CanPol - Alberta edition

[Asher]

There were too many projects going before the Financial Mess and before the royalty mess. That is why some were being shelved even back then.

Your SO should have no problem so long as the price of oil and appetite for it stay 'healthy.'

That's the point. The noise about the royalties and effects on investment were bull****.

So you think a couple billion dollars of minor projects being put back on while many tens of billions of dollars of projects are still cancelled says they're bull****?

They're not ****ing bull****, dude. I can state for absolute, 100% certainty that the reason Chevron pulled out of Alberta was royalty uncertainty. It was the straw that broke the camel's back, and the price of oil also played a role, but it was the royalty fiasco and the perceptive of an inept and unpredictable provincial government that pushed them out the door. Chevron is far from the only one that was negatively impacted by the royalty fiasco. The other big boys also took sharp notice. It played a huge role in the cancellation of many projects and it will continue to play a huge role in all financial models these companies build now, which pushes projects that were quasi-risky before (as most projects worth ten or more billion dollars may be) well into the "no ****ing way" category. Alberta loses out here in terms of employment, and in terms of long-term investment.

Quoting a couple tiny projects being put back on when the oil price stabilized says **** all about the effects of royalties. No one ever said no one would ever invest in Alberta ever again with the royalties as they were, which is apparently what you think was said because you're pointing at these small projects as proof that the royalty fiasco was meaningless to companies.

I'm sorry, nye, but this is immensely retarded and I'm not going to even try to talk with you on this subject any more. There's no point.

[notyoueither]

Someone else bought Chevron's stake. Why did they do that?

I am saying that the royalties as an excuse is bull****, and you are doing nothing to show otherwise other than repeating the industry meme.

[notyoueither]

And yes, projects were being shelved before Bear Sterns, before the royalty report, and while oil was very high.

They were being shelved due to material costs, labour costs, and labour shortages. One project I can recall, there were complaints that what engineering was available was incompetent. They couldn't get work done in other than a shoddy fashion. The company decided that was the wrong environment in which to proceed with a multi-billion dollar investment.

There is such a thing as too much, Asher.

That is a significant factor in my not being the least concerned by the *****ing, especially given that the new rates still result in a relatively low take from government when compared to other jurisdictions.

[Asher]

Someone else bought Chevron's stake. Why did they do that?

I am saying that the royalties as an excuse is bull****, and you are doing nothing to show otherwise other than repeating the industry meme.

What the **** would you want???? You're asking for the impossible then saying the lack of me doing the impossible just proves you right. It's ****ing epicly retarded.

I can state things with 100% fact and certainty because I KNOW THE PERSON who did the financial models and WHO WAS INVOLVED IN THE DECISION. You're saying it's bull**** based on your expertise (which amounts to reading several terribly written newspapers articles) and the fact that a couple small-time projects are back on.

This is a conversation that's not worth having with someone who's no idea what's going on.

And yes, Chevron sold its share in the projects for far less than they wanted. They did sell them, but if you think the value of the sale was not severely impacted by the royalty fiasco you're amazingly naive. But you're also wrong -- they have NOT been able to sell all their shares. No one ****ing wants their 20% share in Athabasca. My father continues to manage that project today.

[notyoueither]

If the GoA were killing the golden goose, would you not think that business reporters from Alberta and elsewhere would be reporting on this in a loud and persistent fashion?

Would you not think that there would be reporting on it even from the CBC?

What we have is some industry grousing, blaming royalty regimes for decreased investment... after the bottom fell out of the price of oil... after the global financial system seized up and capital became extremely difficult to come by... after it looked like we were on the verge of a sustained and severe downturn in demand for raw materials, like oil, on a global basis.

What do we see now, once financial markets are stable and recovering... once the price of oil and other commodities stabilise... once it looks as though global demand will remain and get stronger?

We see projects move ahead.

I would be very interested in any link you can provide that reports on the reasons for Chevron's decisions. I hope it would make for interesting reading. I would hope they are less transparent than Encana was when they had already planned spending elsewhere and then *****ed about royalties as they turned the lights out. What I will not do is take your word for it.

In the meantime, the possible consequences of CO2 policy South of the 49th would have to remain a much larger risk than anything the GoA has done, is doing, or is planning.

[Asher]

If the GoA were killing the golden goose, would you not think that business reporters from Alberta and elsewhere would be reporting on this in a loud and persistent fashion?

You know what I think about journalists. That article you quoted reinforces why they're a bunch of airheaded dip****s.

The very simple fact is the industry is far more complicated than journalists, and you, understand. Everything's so simple to you guys. The price of oil goes down, that must be the only reason projects get canceled. You can't fathom why a government essentially reneging on prior agreements and unilaterally changing its terms to massive degrees would factor in to future business deals these businesses would have to enter into to do business with that province.

There's a lot you and journalists do not comprehend. I've come to accept that.

So yes, continue to preach about how THE WEST IS ON FIREEEEEEEEEEEEEEEEEEE with a couple of tiny, tiny projects now back on while the rest of us in the real world sigh and wait for there actually to be ****ing jobs there. It doesn't take a computer scientist to ****ing realize that the existence of these small projects completely and reasonably dismisses the claims that royalty changes may've submarined massive projects. Am I right??

