The Fraser Institute

The Fraser Institute

June 24, 2010 06:33 ET

The Fraser Institute: Petroleum Industry Again Ranks Manitoba as Top Canadian Province for Investment, Saskatchewan Second and Alberta Improving

CALGARY, ALBERTA--(Marketwire - June 24, 2010) - Manitoba reigns as the No. 1 place in Canada for oil and gas investment for the second year in a row, with petroleum industry executives ranking the province the eighth most attractive jurisdiction worldwide, according to the Global Petroleum Survey, released today by the Fraser Institute, Canada's leading public policy think-tank.

Manitoba improved its ranking in the annual survey, moving up to eighth overall from 21st in 2009. Saskatchewan remains the second highest ranked province, ranked 17th overall, up from 38th in 2009.

"Manitoba continues to attract investment through low royalties and an easy-to-understand regulatory framework, propelling it to a top 10 finish globally," said Gerry Angevine, Fraser Institute senior economist in the Global Resource Centre and co-author of the Global Petroleum Survey 2010.

"Time and time again, survey respondents have told us they value stability and clear rules and regulations, especially around royalties, environmental regulations, and land claim disputes. Jurisdictions that constantly change the rules run the risk of losing investment opportunities."

Changes to the royalty structure have highlighted the industry's perception of Alberta in recent years. After plummeting in the rankings in 2008 and 2009, Alberta climbed to 60th (of 133) this year from 92nd (of 143), although it is ranked ahead of only Quebec among Canadian provinces.

The survey includes responses compiled after the Alberta government's March 2010 announcement that it would roll back royalty increases imposed in 2009, and before the May 27 announcement of incentives for unconventional gas drilling and deep and horizontal oil and gas wells.

"The sharp increase in royalties in 2009 caused many companies to allocate larger portions of their exploration and development budgets to other jurisdictions in spite of a number of temporary changes Alberta introduced in an effort to repair the problem," Angevine said.

"But the perception of Alberta appears to be improving as the government responds to industry concerns and it's likely the province would do better if the survey were undertaken today."

Among the remaining Canadian jurisdictions, Ontario is ranked third, followed by the Yukon, Newfoundland and Labrador, British Columbia, Nova Scotia, Alberta, the Northwest Territories, and Quebec.

On the world scale, every Canadian jurisdiction except Quebec saw an improvement in its overall ranking since 2009. The biggest jump occurred in the Yukon Territory, which vaulted from 105th to 36th. The Northwest Territories rose from 120th to 74th, Ontario from 60th to 28th, Newfoundland and Labrador from 82nd to 50th, British Columbia from 71st to 52nd, and Nova Scotia improved slightly from 54th to 53rd. Quebec fell from 68th to 77th.

"The Yukon's improvement appears to be based on investors viewing the Yukon's fiscal regime and general taxation as being a relatively low barrier to investment this year. But interestingly, the Yukon's fiscal regime has not actually improved. However, compared with Alberta, which is often considered a benchmark, investors may have considered the Yukon's royalties to be more attractive than Alberta's following the imposition of Alberta's New Royalty Framework," Angevine said.

The top 10 most attractive jurisdictions for investment in this year's survey are: South Dakota, Texas, Illinois, Wyoming, Austria, Mississippi, Utah, Manitoba, Oklahoma, and Alabama.

The least attractive jurisdictions are: Bolivia, Venezuela, Russia, Ukraine, Iran, Turkmenistan, Ecuador, Nigeria, Iraq, and Kazakhstan. 

"Jurisdictions known for high royalty fees and tax rates, inadequate infrastructure, price controls, and labour shortages are the places petroleum investors say they most want to avoid," Angevine said.

"Regions offering competitive tax and regulatory regimes, on the other hand, attract highly positive attention, fostering investment and economic benefits for years to come."

The Global Petroleum Survey 2010 is designed to help measure and rank the investment climate of oil- and gas-producing regions around the world.

A total of 645 respondents completed the survey questionnaire this year, providing sufficient data to evaluate 133 jurisdictions. The exploration and development budgets of participating companies totaled about $161 billion in 2009, representing more than 60 per cent of global upstream expenditures last year.

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, legal process, and political stability, among others.

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The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of 75 think tanks. 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

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