Survey: Alberta losing investor confidence

Policy changes enacted or planned by a new provincial government damage investors’ confidence in the oil and gas industry of Alberta, according to the Fraser Institute, Vancouver.

In an analysis of the institute’s recently published Global Petroleum Survey, which annually gauges barriers to exploration and production investment by jurisdiction, Kenneth P. Green and Taylor Jackson note that Alberta had the largest indicated decline in investor confidence (OGJ Online, Dec. 1, 2015).

The investment driver with the largest shift in sentiment from 2014 to 2015 for Alberta was political stability, according to the analysis.

The institute conducted its 2015 survey during May 29-July 31, after the election in which the New Democratic Party ousted the Progressive Conservative Party.

In a measure of policy-related investment barriers, Alberta’s indexed score—with a high value indicating negative sentiment—deteriorated to 34.21 in 2015 from 26.57 in 2014. The province’s ranking fell to 38th of 126 jurisdictions in 2015 from 16th of 156 jurisdictions in 2014.

These and other declines in confidence indicators “may not bode well for Alberta considering that the province’s immediate geographical competitors are perceived to be either attractive jurisdictions to invest in or are improving,” the analysts say.

According to the analysts, three policy areas “stand out as having the greatest potential impact on sector investment”:

• A royalty review that might not be concluded until the end of 2016.

• A corporate income-tax increase to 12% from 10%.

• The new government’s “strong commitment to implement policies that will lower the province’s [carbon dioxide] and other [greenhouse gas] emissions in order to contribute to climate-change mitigation efforts.”

Alberta Premier Rachel Notley on Nov. 22 announced a climate-change mitigation plan that includes a cap on emissions from oil sands production and upgrading, an increased carbon tax, and a phaseout of coal-fired power generation (OGJ Online, Nov. 23, 2015).

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