Pipelines

[SeaKingTacco]

The First Nations are big players in Oil & Gas in Western Canada. I am surprised it doesn’t get more play outside the region.

 

[Czech_pivo]

@Kirkhill ,

I agree with the sentiment. I also think that directly nationalizing the governmental/societal benefit from the proceeds of extracting the nation's resources, strictly managing supply through a National cartel to ensure price consistency and sustainable profitable operation, and generally taking a more strategic, long view approach would be not only prudent- but also greatly change the rest of the countries view onO&G.

Something tells me Danielle Smith would not be so fond of the ideas.

Alberta has tried to do something similar with their Alberta Wealth Fund but they have utterly underperformed and failed overall to achieve really anything - much like the similar fund Alaska has.

There is NO reason why a combination of both private and public facilities cannot operate side by side within Canada. Need a new refinery, great, this one is being funded/owned/run by the new Canada Sovereign Fund, where all profit is directly put into the Sovereign Fund for further investment elsewhere. The CPPIB does an AWFUL lot of 'joint' ownership/investment business cases. There is no reason why this practice can't be applied at the Energy sector level. The approach is that they are at 'arms length' from the Federal Government and they ARE NOT part of the civil service, in other words, they are NOT public servants.

 

[Czech_pivo]

There's basically only one culture in Norway. Historically northerners felt mistreated by southerners (with reason), but I doubt that is still a factor. Canada has at least 6 distinct regions: Atlantic, QC, ON, Prairies, BC, North. Each of them, and some more than others, likes to suck at a federal teat in different ways and degrees. They manifestly do not always agree on pursuing or even allowing things in the national interest. Any accumulation of capital would quickly be misused politically. The critical factor is that the CPPIB mainly invests in established interests, which is not at all the same as owning and operating interests or being a direct project investor (as opposed to simply investing in organizations). Deciding what projects to pursue is ripe for political interference.

Also:

• from where are contributions to a national savings account to come?
• who are the wise people who are capable of out-performing private interests in finding and executing on major opportunities, and why should we suppose those people aren't already employed by private interests?
• if such a board were simply to act as a venture capitalist, how is it to be insulated from the same pressures and behaviour as every other government agency subject to lobbying?

#1 - the initial seed money can easily come from the Federal Government - it could come in the form of a 10 or 20 or 30yrs loan, that is fully repayable at current market interest rates. That is the easiest part.
#2 - this is already happening within the CPPIB today - if you build it, they will come - where did all of these Bay Street investment workers come from in the first place to work for the CPPIB 25yrs ago?
#3 - why do you think they would need to function as a 'venture capitalist'? Its the EXACT same principle as what's occurring today within the CPPIB - you hire the right people, with the right industry experience and connections and give them the right oversight and incentives and they will thrive.

The CPPIB does NOT just invest in 'established' ventures at all. They are very, very much involved in small start up companies - from Food/Beverage, Tech/AI, Biotech, Digital Banking.

The CPPIB is basically the same thing as a Sovereign Wealth Fund already, but its not because it invests the contributions paid by CDN workers and employees - not public funds coming into the coffers of the Federal government.

I think you're looking at reasons why this would not work when the CPPIB (and its complete success) is staring back at you saying, yes, this would work and I'm the perfect example of how it can work.

 

[Kirkhill]

@Kirkhill ,

I agree with the sentiment. I also think that directly nationalizing the governmental/societal benefit from the proceeds of extracting the nation's resources, strictly managing supply through a National cartel to ensure price consistency and sustainable profitable operation, and generally taking a more strategic, long view approach would be not only prudent- but also greatly change the rest of the countries view onO&G.

Something tells me Danielle Smith would not be so fond of the ideas.

Someplace short of outright nationalization lies Norway, the Alberta Heritage Fund and the Alaska Permanent Fund. Danielle Smith is not, to my knowledge opposed to that type of state intervention. Nor, indeed, is Alberta averse to sharing the benefits.

Asking for benefits from oil while at the same time denying access to foreign markets, proposing to limit prices to what Eastern Canada chooses to pay, stymying development, and proposing internal distribution of oil and gas within Canada while not permitting the export of same .... none of those go down well.

Alberta brings in oil workers from other provinces. It buys goods and services from other provinces. It buys steel, aluminum, pipes, pumps, valves, integrated controls, heat exchangers, separators .... all sorts of stuff that buy groceries in other provinces. All sorts of stuff that is taxed by various governments, including the federal government. Not to mention the taxing of all the salaries and the taxing of all the stuff those salaries by.

If we can sell internationally at international prices Ontario, Quebec, the Maritimes and the Territories will benefit. As will the CAF.

