Through a quirk in our printing and distribution deadlines, this edition went to press before the 2016 Saskatchewan provincial election, but was distributed after. So, as this editorial is being typed, we really don’t know who will win the election.
But when it comes to oil and gas royalties, it really shouldn’t matter.
One of the key components of the Saskatchewan Party government’s policies over the last 8.5 years has been they were not messing with anything when it comes to royalty regimes. Minster of the Economy Bill Boyd, whose previous title was Minster of Energy and Resources, spent the first mandate giving, essentially, the same speech wherever he went. They were not changing anything, full stop.
This was at a time when then-Alberta Premier Ed Stelmach mucked around with their royalty regime several times. And just recently, current Alberta Premier Rachel Notley implemented a royalty review, scaring the bejesus out of the industry. That same review then said it is best to leave well enough alone. During that time, investment in the Alberta oilpatch, already hurting from a huge drop in oil prices, dropped like a wrench down a wellbore.
Interestingly, Saskatchewan’s current royalty regime, untouched as it has been for at least ten years now, was brought in under former premier Lorne Calvert’s government.
This point came up twice in interviews with oil producers this month.
Del Mondor, owner of Aldon Oils, said that Saskatchewan was an unfriendly place to do business under the Allan Blakeney NDP regime. That changed with Grant Devine’s Progressive Conservative government. The NDP under Roy Romanow and Lorne Calvert carried on many of those policies, Mondor said. “Us in the oil business, what we’re looking for is consistency. Credit to Romanow and the other governments, they didn’t do much in the way of change.”
The Saskatchewan Party administration has carried on policies set under the Calvert government. Mondor said, “It allows guys like me to sit back and go, ‘What am I going to do? Now that the government, and several governments, have committed to not changing anything, what should I be doing or not doing?”
Raging River Exploration’s CEO Neil Roszell said, “It’s been a favourable, stable political regime for a multiple years that has allowed us to build and execute our business without government interference. They’re kind of our partners. The landowners, in general, have been a lot more favourable to oil and gas development. And the speed of execution in terms of well licensing has been quicker in Saskatchewan. I maintain that’s still the case today.”
He added, “If I was starting a brand new company again, I would certainly be more biased to starting a company in Saskatchewan, because it is more favourable environment to get rolling in, for sure.”
So, no matter who gets the nice office in the marble palace, one thing is clear: good energy policy, when it comes to royalties, appears to be agnostic to political parties. Just do the right thing, leave things where they are at, and we’ll be okay.
