Natural gas giant would pull investment if royalties hiked
The Edmonton Journal Published: Saturday, September 29, 2007
EDMONTON - Alberta Premier Ed Stelmach appeared unmoved yesterday by EnCana Corp.'s threat to pull $1 billion in capital investments out of Alberta next year if the province accepts recommendations to hike royalties.
"My message to everyone is let's just calm down. Take a deep breath," Mr. Stelmach said. "If somebody has factual, good, hard evidence that may challenge any of the recommendations, we'll certainly look at it."
EnCana, North America's largest natural gas producer, said its spending cuts would be the "tip of the iceberg" in potential job and investment losses if the government hiked its royalty revenues on oil and gas production by $2 billion.
"If the royalty panel's recommendations are adopted in full, many of Alberta's new and emerging resource plays will simply not be economically viable," the company said.
EnCana is the first energy producer to threaten to cut spending in Alberta in the wake of the Sept. 18 panel report. Mr. Stelmach has said he would announce the government's response next month.
Yesterday, Mr. Stelmach argued that EnCana had taken a firm position without even knowing how the government will act.
"We need the time to review. Whatever is being said is not going to sway me from the total review and, again, finding that balance," the premier said.
He has repeatedly insisted his government's decision will be fair to Albertans who deserve "economic rent" from natural resources, and to companies who want Alberta to remain a competitive market for energy development.
Frank Atkins, an economics professor at the University of Calgary, said yesterday that EnCana's announcement is "necessary posturing" designed to pressure Mr. Stelmach to water down the panel's recommendations.
"Any time your taxes change for the worst, you're going to scream. It's their job to get their argument out there," Mr. Atkins told Bloomberg News. "I can't see a great deal of capital flight coming out of this."