[notyoueither]

In other words, what you, Flubber, and KH have been on about is a non-event.

The industry and some of their shills are making noise because they hope to pay less than they will have to, but the new royalty regime is not a real factor in the economics of the industry.

[Asher]

I would be very interested in any link you can provide that reports on the reasons for Chevron's decisions.

By the way, this comment made my day. Yes, Chevron routinely puts their complicated and proprietary financial models and risk assessment models up on their websites.

That's how the business works.

Christ.

[Asher]

In other words, what you, Flubber, and KH have been on about is a non-event.

The industry and some of their shills are making noise because they hope to pay less than they will have to, but the new royalty regime is not a real factor in the economics of the industry.

Yes, that's exactly what's happening. They're just whining 'cause they don't want to pay it. The fact that many of them have already ****ing left is just them bluffing, isn't it?

What world do you live in?

Why don't you just think about it? I don't understand why you cannot fathom this. The old royalty system permitted companies to take big risks in the oil sands development because they didn't need to pay royalties until they'd recovered the MANY billions of dollars in development costs. It wasn't until this royalty system was enacted that the oil sands became actively developed. The province essentially pulled that system out from under the oil companies when they decided THEY wanted more money ('got greedy').

Can you not comprehend the impact this would make on financial models? When will these companies get their RoI? Instead of being 20 years, suddenly it's 30+ years. That's a far longer exposure to the market, it's a far bigger risk, it's far harder to justify spending money on. Shareholders don't want to wait 30-40 years to get money back from investments. That doesn't make sense.

[notyoueither]

I would be very interested in any link you can provide that reports on the reasons for Chevron's decisions.

By the way, this comment made my day. Yes, Chevron routinely puts their complicated and proprietary financial models and risk assessment models up on their websites.

That's how the business works.

Christ.

One would think taxation killing investment would be more widely reported if the companies making the claims had any sort of a case.

[notyoueither]

Yes, that's exactly what's happening. They're just whining 'cause they don't want to pay it. The fact that many of them have already ****ing left is just them bluffing, isn't it?

What world do you live in?

I live in a world where there has been a Global Financial Crisis, where many people who are paid to know this **** say things like Great Recession, and where the price of oil went from $140 to $40 just before these projects were being cancelled en masse.

What world do you live in?

[Asher]

One would think taxation killing investment would be more widely reported if the companies making the claims had any sort of a case.

One would think that raising taxes would obviously impact investment. It's ****ing common sense.

For what it's worth, it WAS widely reported when the royalty fiasco happened.

[Asher]

I live in a world where there has been a Global Financial Crisis, where many people who are paid to know this **** say things like Great Recession, and where the price of oil went from $140 to $40 just before these projects were being cancelled en masse.

What world do you live in?

I worked at Lehman Brothers as it collapsed. My father manages Chevron's role in the Alberta oil sands.

I'm out of gas here. I'm not going to lecture you about world financial markets or how Alberta's energy sector works because I don't think you actually ****ing care. You've made no effort here to learn anything new or think this through at all.

Yes, there was a recession (it was not a Great Recession, whoever said that was probably a dip**** journalist), and yes, oil prices fell, but YES, an unpredictable and government that shows a lack of respect to business combined with dramatically increased royalties (and therefore exposure to risk) AND uncertain environment legislation ALL COMBINED to resulted in the massive pull-back of investment in Alberta.

It was a perfect storm. The royalty thing was just the last straw for many. It cannot be understated how much what Alberta did pisses off businesses and scares them for future investments. These deals are massively complex and analyzed in insane amounts of detail. Huge models are built and many, many factors and variables analyzed. The royalty rate is a massive modifier applied to the viability factor of these projects, and a subtle variation in that could dramatically impact the fiscal viability of the projects. And it went up...BY A LOT.

[notyoueither]

Why don't you just think about it? I don't understand why you cannot fathom this. The old royalty system permitted companies to take big risks in the oil sands development because they didn't need to pay royalties until they'd recovered the MANY billions of dollars in development costs. It wasn't until this royalty system was enacted that the oil sands became actively developed. The province essentially pulled that system out from under the oil companies when they decided THEY wanted more money ('got greedy').

Can you not comprehend the impact this would make on financial models? When will these companies get their RoI? Instead of being 20 years, suddenly it's 30+ years. That's a far longer exposure to the market, it's a far bigger risk, it's far harder to justify spending money on. Shareholders don't want to wait 30-40 years to get money back from investments. That doesn't make sense.

Then fewer projects will move forward. That is fine.

What part of 'labour shortage' is difficult for you to comprehend?

What part of $40 oil and it's impact on expensive to recover oil is a mystery to you?

Do you think I am making it up when I claim that projects were being cancelled due to labour and material issues before any of this started?

[notyoueither]

One would think that raising taxes would obviously impact investment. It's ****ing common sense.

For what it's worth, it WAS widely reported when the royalty fiasco happened.

The claims of the industry were reported.

What has not received coverage that I am aware of is any acceptance that they have a case.