Alberta Federation of Labour Alberta’s $2.9-Billion Drilling Stimulus: Where did the money go?

 $2.9 billion Drilling Stimulus:  no new jobs  decreased drilling  Royalties siphoned off through a government- sanctioned “grey market”

(in millions) 2009 Estimated Cost (one year only) Actual Cost (over two years) % Difference Drilling Credit$466$1, % New Well Royalty Reduction$1,040$1, % Total$1,506$2, % (Source: Ministry of Energy)

“For that investment, what we get is jobs. We get jobs for Albertans, we generate some wealth in the province of Alberta. We will generate additional royalty revenue and production over 10, 20, maybe 30 years.“ Energy Minister Mel Knight Government of Alberta News Release, June 25, 2009

(Source: Statistics Canada, CANSIM Table )

(Source: Alberta Energy)

(Sources: Drilling data from the Canadian Association of Oilwell Drilling Contractors, Oil prices [Canadian par spot price] from U.S. Energy Information Administration)

(Source: Statistics Canada, CANSIM Table )

(Source: Statistics Canada, CANSIM Table )

An unregulated, yet legal, market for buying and selling royalty credits “The licensee of any eligible well must allocate a drilling royalty credit to any one or more royalty payers, such that the entire royalty credit if allocated.” Drilling Royalty Credit Regulation 4(1)

$10 million in surplus credits Company X has $12 million in credits $10 million in surplus credit sold to company Y for $? $0 royalties owed Uses $2 million in credits against royalties owed Company Y reduces royalties owed to the public by $10 million

“Except as provided under the regulations, no person shall communicate or allow to be communicated any record, return or information obtained under this Act to a person not legally entitled to that information or allow any person not legally entitled to that record, return or information to have access to any record, return or information obtained under this Act.” Section 50, Mines and Minerals Act

 Open the books on the $2.9-billion Drilling Stimulus  Public Accounts Committee should review the program

 Deadline to buy and sell drilling royalty credits was June 30, 2011  Ministry of Energy has a list of which firms bought and sold credits  Minister of Energy can restart the program at any time

(Source: Canadian Association of Petroleum Producers)