 

[OldSolduer]

Someplace short of outright nationalization lies Norway, the Alberta Heritage Fund and the Alaska Permanent Fund. Danielle Smith is not, to my knowledge opposed to that type of state intervention. Nor, indeed, is Alberta averse to sharing the benefits.

Asking for benefits from oil while at the same time denying access to foreign markets, proposing to limit prices to what Eastern Canada chooses to pay, stymying development, and proposing internal distribution of oil and gas within Canada while not permitting the export of same .... none of those go down well.

Alberta brings in oil workers from other provinces. It buys goods and services from other provinces. It buys steel, aluminum, pipes, pumps, valves, integrated controls, heat exchangers, separators .... all sorts of stuff that buy groceries in other provinces. All sorts of stuff that is taxed by various governments, including the federal government. Not to mention the taxing of all the salaries and the taxing of all the stuff those salaries by.

If we can sell internationally at international prices Ontario, Quebec, the Maritimes and the Territories will benefit. As will the CAF.

The National Energy Policy enters the chat::

 

[Kirkhill]

The National Energy Policy enters the chat::

Yup.

Connecting Alberta to New Brunswick and BC without permitting the loading of tankers for foreign sales would simply be the NEP by other means.

 

[IKnowNothing]

It’s no so much Danielle Smith one has to be concerned with ‘fondness’ of the concept. It’s the incumbent First Nations on Treaty 8 land (and the unceded mineral (including oil) rights agreed between the federal Crown and those bands…

Albertans who believe that oil and gas in Alberta is uniquely the province’s to do with as it pleases are perhaps not appreciating the situation as is legally is.

Good point.

What I was trying (and apparently failing) at was a tongue in cheek call out that the provincial government of Alberta will fight hammer and tongs against both the specific mechanisms and prevailing approach and attitudes to resource development that the countries have used to ride O&G to national prosperity.

Well, if we are going to create a national energy sovereign fund, created by taxing energy exports, let’s make sure we tax all energy exports, including hydro and nuclear.

All must contribute, right?

Absolutely- but if go down this path where do we draw the line between responsibility for Natural Resources and Responsibility for Commerce and Trade?

Asking for benefits from oil while at the same time denying access to foreign markets...

Demanding to dictate National and extra-Provincial policy and transit/make use of other provinces while at the same time guarding the benefit like a jealous squirrel...

And around and around we go.


To me, the bottom line is that a national buy-in- as would seem to be required- necessitates a national approach. Some work in a given industry, some work in adjacent businesses, some in immediately adjacent areas. They obviously have a vested interest in the survival and success of the industry. But does/should a mechanic in Calgary see more benefit than a mechanic in Vancouver from an industry that neither has any direct involvement in? The farmer outside of Lethbridge vice the Farmer outside of Saskatoon? Bank Manager in Edmonton vs the one in Toronto? They're all Canadian citizens. They all (presumably, ha) pay income tax. But it stands to reason that one will care more much more about something (otherwise unrelated to them) that sees them pay reduced Provincial income tax, no sales tax etc. Why is being lucky enough to have valuable flammable mud that makes cars go inside your provincial boundaries inherently more worthy of benefit than being lucky enough to have the coastline necessary to get said valuable mud to foreign customers? Or to be lucky enough to have the transit path needed to connect the two? The business processes creates value added activity, taxed at the income and corporation level. But in terms of royalties, inherent resource value- We're talking about geography, not virtue.

 

[SeaKingTacco]

IKN,

Saskatchewan got uranium deposits.

Ontario and Quebec got lots of rivers, easily dammed for hydro.

Etc.

Everybody got something. If a federal government is smart enough to enable smart resource development under provincial jurisdiction, isn’t it self evident that all Canadians benefit?

My point is that, for the last 9 years, our federal government under the Liberals have done everything they can to both keep oil in the ground and to spend the tax revenue from oil production, as fast as they can.

 

[Furniture]

The First Nations are big players in Oil & Gas in Western Canada. I am surprised it doesn’t get more play outside the region.

Likely because to most urban voters east of Manitoba the popular perception of First Nations people is staunch eco-warriors.

The notion of them being pro O&G development doesn't compute...

 

[Brad Sallows]

#1 - the initial seed money can easily come from the Federal Government - it could come in the form of a 10 or 20 or 30yrs loan, that is fully repayable at current market interest rates. That is the easiest part.

How much seed money?

I think you're looking at reasons why this would not work when the CPPIB (and its complete success) is staring back at you saying, yes, this would work and I'm the perfect example of how it can work.

If that's true, why re-invent the wheel? There's a huge gap between CPP RoI (at 7%+) and the RoI to a plan member (a little above 2%, and trending down). There's your "sovereign wealth".

