Originally posted 6 September 2016
Sales of oil sands leases since 1 April, the start of the Province`s fiscal year have been weak. As the table below illustrates, except for the June sale, interest has been weak. Land sales remain important as a leading indicator of future energy investment.
|Public Sales Results- Oilsands|
The charts following are taken from the Department of Energy`s webpage disclosing its Petroleum and Natural Gas Sales Statistics. The historical data provide a helpful visual of the cycles that have occurred in the oilpatch over the past 36 years.
A big boost for development took place in the mid to late 1990s as the oilsands royalty regime was modified to deliberately open investment with modified royalty rates which allowed companies to recoup their capital and a rate of return before meaningful returns to the resource owners occurred.
These charts also show the difficulties faced during the 1980s and early 1990s, the rapid improvements in the 2000s, save the financial crisis of 2007-09, a sharp recovery followed by a steep decline. Oil and gas discoveries (Montney and Duvernay formations) and the impact of new fracking technology have also played an important role in the demand for land to explore and develop.
The charts reinforce the difficulty faced by the Crown as resource owner becoming “addicted” to the volatile flow of bonuses into the provincial Treasury. Continue reading