The quality of the Google imagery, for obvious reasons is impressive in the area near Fort McMurray. The machinery at work is clearly visible, so is the potential cost to the environment.

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I am starting to wonder if Alberta government representatives think before they speak or even think at all. Having backed off and only partially implemented the recommendation in the “Our Fair Share” report, John Knapp the assistant deputy minister of environment seems to be trying to justify Alberta’s failure to participate in an European-designed carbon credit trading scheme. As is noted by the Canadian Press Alberta officials said their government remains content with its internal plan to reduce its greenhouse emissions.

John Knapp acknowledged an international market for greenhouse gas credits would have advantages for companies stating that:

“If you’re in a much broader marketplace, potentially you have much broader access to a much broader area to trade from.”

The advantage and logic for not participating? According to Knapp restricting Alberta’s carbon market to provincial boundaries will keep its credits relatively expensive, further encouraging companies to reduce their emissions as joining the international carbon market will flood the province with cheap credits at a few dollars a tonne as opposed to the $15 a tonne in the Alberta internal market.

Are we to believe that the same government that failed to implement the recommended royalty rates because of the threats and fear created by the oil companies will force these same companies to pay outrageous rates for carbon credits? Careful Knapp, next thing you know the companies will be threatening to invest in Saskatchewan if they offer cheaper carbon credits.

In a province where the liberal energy critic claims that the royalty structure has cost the taxpayers 16 million dollars, Enbridge has come out to break rank with the other oil companies to indicate a proposed hike in royalties will not impact oil sands investment. According to the Calgary Sun Enbridge vice-president Richard Bird stated that:

We’re doubtful the royalty variable is going to be the make-or-break economic variable in those decisions, construction costs, commodity prices and profit margins will be bigger factors.

My conclusion, either the accountants and executives from Enbridge are not competent  or Encana and Talisman are blowing the proposed royalty increases out of proportion.

If oil hits $100 in 2008 as predicted by CIBC then the oil companies are going to be making a killing. Will the oil companies still claim they are getting the short end of the stick if Alberta still wants their “Fair Share”?

NEW YORK (AP) — Oil prices could top $100 a barrel by the end of next year and remain above that point for years to come, the chief economist of Canadian investment bank CIBC World Markets said Tuesday.

Jeffrey Rubin said rising demand within oil-rich nations, such as Mexico, Venezuela and Saudi Arabia, will put pressure on global oil prices in the coming years. That, combined with the increased cost of pulling petroleum from reserves deep under the sea or wringing it out of oil sands in Canada, will keep oil prices high even if demand in the Western world remains constant.

Source: CNN Money

It is now widely reported in the media that in response to the suggestion that the Alberta government should seek fair compensation for Alberta resources companies are looking elsewhere to invest. In Canadian Oilfield Supply and Services Directory it is noted that:

Calgary-based Crescent Point Energy Trust (TSX:CPG.UN) became the latest company to look eastward saying Tuesday it will shift all of its $150-million 2008 preliminary capital development budget from Alberta to Saskatchewan because of the uncertainty created by the royalty review.

Interestingly it is noted that both Alberta and Saskatchewan are among the worst jurisdictions in the world when it comes to retaining the value of the resource for its people. Interesting that oil companies focus on jurisdictions where they can take advantage of the resource owners.