fiscal regime that "recognizes the value of processing oilsands in the province."
Which should mean jobs and royalties.
Stelmach's going to hear a lot more anguish like this as the royalty review heats up. But can he stand the heat?
by Neil Waugh (EDMONTON SUN)
Premier Ed Stelmach was in Fort McMurray last week making a speech tailor-made for the place he calls "the engine that drives much of Alberta's and Canada's economies."
Stelmach said he could feel Fort Mackers' pain, and the "tremendous growth pressures" that the oilsands boom brings with it.
He specifically focused on labour force planning.
"I know that's a big issue in Fort McMurray," Stelmach said. "And one with no easy answers."
Then he revealed how he had turned his new Employment Minister Iris Evans loose to develop a "made-in-Alberta solution to labour needs."
To make sure that Auntie Iris got the message, he also included it as Point No. 1 in her mandate letter. She's ordered to "improve and strengthen" the province's immigration program and to implement a "comprehensive labour strategy."
Mainly because the one that Ralph Klein left him couldn't get much worse. Allegations swirling around Canadian Natural Resources Ltd.'s Horizon project - and the imported Chinese tradesmen assembling the plant's massive tank farm - are bound to hit the floor of the legislature once the session gets going.
Yesterday, CNRL vice-president Real Doucet issued a "progress update" for the fourth massive project in the Athabasca oilsands. He reported that construction was "ahead of our projected schedule" and the cost is still "not marginally different" from the original target of $6.8 billion.
Then Doucet praised CNRL's "well-defined and well thought out" execution strategy, including the "managed open site" concept that has caused a furor in the building trades.
It will likely see Stelmach's Tories lose two of their remaining three Edmonton seats in the next election.
"Fly-in/fly-out continues to demonstrate success," beamed Doucet. "We have expanded our available labour force to across Canada."
55 FLIGHTS A WEEK
He revealed that there are now up to 55 flights a week into the job from "all across Canada," with over 4,000 tradesmen and women onsite in December. Meanwhile, there are disturbing reports of thousands of pipefitters and electricians on the dispatch lists at the Edmonton union halls as the bitter dispute between CNRL and the Alberta building trades continues to simmer. Now Stelmach wants to import more offshore workers as his solution to the alleged labour woes, while Alberta tradesmen sit at home drawing pogey.
The premier also told his Fort Mac audience of his bold plan (except we haven't seen it yet) to review the ridiculous penny-on-the-dollar oilsands royalty to "encourage investment."
More importantly, the review will consider how to "pay optimal economic dividends to Albertans," who, Stelmach reminded the Fort Mac folk, "own these resources."
Yesterday, the oilsands patch began firing back, with the release of the Canadian Oil Sands Trust's fourth-quarter report. It contained the happy news that the income trust outfit - that owns a 36.7% stake in Syncrude - finally started paying a 25% royalty in the second quarter of 2006. Or $8.23 a barrel. In 2005 the average royalty was 72 cents a barrel.
And Syncrude is expected to pay $675 million in royalties in 2007.
But don't cry for Syncrude. Tucked away in the report's fine print is a revelation that the plant's break-even point is $23 a barrel. Yesterday oil traded at $57.30 US per barrel. Nice work if you can get it.
But finally Stelmach's royalty review plan has penetrated the Calgary oil towers.
ROYALTY REVIEW
The trust's document also warned unitholders that the company "cannot determine or speculate" on the royalty changes Premier Ed may have up his sleeve.
"The trust believes the current regime strikes the right balance between the owners of the resource and those risking capital to develop it," the report urged.
And it warned how oilsands plants are "capital intensive and risky."
Then the report called for a "fair and stable" fiscal regime that "recognizes the value of processing oilsands in the province."
Which should mean jobs and royalties.
Stelmach's going to hear a lot more anguish like this as the royalty review heats up. But can he stand the heat?
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