CALGARY – If energy companies are skittish about investing in Alberta, they’re welcome to set up shop next door, Saskatchewan’s economy minister said Wednesday.
Bill Boyd said he’s been watching the political debate in neighbouring Alberta over the newly elected NDP government’s plans to review oil and gas royalties.
Boyd said he’s been hearing “a fair bit of concern” from companies at the Global Petroleum Show, a massive exhibition in Calgary this week with some 50,000 attendees from around the world.
“During this period of time where there’s some degree of instability, I think they’re a little bit worried as to what may eventually transpire,” he said in an interview.
“A little bit more serious than that, though, is they are certainly pulling back in terms of investment. I don’t think new investment decisions are going to be made until that climate is known.”
Boyd is touting Saskatchewan as a stable and attractive place to invest during his Calgary visit.
“We’ve seen some companies move some of the capital that they were looking to allocate elsewhere to Saskatchewan. So that’s certainly good news for our province,” he said.
When Alberta last raised royalty rates following a review in 2007, many companies threatened to move their money elsewhere. But most of the changes were essentially undone a few years later when the Great Recession hit and crude prices cratered.
Scott Saxberg, CEO of Saskatchewan-focused producer Crescent Point Energy (TSX:CPG), said Boyd’s boasts are well founded.
“We’re continually impressed with how well-run that government is and how well-run that department is,” he said.
The vast majority of Crescent Point’s spending this year is focused on Saskatchewan, with Alberta getting the smallest slice.
When Crescent Point decides where to put its dollars, a jurisdiction’s fiscal regime is a major consideration, said Saxberg.
“These decisions are 20-, 30-year capital spend decisions,” he said.
“So you want to have consistent certainty in around that regime and what the rules are and so then we’ll make our economic determination of what capital we’ll spend and where.”
Saxberg said he’s met with Alberta’s new energy minister, Marg McCuaig-Boyd, and came away with a good impression. But, for the time being, there’s some caution about investing in Alberta.
Trevor McLeod, with the Canada West Foundation, said it “makes some good sense” for Boyd to trumpet Saskatchewan’s energy approach in the heart of Canada’s oilpatch.
“Heaven knows for a long time, Saskatchewan for a number of years, wasn’t able to make that argument, whereas Alberta was,” he said.
But he doesn’t see the rivalry being a problem.
“I really do think we have broad-minded individuals in the leadership chairs,” he said.
United Steelworkers economist Erin Weir said the Saskatchewan government “seems intent on running a race to the bottom.”
“Instead of undercutting Alberta’s royalties, we should work with Rachel Notley’s new government so that both provinces can collect a better royalty return,” said Weir, who is running for the NDP federally in Regina.
“Surely interprovincial co-operation could help to collect fair royalties from our resources, rather than allowing oil companies to play one province off against the other.”