Premier Stelmach on teeter-totter

Alberta premier reportedly tells execs he won’t ‘trounce’ royalty pacts; head of review panel warns government can’t ‘cherrypick’

By Gary Park

For Petroleum News

Premier Ed Stelmach is expected to deliver a televised fireside chat to Albertans on or close to Oct. 24. The primary thrust of his message is equally vague.

He may deliver the government’s final or partial verdict on royalty changes, although his office says he will not duck the matter altogether.

But recent days have suggested that the sooner he takes a stand the better it will be for his government and the industry.

Amid a series of private meetings between cabinet ministers and the corporate world, Stelmach spread confusion and was accused of wilting under oil patch pressure on October 11 when he delivered a private speech to 50 business executives in Calgary.

He was widely reported as saying he would “not trounce” existing royalty agreements, putting himself at odds with his own appointed review panel, which opposed allowing deals negotiated in past years to remain unchanged.

The National Post, which broke the story, reported from notes compiled by some of the executives, who said Stelmach opposed rewriting agreements already in place for fear of destroying international investor confidence in Alberta.

He told the gathering his objective is “fairness, stability and predictability” for the industry, leaving some of his audience hopeful that the premier understands the complexities of what he is dealing with.

Spokesmen for Stelmach said the National Post report “sounds like something he might have said” and did not attempt to “disavow the quote.”

They insisted no final decisions have been made, but were emphatic that Stelmach was not making any formal pronouncements.

Panel: don’t cherrypick

“If you start taking things away, it has an impact on the total government take,” he said, adding the panel told Stelmach “not to cherrypick” from the recommendations.

Hunter said that grandfathering would create discrepancies between existing and future projects, denying Albertans the fair return they want from their natural resources.

“Our intent is to simplify the royalty regimes and taxes and fees, get rid of some of the historical stuff and then apply the regime to all players within the oil and gas sector,” Hunter told the Globe and Mail.

Opponents say Stelmach caving

Noting the governing Conservative party collected C$580,000 in funding from oil and gas companies in 2005 and 2006, he said the government does not have “sufficient independence” from the industry, referring to the closed doors sessions with industry executives to bolster that point of view.

“I think this premier is about as transparent as a slab of granite,” Mason said.

Liberal party energy spokesman Hugh MacDonald said there is now plenty of evidence that Stelmach will fold in the face of industry threats to pull billions of dollars in spending from Alberta at the cost of thousands of jobs.

“I would hope the premier doesn’t turtle,” he said. “But (the industry) certainly appears to be swaying him.”

Pierre Alvarez, president of the Canadian Association of Petroleum Producers, although not at the meeting, reiterated that royalty agreements now in place must be handled “very carefully,” assuming those deals have the force of law.

There seems little doubt inside or outside government that doing nothing is not an option for the Stelmach government.

What troubles many observers is how a largely untried and untested premier will handle such a monumental issue and whether he will be influenced by the need to look bold and decisive if he plans to call an election this fall when two-thirds of Albertans reportedly want to see the review panel’s recommendations implemented without change.