Download - The Importance of Achieving a Competitive Fiscal Regime: The Alberta Experience July 30, 2013
The Importance of Achieving a Competitive Fiscal Regime: The Alberta Experience July 30, 2013
Alberta
Rest of Economy
69%
Oil & Gas ExtractionIncidental Services
Engineering Construction
Refining
ChemicalsField Ma-
chinery
Pipelines
Professional Services
Chart Title
Population (2012) – 3.8 million GDP (2012) – $306.7 billion Economic growth (2012) – 3.9% Unemployment rate – 4.6% (2012)
$7 - 10 billion per year non-renewable resource revenues
$25 - 40 billion per year in oil and gas industry investment
Source: Government of Alberta
Alberta covers 661,190 km2 ,an area comparable to France.
Ottawa 2,847km
Vancouver 817 km
New York City 3,270 km
Mexico City 3,973 km
Anchorage 2,277 km
Alberta
Houston3,018 km
London6,793 km
State ownedor controlled
Accessible
Canada’sOil Sands
World OilReserves
OtherAccessibleReserves
52%
48%
AccessibleOil Reserves
Source: EIA, ERCB, CAPP, BP
Alberta Crude Oil and Oil SandsMajor Producer 2012 MbpdSaudi Arabia 11.5
United Sates 11.1
Russia 10.4
China 4.4
Canada 3.9
Iran 3.5
United Arab Emirates 3.2
Mexico 2.9
Venez
uela
Saudi
Arabia
Canad
aIra
nIra
q
Kuwait
United
Arab
Emira
tes
Russia
n Fed
eratio
nLib
ya
Nigeria US
Kazak
hstan
0.050.0
100.0150.0200.0250.0300.0350.0
Billi
on B
arre
ls
Alberta’s Natural Gas Industry is Well Placed with Abundant Resource Opportunities
Alberta’s Natural Gas ResourcesWorld’s 6th largest producing region (Canada combined is 5th)
Source: Energy Resource Conservation Board, Petrel Robertson
Conventional Gas (GIP)
Deep Basin Tight Gas (GIP)
Coal Bed Methane (GIP)
Shale Gas (GIP)0
200
400
600
800
1000
1200
Tcf
Remaining Recov-erable
Gas in Place
Produced
GIP: Gas in Place is the total gas volume believed to be contained in the reservoir.
3600
≈ 11 ≈3400
Alberta’s Oil & Gas Competitiveness Review
Fiscal System Objectives
Alberta maintains a competitive and effective royalty framework that encourages responsible resource development, provides a favourable climate for industry growth and maximizes benefits to Albertans.
Tax and Royalty Revenue Jobs & Economic Opportunity
Taxes & Royalties
Alberta Royalty ReviewPre Shale
2007 Assumptions
Source: http://permaculturenews.org
• Ever Increasing Prices• Scarcity Rents
Unintended Consequences
Royalty Increase of 20% or about $1.9 Billion for 2009
$2.4 Billion in royalty reductions for 2009 and 2010
2007 2008 2009 2010
Investment Competitiveness Review
New Royalty Framework commences
Our Fair Share Report Stimulus Program Announced
Activity is about 50% of 2007 levels
Confidence Restored
Great Recession
Shale Gas Recognized as Game Changer
Oil and Gas Competitiveness Review
Western Canada Land Sales
Source: Alberta Energy, Energy, Mines and Petroleum Resources – Province of British Columbia, Government of Saskatchewan
Percentage of Land Sales 1999-2008
30.85%
58.08%
11.07%
British Columbia
Alberta
Saskatchewan
Land sales are a leading indicator of future activity Alberta dominates in Western Canada
Western Canada Land Sales
Source: Alberta Energy, Energy, Mines and Petroleum Resources – Province of British Columbia, Government of Saskatchewan
Percentage of Land Sales January-October 2009
66.96%
25.33%
7.72%
British Columbia
Alberta
Saskatchewan
(11.07%)
(58.08%)
(30.85%)
Values for 1999-2008 in parenthesis
Investors indicated more confidence in the future prospects in BC than in Alberta.
Western Canada Land Sales
Source: Alberta Energy, Energy, Mines and Petroleum Resources – Province of British Columbia, Government of Saskatchewan
Percentage of Land Sales 2010-2012
13.32%
77.66%
9.02%British Columbia
Alberta
Saskatchewan
1999
- 200
8
2009
Jan-O
ctobe
r
2010
- 201
20%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Alberta once again dominant
Competitiveness
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
0
500
1,000
1,500
2,000
2,500
3,000
0
10
20
30
40
50
60
Global Oil and Gas
Proved Oil Reserves Proved Natural Gas Reserves Production Reserve Life Index
Bill
ion
Boe
Res
erve
Life
Inde
x (Y
ears
)
Where is the peak?Source: BP Statistical Review of World Energy
Emerging Resources are on the Margin
Royalty Targets
Competitive Terms
UncompetitiveTerms
Investment Distortions
Leakage of Resource Rents
Stranded Resources
Lack of Innovation
Measuring PerformanceGoals are:• Maintain Alberta’s fiscal regime to be among the top 3 most attractive
locations when compared to similar jurisdictions• Grow oil sands supply share of global oil consumption
Questions?