Royalty fear unfounded: mayor
International investors not afraid of NDP’s promised review, Nenshi says
International energy money will keep flowing into Alberta because investors don’t fear an NDP royalty review, Mayor Naheed Nenshi said after an economic mission to New York City.
He’s an optimistic guy by nature, Nenshi told Calgary reporters Wednesday, but he said he’s “genuinely optimistic” after several meetings in the U. S. financial capital.
“You know, we have to work hard on providing clarity. We have to ensure a royalty review is done expeditiously and has the right people around the table,” the mayor said.
“But these folks told me very clearly: royalty reviews happen all the time. The royalties are way below what we’re paying in most places in the United States.”
The election of Rachel Notley’s NDP and the end of four decades of Tory rule has made some oilpatch executives and bankers skittish, particularly with the uncertainty of Notley’s promised review of energy royalty rates. It’s the first since former premier Ed Stelmach’s in 2007, which led to controversial increases that were later rolled back in many areas.
Amid his boosterism, Nenshi also agreed there’s some investment chill for now, before the review plans have been set.
“As always, they’re saying: look, we can’t put in hundreds of million of billions of dollars unless we can run our numbers, and we can’t run our numbers without having the royalty rates to slide in,” the mayor said.
“But they were not at all concerned about a giant compression of margins or this being an uneconomical place to invest in.”
Though he cited comparisons between Alberta’s royalties and U. S. rates, Nenshi also acknowledged there’s a huge difference between the Crown- controlled resources here and operations mainly on private land south of the border.
The NDP government has said it plans to launch a royalty study later this year, but hasn’t elaborated much further. The talk of ensuring companies pay a fair share to Alberta coffers comes during a slight rebound that follows last year’s oil price plunge, and thousands of job losses in the sector as companies scale back or defer oilsands expansions.
Canadian Natural Resources Ltd. last week delayed a June open house for investors, blaming “uncertainty surrounding the government of Alberta’s review of royalty, taxation, environmental and greenhouse gas policies.”
Cheryl Oates, spokeswoman for Notley, welcomed Nenshi’s comments.
“We’re happy that he feels that way,” she said.
“His views align with a lot of Albertans. They understand that this will be a careful and considered process, and we’re happy people are open- minded to it.”
The NDP has also promised a new strategy on carbon emissions will come out this month.
Nenshi’s trip to New York, as part of a Calgary Economic Development mission, included interviews with Bloomberg Radio and MSNBC.
He once again touted the Keystone XL pipeline, a project that Notley has been far less bullish on than her Tory predecessors.