Alberta third globally for oil and gas investment

Fraser Institute Global Petroleum Survey says Saskatchewan has best policy.

CALGARY — Saskatchewan has the best policies in Canada for attracting oil and gas investment but the Fraser Institute’s annual Global Petroleum Survey shows Alberta continues to lead with proven reserves and is number three in the world.

The Global Petroleum Survey uses the opinions of petroleum executives and managers to rank jurisdictions for their relative attractiveness for investment and segments jurisdictions into tiers based on proven oil and gas reserves.

The report ranks Texas the top spot for investment globally with the largest proven reserves (92.1%). Qatar ranks second.

Among the second tier of jurisdictions, Oklahoma has 6.8% of total proven reserves, followed by Arkansas then North Dakota.

The third tier representing just 1.1% was topped by Mississippi, followed by Saskatchewan, Kansas, Alabama, Manitoba, and Netherlands/North Sea.

“North American jurisdictions overall benefit from providing a secure environment in terms of the physical safety of personnel and assets, having a fair and transparent legal system, and for the quality of geological databases,” said survey co-author Alana Wilson, Fraser Institute senior economist in natural resource studies.

Looking strictly at survey responses without accounting for proven reserves, oil and gas executives and management ranked Saskatchewan first in Canada and third out of 157 jurisdictions worldwide. Manitoba was ranked second in Canada and ninth globally, followed by Alberta in 19th place.

Political uncertainty in BC, particularly around proposals for two pipelines carrying oil from Alberta to the BC coast for export, was a negative factor for Alberta geological and technological know-how was a positive.

Newfoundland and Labrador ranked 24th compared with 47th one year ago thanks to improved scores for labour regulations and employment agreements.

BC, which is pursuing export market opportunities for liquefied natural gas, dropped from 39th (of 147) in 2012 to 47th (of 157) because of uncertainty concerning environmental regulations, political stability, taxation in general and the province’s carbon tax in particular.

The Northwest Territories was 61st, New Brunswick 81st, a move up from 102nd last year that is attributed to improved performance on regulatory enforcement.

At the other end of the scale, Quebec fell from 101st (of 147) in 2012 to 141st (of 157) in 2013 and stands out as the Canadian jurisdiction with the greatest barriers to investment, ranking in the fourth out of five quintiles – a grouping that includes Syria and Libya.

Quebec’s poor results are attributed to the cost of regulatory compliance, taxation in general, uncertainty concerning protected areas and policies discouraging investment in hydraulic fracturing.

Most respondents (62%) indicated that their assessment of Western Canada and Northwest Territories as investment venues would deteriorate if pipeline bottlenecks continue to constrain movement of oil to Eastern Canada, export markets overseas and US refiners. One respondent described midstream or pipeline constraints as “the single biggest risk to the industry today in Western Canada.”

Among nations with the largest proven reserves, Venezuela, Iran, and Russia/Offshore Arctic were the least favourable for investment. Among tier two jurisdictions, Ecuador, Bolivia, Uzbekistan and South Sudan are the least favourable while Argentina/Salta and Kyrgyzstan are the least favourable and among tier three jurisdictions.

The 10 least attractive jurisdictions ignoring reserves are Venezuela, Ecuador, Iran, Bolivia, Russia/Offshore Arctic, Uzbekistan, Russia/Eastern Siberia, South Sudan, Iraq, and Russia/other.

The survey polled 864 respondents representing 762 companies covering 157 jurisdictions. The exploration and development budgets of participating companies account for more than 50% of the $619 billion spent in 2012 on petroleum exploration and production among international oil companies.

Click here for the report.