{"id":62532,"date":"2017-01-09T17:24:08","date_gmt":"2017-01-09T17:24:08","guid":{"rendered":"http:\/\/usa.timesofnews.com\/oilpatch-players-seek-federal-approval-for-investment-fund-to-kick-start-industry-2.html"},"modified":"2017-01-09T17:24:08","modified_gmt":"2017-01-09T17:24:08","slug":"oilpatch-players-seek-federal-approval-for-investment-fund-to-kick-start-industry-2","status":"publish","type":"post","link":"https:\/\/usa.timesofnews.com\/breaking-news\/political\/oilpatch-players-seek-federal-approval-for-investment-fund-to-kick-start-industry-2.html","title":{"rendered":"Oilpatch players seek federal approval for investment fund to kick-start industry"},"content":{"rendered":"<p>It&#8217;s now 2\u00bd years into the oil price downturn\u00a0and, by most measures, Alberta is still in a rut.<\/p>\n<p>The economy is expected to come out of recession this year and oil prices are showing some strength, but there are still 215,000 people without a job, and\u00a0as of December,\u00a0more than 14,000 of them had been out of work for more than a year.<\/p>\n<ul>\n<li><strong><a href=\"javascript:void(0)\">Alberta unemployment falls to 8.5% as Calgary rate remains highest among major cities<\/a><\/strong><\/li>\n<li><a href=\"javascript:void(0)\"><strong>Alberta&#8217;s &#8216;bittersweet&#8217; recovery: Don&#8217;t expect a job surge soon, TD warns<\/strong><\/a><\/li>\n<\/ul>\n<p>At the same time, the province is dealing\u00a0with an ongoing problem of abandoned and inactive oil and gas wells, which count\u00a0in the tens of thousands.\u00a0The Orphan Well Fund, which reclaims wells as a last resort in the case of bankruptcy, has seen its inventory of defunct wells\u00a0skyrocket to nearly 1,400,\u00a0from 162 in 2014.<\/p>\n<h2>The pitch<\/h2>\n<p>Investment banker Ian Thomson, along with the Petroleum Services Association of Canada (PSAC), is pitching an idea to the federal government he thinks can help put people back to work \u2014\u00a0inject some capital in the junior oilpatch\u00a0and make a dent in the number of inactive wells in the province.<\/p>\n<p>Thompson and PSAC\u00a0want the federal government to consider including in the next budget what they call a Sustainable Environmental Energy Investment (SEEI) fund for smaller oil and gas companies.\u00a0<\/p>\n<p>For every dollar invested in one of these companies, 47.5 cents\u00a0could be spent on\u00a0drilling and exploration, but the rest must be used to clean\u00a0up old wells.\u00a0<\/p>\n<blockquote class=\"pullquote\"><p>\n <span class=\"pullquote-quotation\">&#8216;It was the first time I&#8217;d ever got hate mail from around the world \u2014 people saying the industry is looking to get bailed out.&#8217;<\/span><br \/>\n <cite class=\"pullquote-source\">&#8211; Mark <span class=\"scayt-misspell-word\">Salkeld<\/span>, Petroleum Services Association of Canada<\/cite>\n<\/p><\/blockquote>\n<p>The reason the idea needs government support is that it&#8217;s structured as a flow-through fund.<\/p>\n<p>Individual investors would be able to write off the full investment against their taxes, which means lost tax revenue for provincial and federal coffers.<\/p>\n<p>These kinds of funds\u00a0have been used for decades to promote development of Canada&#8217;s natural resources. They are quite\u00a0attractive to investors\u00a0but less so to the government.<\/p>\n<p \/>\n<p>As the vice-president of investment banking with Acumen\u00a0Capital, Thomson\u00a0has seen capital dry up for the companies he works with. He acknowledges that there would be a cost to taxpayers, but says that based on research done for the mining industry, the cost is limited.<\/p>\n<p>&#8220;The estimates based upon publicly available data suggest that for\u00a0the $450 million we expect to see invested, the forgone tax revenue would be $37.8 million.&#8221;<\/p>\n<p> <img decoding=\"async\" src=\"http:\/\/usa.timesofnews.com\/wp-content\/plugins\/RSSPoster_PRO\/cache\/52be6_mark-salkeld-psac.jpg\" alt=\"Mark Salkeld, PSAC\" width=\"100%\" \/><\/p>\n<p class=\"figure-caption\">Mark Salkeld, of the Petroleum Services Association of Canada, is in talks with Ottawa and the governments of Alberta and Saskatchewan about a proposed Sustainable Environmental Energy Investment for the oilpatch. (CBC)<\/p>\n<h2>Previous requests failed<\/h2>\n<p \/>\n<p>This time last year, Mark Salkeld, the president of PSAC,\u00a0went to Ottawa with a\u00a0different proposal. He asked\u00a0for $500 million in infrastructure money to decommission and clean up old wells. The idea was that oil services workers could get back to work, get off EI, and the\u00a0wells would get cleaned up.<\/p>\n<p>The idea ultimately didn&#8217;t fly with government\u00a0because it let the industry off the hook for cleanup costs.