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PostPosted: Sat Sep 29, 2007 11:25 am
 


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/


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PostPosted: Sat Sep 29, 2007 1:05 pm
 


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!


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PostPosted: Sat Sep 29, 2007 4:18 pm
 


Benoit wrote:
Toro wrote:
Benoit wrote:
Toro wrote:
Oh yeah, investment banks are whores.

But that doesn't mean they're wrong.


The past proves them wrong: investments cannot be at risk since the increase in royalties just follows, with a big time lag, the increase in the price of oil. Investors received profits in the past, they were not desperately counting on increases in the price of oil.


the report recommends increased royalties on new investments, not on investments in the past.


I have read the recommendations and the panel does not speak specifically of the new investments, it proposes to increase now the «post-Payout» net royalty rate from 25% to 33%.


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.


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PostPosted: Sat Sep 29, 2007 4:22 pm
 


Benoit wrote:
Finding the point where the royalty rate generates the most public revenues should be the objective because, that way, equal economic freedom for each citizens can be maximized. In the process of finding the maximum (on the Laffer curve), it is better to miss the summit by imposing a royalty rate too high than too low. When the rate is too low, economic rents that fall in the hands of lobbyists are corrupting the political life worldwide. When the rate is too high, the resource is simply conserved.


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.


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PostPosted: Sat Sep 29, 2007 5:38 pm
 


Toro wrote:
Benoit wrote:
Finding the point where the royalty rate generates the most public revenues should be the objective because, that way, equal economic freedom for each citizens can be maximized. In the process of finding the maximum (on the Laffer curve), it is better to miss the summit by imposing a royalty rate too high than too low. When the rate is too low, economic rents that fall in the hands of lobbyists are corrupting the political life worldwide. When the rate is too high, the resource is simply conserved.


When the rate is too high, the cost is the opportunity cost to the economy.


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


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PostPosted: Sun Sep 30, 2007 7:06 am
 


Benoit wrote:
When the royalty rate is set too high, capital and labor go to their best alternative,


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?

Quote:
it means their opportunity costs become their benefits.


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


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PostPosted: Sun Sep 30, 2007 8:34 am
 


Toro wrote:
Benoit wrote:
When the royalty rate is set too high, capital and labor go to their best alternative,


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?



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


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PostPosted: Sun Sep 30, 2007 10:15 am
 


Benoit wrote:
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".


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PostPosted: Sun Sep 30, 2007 3:22 pm
 


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


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.


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PostPosted: Sun Sep 30, 2007 7:10 pm
 


:lol:

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


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PostPosted: Sun Sep 30, 2007 7:57 pm
 


Toro wrote:
:lol:

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.


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PostPosted: Sun Sep 30, 2007 8:19 pm
 


I was joking, Benoit.


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PostPosted: Mon Oct 01, 2007 7:27 am
 


Toro wrote:
I was joking, Benoit.


It’s not an excuse.


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PostPosted: Mon Oct 01, 2007 1:44 pm
 


Toro wrote:
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".


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?


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PostPosted: Tue Oct 02, 2007 8:49 pm
 


DrCaleb wrote:
Istanbul wrote:
Alberta may pay ultimate price

Oilsands developers unlikely to accept increase



This just in: Albertans unlikely to accept rising pump prices.

But we do. Not like they ask us, or we have a choice.

We aren't asking them to accept an increase in the royalty scheme ether. But they will. They are as addicted to their profits as we are to our cars.


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


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