Greener Pastures

Apr 1, 2009  

Shipping to Argentina is much more complicated than buying locally, especially when just one of the desalters you’re shipping from Canada and towing through Argentina takes up an entire six-lane highway. But it’s sometimes unavoidable. Alberta has a wealth of engineering, manufacturing and other oil and gas-related expertise that can’t be found elsewhere.

Still, loss of royalties through out-of-country or out-of-province investment is obviously an issue for the province. “Gas is hugely important for the Alberta government as a revenue source,” says Canada West Foundation’s Roger Gibbins, president and CEO of the economic and public policy research group. That the focus sharpened on new North Amer-ican gas plays at the same time as changes to Alberta’s royalty structure came into effect, he points out, isn’t a coincidence.

But generally, cross-border investment helps much more than it hurts.

“Mercantilism is the kiss of death to any economy,” says Peter Hall, vice-president and chief economist for Export Development Canada, a federal institution that helps develop Canadian businesses overseas for the benefit of our national economy.

According to Hall, businesses in every industry avoid that fatal kiss by branching out and developing the knowledge, skills and other attributes required to operate on a global scale. When they do, domestic economies get all kinds of goodies, such as the opportunity to export goods and services, research and development spinoffs and increased employment, particularly in higher paying head office jobs.

And as recent history has shown, new markets don’t have to be as far away as Argentina. With the grass in Saskatchewan and B.C. glowing an enticing emerald, it may be time for Alberta to actively help industry establish satellite operations for the province’s benefit. After all, B.C. and Saskatchewan have both worked to lure industry, implementing regulations and incentive programs that attempt to offset the challenges in developing shale and oilsand deposits. “We can’t assume we have some natural advantage,” Gibbins says of retaining homegrown industry. “We have to be in that competitive game.”

Hall agrees. And he goes further, suggesting that establishing a provincial program that helps Alberta companies, particularly homegrown juniors, access out-of-province plays and move from junior to major might be extremely beneficial, especially if the companies are maintaining offices within this province.

Though they would almost certainly welcome the help, the companies of Alberta’s oil and gas industry, whether working inside or outside provincial borders, seem committed to maintaining the current state of relative stability. Neighbouring plays might be hot, but Alberta remains home for those leading companies into new opportunities. As Hopkins puts it: “The fact of the matter is Calgary is the centre of the universe when it comes to the resource industry. From Calgary, we can access the world.”

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