Big oil is taking no chances with the outcome of Alberta’s royalty review currently underway. In 2007, the industry was surprised when royalties were jacked up despite dozens of corporate presentations to the royalty review panel warning of the fragility of investment economics and the damage increased royalties would cause. Therefore producers and others with significant vested interest have already started the lobbying process.
Such is the case with Canadian Natural Resources Limited (CNRL) which made a slide presentation to the new NDP Alberta government on August 20. The industry has obviously learned never to assume politicians actually understand what makes the economy and oil industry work.
The presentation’s key messages were: CNRL is a responsible operator in every way; jobs are created by investment, supported by a positive return on capital; Alberta needs a supportive environment which creates jobs; Alberta is a high cost place to do business, and historically, returns on investment have been poor. That’s when prices were high. It is worse now.
CNRL has been very successful because it is all business. Any oilfield service contractor working for CNRL knows how much price matters to that operator. The company’s Mission Statement reads, “To develop people to work together to create value for the Company’s shareholders by doing it right with fun and integrity.” There is little confusion about why CNRL is in business and what it is trying to accomplish. The presentation ended with the message, “Share the contents of this presentation with your friends and family.” So here we go.
You hope when CNRL talks somebody listens. The company is a made-in-Alberta success story. The public corporate entity started life in Vancouver in 1973 as AEX Minerals Corporation, a junior miner which explored for zinc and lead in the Yukon. In 1975 it was renamed Canadian Natural Resources Limited and registered in Alberta 1982. The company has been on a breathtaking growth tear ever since.
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