\u00a0<\/p>\n<ul>\n<li><a href=\"javascript:void(0)\"><strong>Alberta energy minister keen on industry group&#8217;s well cleanup proposal<\/strong><\/a><\/li>\n<li><a href=\"javascript:void(0)\"><strong>Saskatchewan to drill most oil and gas wells in 2017, says PSAC<\/strong><\/a><\/li>\n<\/ul>\n<p>&#8220;It was the first time I&#8217;d ever got hate mail from around the world \u2014 people saying the industry is looking to get bailed out,&#8221; said\u00a0Salkeld. &#8220;That was a hard lesson learned.&#8221;<\/p>\n<p>The SEEI\u00a0is not a subsidy, he says. &#8220;It&#8217;s an incentive that all industries get from government to help create jobs and support industry.\u00a0At the end of the day, it puts\u00a0PSAC\u00a0member companies back to work, which was our driving motivation back then\u00a0and still is.&#8221;<\/p>\n<h2>Abandoned well problem sticky<\/h2>\n<p>The inactive and abandoned well problem is a sticky one for a number of reasons. For energy companies in a downturn, it&#8217;s usually\u00a0a better use of capital to drill new wells, which will generate cash flow, than to reclaim old wells.<\/p>\n<p>As well, landowners are often quite happy to keep receiving lease payments\u00a0for wells on their land and can be resistant to wells being reclaimed. Salkeld said that he was surprised a year ago to hear from landowners\u00a0who were opposed to his request for federal funds to do well cleanup.<\/p>\n<ul>\n<li><a href=\"javascript:void(0)\"><strong>Alberta looks at different ways of making sure companies clean up old wells<\/strong><\/a><\/li>\n<li><strong><a href=\"javascript:void(0)\">Alberta Energy Regulator tries to stem tide of orphan wells<\/a><\/strong><\/li>\n<\/ul>\n<p>The head of one of the companies that would be eligible for the investment is interested. Phil Hodge, chief executive of Pine Cliff Energy, says he would\u00a0have to hash out the economics of the proposal before committing to it, but he&#8217;s happy the issue is being raised.<\/p>\n<p>&#8220;I applaud an effort to attract capital into industry to deal with environmental issues,&#8221; said Hodges.<\/p>\n<p>&#8220;I&#8217;m hopeful that this will open up a dialogue to discuss some of these issues\u00a0with industry, landowners\u00a0and government.&#8221;<\/p>\n<p>Thomson and Salkeld have made their pitch to the federal government, as well as the provincial governments in Saskatchewan and Alberta.\u00a0<\/p>\n<p>&#8220;We&#8217;ve had lots of positive signals,\u00a0federally and provincially, but I know they&#8217;ve got a lot more to deal with than some oil guy saying lets get people back to work,&#8221; Salkeld said.<\/p>\n<p>No one from Alberta Energy was immediately available for comment. The next federal budget is due in the spring.<\/p>\n<p \/>\n<p \/>\n<p \/>\n<p \/>\n<p \/>\n<p \/>\n<p \/>\n<p>Article source: http:\/\/www.cbc.ca\/news\/canada\/calgary\/oilpatch-sustainable-environmental-investment-1.3924323?cmp=rss<\/a>\r\n<\/p>","protected":false},"excerpt":{"rendered":"<p>It&#8217;s now 2\u00bd years into the oil price downturn\u00a0and, by most measures, Alberta is still in a rut. The economy is expected to come out of recession this year and oil prices are showing some strength, but there are still 215,000 people without a job, and\u00a0as of December,\u00a0more than 14,000 of them had been out [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":62533,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[84],"class_list":["post-62532","post","type-post","status-publish","format-standard","hentry","category-political","tag-political"],"_links":{"self":[{"href":"https:\/\/usa.timesofnews.com\/breaking-news\/wp-json\/wp\/v2\/posts\/62532","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/usa.timesofnews.com\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/usa.timesofnews.com\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/usa.timesofnews.com\/breaking-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/usa.timesofnews.com\/breaking-news\/wp-json\/wp\/v2\/comments?post=62532"}],"version-history":[{"count":0,"href":"https:\/\/usa.timesofnews.com\/breaking-news\/wp-json\/wp\/v2\/posts\/62532\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/usa.timesofnews.com\/breaking-news\/wp-json\/wp\/v2\/media\/62533"}],"wp:attachment":[{"href":"https:\/\/usa.timesofnews.com\/breaking-news\/wp-json\/wp\/v2\/media?parent=62532"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/usa.timesofnews.com\/breaking-news\/wp-json\/wp\/v2\/categories?post=62532"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/usa.timesofnews.com\/breaking-news\/wp-json\/wp\/v2\/tags?post=62532"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}