Natural Gas and Conventional Oil Investment Competitiveness Study Project Frequently Asked Questions
What is an “investment competitiveness study”?
Who will be leading the study?
Who are the advisors on the project and what is their role?
What initiated the study?
Why is this so important?
What factors will be taken in to account in the comparison?
How will you work with stakeholders on gathering the necessary information?
What are the expected deliverables from the project?
Is Alberta still a great place to invest?
What is an “investment competitiveness study”?
The study will compare the investment competitiveness of Alberta’s conventional oil and natural gas sector with that of appropriate competing jurisdictions, both domestic and international.
Who will be leading the study?
The Alberta Department of Energy will lead the study that will also involve key stakeholders including other Government Departments, the Energy Resource Conservation Board, Canadian Association of Petroleum Producers (CAPP) and the Small Explorers and Producers Association of Canada (SEPAC).
Who are the advisors on the project and what is their role?
Former Nexen Inc. vice-president Roger Thomas and former Royal Bank of Canada investment banker Chris Fong will help oversee the fiscal side of the study.
The advisor(s) will assist the Project Sponsor through the following roles:
- Facilitate dialogue and understanding among government, industry, and the financial community;
- Work with the Government team and the industry team to review information, analysis and methodologies employed;
- Provide advice and recommendations to the government team, the DM Steering Committee, the Project Sponsor and the Minister of Energy;
- Act as an independent third party that can advocate for the process, work and results of the study.
The advisor(s) will provide information and advice on their specific area of expertise (e.g. resource development, oil and gas investment, bank financing) and may retain additional expertise as required.
The Department of Energy is undertaking this investment competitiveness study in response to a number of questions regarding how well the province’s energy sector is positioned compared with other provinces.
In an increasingly dynamic and competitive market economy, we cannot afford to assume that what clearly worked well in the past will remain appropriate for the future. Our past successes have not come from being passive observers. We must review our practices and investment strategies and take responsibility for our economic and financial future. This is why a competitiveness review is so important at this time.
What factors will be taken in to account in the comparison?
The analysis will consider all the factors a company would take into account before investing their shareholders’ dollars in our province. These will include not our only royalty and tax structure, but the nature of our reserves, costs, market conditions and the regulatory system.
This study will also provide a thorough comparison of investing in Alberta’s oil and gas resources relative to competing jurisdictions, with a particular focus on British Columbia, Saskatchewan and on-shore United States; e.g., Texas.
How will you work with stakeholders on gathering the necessary information?
Under the guidance of a Project Management Office and the Executive Director for Alberta Energy, interviews, focus groups and workshops will be held with stakeholders to identify issues, confirm inputs/methodology, identify work/ information requirements, review, analyze and make recommendations for the preparation of the final deliverable.
What are the expected deliverables from the project?
- A comprehensive comparison of the economic value of Alberta’s natural gas and conventional oil resources by area and resource type, including a comparison of Alberta’s competitiveness relative to that of competing jurisdictions.
- A thorough comparison of the characteristics of Alberta’s natural gas and conventional oil resources relative to competing jurisdictions.
- An identification of the key attributes of oil and gas producers in Alberta going forward.
- An assessment of the regulatory framework to identify potential impacts on investment competitiveness (e.g. impacts on costs and resource recovery) and to identify key enablers and barriers for future natural gas and conventional oil development in Alberta.
- Recommendations for consideration by the Government of Alberta
- Where appropriate, other recommendations for future studies and / or policy considerations.
Is Alberta still a great place to invest?
The investment climate in this province remains positive for the energy sector, as many of Alberta’s international competitors do not offer the same level of political stability, transparency and security.
- Imperial Oil Ltd. announced it is proceeding with the $8-billion, 110,000-barrels-per-day first phase of its Kearl oil sands mine.
- Athabasca Oil Sands Corp. (AOSC) announced on August 31, 2009, that PetroChina International Investment Company Limited has agreed to pay $1.9 billion Cdn for a 60% stake in two planned oil sands projects.
- Royal Dutch Shell, Ivanhoe Energy, and Suncor have all announced that they remain committed to investing in Canadian oil sands.
