With WTI hovering at roughly $45 per bbl, Saudi Arabia's ongoing struggle to maintain its share of the global oil market seemingly shows little sign of winding down. On the face of it, Saudi Arabia's strategy makes intuitive sense: leverage its substantial production capacity to flood the market with crude oil and drive down the price to the point where rival shale production at current levels is uneconomical. True enough, US rig counts continue to drop and without a doubt production targets [Read more]
New report suggests ending Alberta’s gross revenue royalty structure
With royalty review given the go-ahead for late 2016 by the Alberta provincial government, the question now remains what the Royalty Review Panel’s final recommendation will look like. A report released today by the C.D. Howe Institute offers a starting point for the discussion on what changes, if any, should be introduced to Alberta’s resource tax system. With $75 billion in oil & gas tax revenues collected between 2009 and 2013, and said revenues accounting for a whopping 21.8 percent [Read more]
In discussing oil & gas “subsidies”, sloppy terminology comes into play
In a heated election year, it is a sobering truth that the oil & gas industry has become a fashionable target for various commentators. In this context, few issues are likely to generate as much passion as that of oil & gas subsidies, often derided by critics as “corporate welfare.” The size of Canadian energy subsidies is said to range from $211 million to $34 billion. This range is nonsensical; what the subsidies amount to depends on what the subsidies are defined as. A fairly [Read more]
Abolition of US crude oil export restrictions could spur wider US-Canada price differential
Amid talk of the persistent crude oil supply glut, relatively little attention has been paid to the one notable quirk about US energy exports: they are heavily restricted. Those restrictions are of course a legacy of the supply shocks that characterized 1970s energy markets, a consequence of the OPEC oil embargoes. The system is not an outright ban but rather an export licensing regime. This regime is subject to notable geographic exceptions. Exports to Canada and more recently to Mexico are [Read more]
Alberta NDP remains stuck in campaign mode
With oil prices at historic lows and Alberta’s vital oil & gas industry under extraordinary pressure, the province faces a budget deficit forecasted in the range of $5.4 billion. The BOE Report has long taken issue with Premier Notley’s handling of Alberta’s ongoing economic crisis, and the Alberta NDP has deservedly become synonymous with job-threatening policies of tax increases and royalty review. But, Premier Notley won a mandate from Albertans, and one would expect her NDP government [Read more]
Media coverage of oil sands builds false narrative
Beloved celebrity educator Bill Nye the Science Guy is the latest voice joining the chorus against continued development of the Alberta oil sands. Channeling his objections, a recent Vice News article decried the impact of industry activity on local aboriginal communities. The same article also unintentionally revealed that media coverage of this crucial economic sector is woefully lacking in critical details. In many ways, the aforementioned article is unremarkable. It repeats the trite [Read more]
Downturn Offers Chance to Improve Industry Fundamentals
Pessimists can be forgiven for succumbing to the doom and gloom that pervades the oil & gas news headlines. While WTI recently showed some improvement, it has yet to climb back over $50/bbl nor is it anywhere near the $70/bbl to $80/bbl range that oil sands and US and Canadian unconventional producers require to break even, according to the most recent industry overview by Peters & Co. To be sure, anyone following developments in the industry on the macro level would be overwhelmed by [Read more]