 

[Czech_pivo]

How much seed money?

If that's true, why re-invent the wheel? There's a huge gap between CPP RoI (at 7%+) and the RoI to a plan member (a little above 2%, and trending down). There's your "sovereign wealth".

1) Above my paylevel
2) The ROI for the CPPIB to stay ahead of future needs is 4% and they have been consistently above that threshold over the last 20yrs.

 

[Brad Sallows]

1) Above my paylevel

No point proposing it unless you know what it is and it's a realistic amount.

2) The ROI for the CPPIB to stay ahead of future needs is 4% and they have been consistently above that threshold over the last 20yrs.

That's my point. CPP pays a shitty RoI to contributors and pockets the difference between that and real returns. Even if the federal government is unable to skim the profits and remains committed to staying that way, the IB seems to meet all other criteria for being a sovereign wealth fund. Does it have to pay revenues directly to the federal government, or is it enough that its activities contribute to other sources of revenue?

 

[Czech_pivo]

No point proposing it unless you know what it is and it's a realistic amount.

That's my point. CPP pays a shitty RoI to contributors and pockets the difference between that and real returns. Even if the federal government is unable to skim the profits and remains committed to staying that way, the IB seems to meet all other criteria for being a sovereign wealth fund. Does it have to pay revenues directly to the federal government, or is it enough that its activities contribute to other sources of revenue?

1) I'm not sure I follow that argument. One can know that something needs to occur (like surgery for cancer or replacing a leaky roof) but I can admit that they may not be aware of the best approach about how to go about doing it.

2) I think that we are talking about 2 different things. By ROI, I'm talking about what the CPPIB needs to 'make' in order to deal with the amount of money paying out vs coming in.

If you're talking about the CPP payments to pensioners, that is something that is NOT within the scope/responsibility of the CPPIB. That falls under the mandate of the Feds. Personally, I believe that the contribution/income thresholds should be vastly increased (to the same levels of the SS) so that future pensioners can receive a greater amount of income replacement. Please note that NONE of the money in the CPPIB goes into the Fed Gov't general funds/revenue in any manner. This money is held at arms length and are untouchable by the Feds.

 

[YZT580]

Good point.

What I was trying (and apparently failing) at was a tongue in cheek call out that the provincial government of Alberta will fight hammer and tongs against both the specific mechanisms and prevailing approach and attitudes to resource development that the countries have used to ride O&G to national prosperity.


Absolutely- but if go down this path where do we draw the line between responsibility for Natural Resources and Responsibility for Commerce and Trade?

Demanding to dictate National and extra-Provincial policy and transit/make use of other provinces while at the same time guarding the benefit like a jealous squirrel...

And around and around we go.


To me, the bottom line is that a national buy-in- as would seem to be required- necessitates a national approach. Some work in a given industry, some work in adjacent businesses, some in immediately adjacent areas. They obviously have a vested interest in the survival and success of the industry. But does/should a mechanic in Calgary see more benefit than a mechanic in Vancouver from an industry that neither has any direct involvement in? The farmer outside of Lethbridge vice the Farmer outside of Saskatoon? Bank Manager in Edmonton vs the one in Toronto? They're all Canadian citizens. They all (presumably, ha) pay income tax. But it stands to reason that one will care more much more about something (otherwise unrelated to them) that sees them pay reduced Provincial income tax, no sales tax etc. Why is being lucky enough to have valuable flammable mud that makes cars go inside your provincial boundaries inherently more worthy of benefit than being lucky enough to have the coastline necessary to get said valuable mud to foreign customers? Or to be lucky enough to have the transit path needed to connect the two? The business processes creates value added activity, taxed at the income and corporation level. But in terms of royalties, inherent resource value- We're talking about geography, not virtue.

anyone willing to live in weather at -40 for 5 months of the year deserves to receive the benefits from that flammable mud and the banker in Toronto has no business trying to horn in. We all profit albeit not to the same extent granted when a barrel of oil is shipped to Texas in the same way that a Becker's owner in Oshawa profits from each car that rolls off the assembly line even though they have never walked through the gates. We each contribute to our national well-being in a different way. Many of my relatives taught school. I have children who are serving in the CAF. I spend 3 decades as a civil servant, my great grandfather built houses in Toronto. No one even thought of the benefits accrued to the country by roughnecks in Sarnia (at the time). They simply cheered on their good fortune. A little less me and a lot more we.

