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It's projects like this, why we need to charge more. If they don't want to build refineries here and create jobs, well then they need to pay more for the product.

Proposed Keystone Pipeline Project

The 3,456-kilometre (2,148-mile) Keystone Pipeline will transport crude oil from Hardisty, Alberta to U.S. Midwest markets at Wood River and Patoka, Illinois and to Cushing, Oklahoma. The Canadian portion of the project involves the conversion of approximately 864 kilometres (537 miles) of existing Canadian Mainline pipeline facilities from natural gas to crude oil transmission service and construction of approximately 373 kilometres (232 miles) of pipeline, pump stations and terminal facilities at Hardisty, Alberta. The U.S. portion of the project includes construction of approximately 2,219 kilometres (1,379 miles) of pipeline and pump stations.

The Keystone Pipeline will have an initial nominal capacity of 435,000 barrels per day in late 2009 and will be expanded to a nominal capacity of 590,000 barrels per day in late 2010. Keystone has contracts with shippers totalling 495,000 barrels per day with an average term of 18 years.


http://www.transcanada.com/keystone/

   

I call EnCana's bluff! The Alberta oil sands are basically the last undeveloped source of oil left on the planet....if they decide to pull out of the project, how many seconds will elapse before another company rushes in to take their place? With world demand for oil surging and the Middle East in chaos, developed nations like the U.S. will not sit idally by and let the oil sands go limbo because of Encana's childish tantrum. Screw 'em!

   

Here is the report

http://www.albertaroyaltyreview.ca/pane ... report.pdf

On page nine, it says that 57% of conventional oil wells and 82% of conventional gas wells will be taxed less. Why? Because they are lower producing fields. The field life of an oil reserve is such that the earlier in the life, the more that is produced, and the later in the life, the less that is produced. When you first discover a well, you take the easiest stuff first. Thus, the most productive period of a reserve is in the first year, then declines thereafter. The take from a field is not a constant over its life, its a declining curve.

At some point, the field becomes a maintenance project for the oil company, and often times, growth energy companies will sell the field, or in Canada, they'd spin them off into an income trust. The proposal has the effect, therefore, of taxing new investment more (and most of the capital coming into Alberta is going into the oil sands). That means the incremental cost of new investment is higher, and thus the new royalty scheme discriminates against new investment. But that's what it is designed to do because the government wants to get more from the oil sands.

   

When the rate is too high, the cost is the opportunity cost to the economy. Assuming it is merely maintained does not mean the economic returns are the same. The price of oil may fall, there could be major new finds elsewhere, new technology may open other fields, new technology may offer energy alternatives, and so.

   

When the royalty rate is set too high, capital and labor go to their best alternative, it means their opportunity costs become their benefits.

   

Which is much lower than where it is currently.

What was the job market and wages like in Alberta six or seven years ago when oil was still below $30?



If, by "benefit" you mean they get less than they otherwise would, then yes, the "cost" indeed is a "benefit."

   

But the royalty rate is currently to low, the Albertans don’t get their fair share.

   

That may or may be right. But your opinion of what is "fair" and "too low" is subjective.

Another interpretation is that Albertans are being greedy and are couching their greed in terms of "fairness".

   

It's a stupid interpretation since you cannot afford to insult an unavoidable negotiating partner. Never forget, Albertans are the owners of the resource, so, if you want a piece of it, you better be polite with them.

   

Does that mean since those who are not doing the negotiating can be as rude as they want to be?

   

An adviser, to acquire a good reputation, should be as polite as a negotiator.

   

I was joking, Benoit.

   

It’s not an excuse.

   

Yes, that would be the opinion of the oil industry, which is complaining that their profits of $10 billion (that's an approximate guess) a year will be reduced to $8 billion. Kinda hypocritical to be calling Albertans greedy isn't it?

   

The sooner you learn the difference between a profit an a rent the better.

   

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