Politicians, analysts and others quick to respond to royalty review findings

It was a full house at the Hyatt Hotel in downtown Calgary on Friday morning, with many waiting on the royalty review results.

Wildrose Leader Brian Jean said the decision was a partial victory for Albertans because Rachel Notley listened to the panel, but called review itself a waste of time.

“Even worse than that, it was bad for time, because what it did was it did something that was not necessary,” Jean said. “During low oil prices, we did not need to do this, It actually, I believe, punished more Albertans by job losses, I truly believe that.”

“We saw particular businesses that are not investing in Alberta, just because of the royalty rates,. that says it all, the political climate has to be better in order for companies to bring in capital.”

Jean also said Saskatchewan, B.C., Texas and Pennsylvania were more attractive options for investments compared to Alberta, not only because of royalty rates, but also because of new regulations, like the carbon tax,

Interim PC Leader Ric McIver said the review showed his party’s formula, which had been criticized by the NDP, was right all along and echoed some of Jean’s sentiments about the review creating uncertainly that would lead to economic setbacks.

He also praised the panel involved in the review.

“I think the four panel members are Alberta heroes,” McIver said. “They have taken this government’s attitude from ‘we need to hurt the industry, take more money from them, make it harder for them to operate’ to ‘wow, they’re already paying their fair share.'”

Alberta Party Leader Greg Clark said the review accomplished a lot and applauded what he called “bold moves” by the government.

“This may not be the most political thing I’ve ever said, but it’s the NDP, They came in with this pre-conceived idea that royalties were too low,” Clark said. “I think it was important that we went through this process so that Albertans know, but also the NDP knows, that our royalty scheme is fair.”

“I’m glad also that they accepted our recommendation to have more transparency into oil sands royalties without raising oil sands royalties, I like the idea of providing an incentive to innovate and to get costs down.”

Calgary Mayor Naheed Nenshi also weighed in on the announcement, saying it appears the review has been able to strike a balance between ensuring citizens who own resources are adequately compensated and that there are enough incentives in place to have more investment in the industry.

He said investors from around the world have told him the uncertainty surrounding the royalties is concerning.

“A lot of investors were very legitimately saying ‘let’s hold our money back until we really know, so we can plug those numbers into our spreadsheet, what the investment is going to look like,'” Nenshi said. “Nobody has told me we’re not going to invest.”

“They like the fundamentals, they like the rocks, as people say in the industry, but they wanted to wait to put major investments in until they knew what the royalties look like, this should certainly clear up that uncertainty.”

Trevor McLeod, director of the Centre for Natural Resources Policy at the Canada West Foundation, said the review will provide clarity to the industry and simplify the process of royalty collection overall.

He added, all the NDP could have realistically done was deal with the cost structure, and they did just that.

“There’s still stuff to fix, but today we have more certainty than we had yesterday, and that’s good,” McLeod said.

Bob Schulz, a professor with the University of Calgary’s Haskayne School of Business, said there is still a lot of work ahead, but the report made it clear that companies have to work together.

“The industry now hopefully will wake up and say we have to work as a collaboration, not as a competitor,” he said. “We have to work collaboratively and not just in our own company.”

“Some of the companies already figured that out, but the smaller companies are going to be lost, because they have to figure out who’s innovative in their company, and at least monitor other companies and participate.”

Tim McMillan with the Canadian Association of Petroleum Producers said his group is encouraged.

“We know the direction and intent now, the next 60 days will be very important to work through the details,” he said. “We’re ready to roll up our sleeves and contribute the information to have that to happen.”