EnCana has conducted their own biased evaluation of recommendations contained in the Alberta Royalty Review Panel Report. Of course, EnCana is worried about their investors and without surprise noted how negatively the proposed changes will have on EnCana’s billions of dollars in revenue. They are now threatening to pull significant investment out of Alberta. Without knowing much about their oil investments worldwide I say good riddance. Let them go, someone will happily take their place and turn a few billions rather than multiple billions on the oilsands that exist in Alberta.
EnCana threatens to cut its 2008 capital investment in Alberta by about $1 billion, or 30 to 40 percent of the $2.5 billion to $3 billion the company has planned for Alberta-based activity. Most of the reductions would be to EnCana’s natural gas activity in areas where the proposed royalty scheme makes those activities uneconomic or uncompetitive in its portfolio. The company plans to reallocate capital to investments outside Alberta.
Encana is uninterested in giving back to Alberta residents and would rather reap billions of dollars on an already favorable business climate. Of course, nobody expected any different of a reaction. The proposed changes will have immediate and long-term impacts on working Albertans. The magnitude of the expected capital reductions is the tip of the iceberg. In the short term, these changes would mean extensive job losses across the industry. Of course, they could also go and end up lowering overall housing prices for those without homes yet 😛