 

[QV]

anyone willing to live in weather at -40 for 5 months of the year deserves to receive the benefits from that flammable mud and the banker in Toronto has no business trying to horn in. We all profit albeit not to the same extent granted when a barrel of oil is shipped to Texas in the same way that a Becker's owner in Oshawa profits from each car that rolls off the assembly line even though they have never walked through the gates. We each contribute to our national well-being in a different way. Many of my relatives taught school. I have children who are serving in the CAF. I spend 3 decades as a civil servant, my great grandfather built houses in Toronto. No one even thought of the benefits accrued to the country by roughnecks in Sarnia (at the time). They simply cheered on their good fortune. A little less me and a lot more we.

Agree. More socialism is not the answer. It it were, then does that notion apply to all resources (lumber, fisheries, ag, hydro, minerals ect)?

 

[Kirkhill]

Likely because to most urban voters east of Manitoba the popular perception of First Nations people is staunch eco-warriors.

The notion of them being pro O&G development doesn't compute...

Further to:

Approximately 50 First Nations in Canada, primarily in Alberta, Saskatchewan, British Columbia, and Manitoba, actively receive oil and gas revenues. These revenues are generated from oil and gas activities on designated reserve lands where agreements are in place with the Indian Oil and Gas Canada (IOGC).

Elaboration:

• Active Oil and Gas Activities:
  These First Nations are involved in the exploration, development, and production of oil and gas resources on their reserve lands.
  
  
• Indian Oil and Gas Canada (IOGC):
  IOGC is responsible for managing and regulating oil and gas resources on First Nations reserve lands across Canada.
  
  
• Revenue Generation:
  The IOGC negotiates agreements with oil and gas companies, collects royalties, bonuses, and rents, and ensures that legislative and contract requirements are met.
  
  
• Trust Accounts:
  All funds collected on behalf of First Nations are placed in their trust accounts.
  
  
• IOGC's Role:
  IOGC works with First Nation Chiefs and Councils, requiring approval through a band council resolution for all agreements.

https://www.capp.ca/wp-content/uploads/2024/01/Indigenous-people_s-involvement-in-economic-contribution-and-reconciliation-in-Canada_s-oil-and-natural-gas-industry.pdf

Research Brief: Canada's oil sands and local First Nations - Canadian Energy Centre

How the energy sector impacts Indigenous incomes, employment and prosperity

www.canadianenergycentre.ca

Pumpjacks (Nodding Donkeys) are liberally distributed on Southern Alberta reservations, including the Blood just outside of Lethbridge.

First Nations knew what it was to be wealthy. Wealth was measured comparatively. The Cree generated wealth by buying furs cheap from their neighbours and selling them expensive to the HBC. That source of wealth dried up along with the death of York Factory. The NeeStanan Corridor seeks to re-establish that trader route.

 

[RangerRay]

Likely because to most urban voters east of Manitoba the popular perception of First Nations people is staunch eco-warriors.

The notion of them being pro O&G development doesn't compute...

Speaking from experience, that’s common misconception held in Winnipeg, Vancouver and Victoria as well.

 

[Fishbone Jones]

Daniel Smith was quick out of the gate with throwing down the gauntlet.

Alberta introduces bill that would make it easier to separate

A day after Canada’s Liberals won a fourth consecutive mandate, Alberta’s government has introduced a bill that would make it easier to start a referendum – including one on separating from Canada. “We were going to introduce it regardless of what the outcome was,” said Alberta Premier Danielle...

edmonton.citynews.ca

I wish her great luck and hope Sask and Man follow suit. Not sure if BC can ever make a decision......on anything. I'd love to see what Quebec would do without the billions of free transfer payment they receive.

 

[IKnowNothing]

A little less me and a lot more we.

Ironically, that's pretty much what I was saying. Less provincial tribalism, more national patriotism.

The alternative, cutthroat, and truly capitalist approach is to point out that said flammable mud is valueless if it cant get to market, and haggle over a fair cut for transit.

@SeaKingTacco - see above- alternative phrasing to "everybody got something" under such a lens "Canada got everything". National royalty scheme on all extractives, renewables, lumber, and fisheries. Split the proceeds between a sovereign fund and national defense.

@QV don't make me laugh. Subsidizing a cushy per capita provincial budget with a corporate extractives tax so that citizens get high end services without a comensurate individual tax burden is high end socialism

 

[Colin Parkinson]

IKN,

Saskatchewan got uranium deposits.

Ontario and Quebec got lots of rivers, easily dammed for hydro.

Etc.

Everybody got something. If a federal government is smart enough to enable smart resource development under provincial jurisdiction, isn’t it self evident that all Canadians benefit?

My point is that, for the last 9 years, our federal government under the Liberals have done everything they can to both keep oil in the ground and to spend the tax revenue from oil production, as fast as they can.

New Brunswick sitting quietly in the corner hoping no one notices them......