The Fraser Institute

The Fraser Institute

June 24, 2009 06:00 ET

The Fraser Institute: Manitoba Now Seen as Best Bet in Canada for Oil and Gas Investment; Alberta Continues to Lose Ground

CALGARY, ALBERTA--(Marketwire - June 24, 2009) - Manitoba has dethroned both Saskatchewan and Alberta as the most attractive Canadian province or territory for oil and gas investment, according to an international survey of petroleum executives and managers released today by independent research organization the Fraser Institute.

Saskatchewan, which was the top province in 2008, drops to the number two spot in Canada. But investors are most critical of Alberta, ranking the province as the least attractive among Canada provinces ranked for oil and gas investment. Aside from Manitoba and Saskatchewan, Alberta now also trails Nova Scotia, Ontario, Quebec, British Columbia, and Newfoundland and Labrador.

The results are contained in the Global Petroleum Survey 2009, available as a free pdf from the Fraser Institute web site at www.fraserinstitute.org.

"The survey results clearly show the industry's dissatisfaction with the Alberta government's misguided policies. Punitive royalty rates, a lack of consultation, and a growing anti-energy bias are common complaints about the Stelmach government," said Gerry Angevine, Fraser Institute senior economist and coordinator of the annual petroleum survey.

"Meanwhile, Manitoba has quietly encouraged oil and gas investment with low royalties and an easy to understand regulatory framework."

While the survey shows a reordering among Canada's provinces, it also shows Canada losing ground on a global scale.

Manitoba, the highest ranked province in 2009, is 21st internationally. Saskatchewan fell from 10th (of 81) in 2008 to 38th (of 143) worldwide. Nova Scotia ranked 54th, Ontario ranked 60th, Quebec 68th, British Columbia 71st, Newfoundland and Labrador 82nd, and Alberta 92nd.

Alberta's poor showing puts the province behind China, the Philippines, and Brazil as an attractive place to invest in upstream oil and gas development.

Canada's three territories also dropped sharply in this year's survey. The Yukon fell to 105th (of 143) from 31st (of 81); the Northwest Territories dropped to 120th from 65th, and Nunavut is ranked 121st. Nunavut was not ranked in 2008.

"The main issue for the territories seems to be uncertainty around land claims issues and too many overlapping regulatory agencies," Angevine said.

"You can see these issues reflected in the stalled MacKenzie Valley pipeline development in the Northwest Territories."

The top 10 most attractive jurisdictions for investment in this year's survey are: Arkansas, Alabama, Kansas, Austria, Mississippi, Nebraska, South Dakota, Texas, Oklahoma, and Indiana.

Jurisdictions receiving the highest number of negative comments are: Bolivia, Niger, Venezuela, Ecuador, Sudan, Russia, Bangladesh, Nigeria, Kazakhstan, and Ethiopia.

"Petroleum executives responding to the survey say they turn to different jurisdictions when confronted with high royalty fees and tax rates, inadequate infrastructure, price controls, and labor shortages," Angevine said.

"They prefer to avoid jurisdictions with costly and time-consuming regulations. Other factors being equal, competitive tax and regulatory regimes can attract investment and generate substantial economic benefits. Policy makers should recognize that overly strident regulations and anti-energy sentiment can be costly in terms of lost revenue and jobs."

The Global Petroleum Survey 2009 is designed to help measure and rank the investment climate of 143 oil and gas producing regions.

A total of 577 respondents completed the survey questionnaire this year, providing sufficient data to evaluate 143 jurisdictions. This is a substantial increase from the 2008 survey, in which 81 jurisdictions were rated, and the inaugural 2007 survey, in which 54 jurisdictions were rated.

The survey questionnaire sought the opinions of senior executives and managers on a range of issues including royalties and licensing agreements, taxation, the cost of regulatory compliance, trade and labour regulations, and political stability among others.

The Fraser Institute is an independent research and educational organization with locations across North America and partnerships in more than 70 countries. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institute's independence, it does not accept grants from governments or contracts for research. Visit www.fraserinstitute.org.

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