Yet another made in Québec myth: “Oil and gas companies were given permits in Québec for ten cents.”
Bugs Bunny’s two cents on the ten cents myth is that it only makes sense in a cartoon and people who would say it are ‘ultra maroons’. It is simply, plainly, clearly, manifestly and obviously not true. It doesn’t even make it as a metaphor.
Ten cents is not what anyone pays to acquire a license in Québec. Ten cents is the annual rental per hectare in Québec and the last Québec budget contemplates increasing it. Only in a cartoon would rental costs in Québec be reported and compared to acquisition costs elsewhere.
Alberta charges not thousands as advertised by opponents but $3.50 per hectare as an annual land rental.
Typical leases in Alberta are much smaller than in Québec because it is an established area with smaller reservoirs. So the annual rental cost of a typical lease in Alberta is not that much different than the annual rental for a typical license in Québec. Québec oil and gas companies argue that the rental increase proposed in the last Québec budget is not reasonable given the very early stage of Québec exploration.
What if Elmer Fudd countered that the ten cents is only a metaphor for those ‘wascally’ oil and gas companies getting their permits too cheap? If Bugs Bunny took a wrong turn at Albuquerque he might end up in Norway, home of opponents much beloved Norwegian system. ‘What’s up in Norway doc?’
Permits in Norway are of a similar size to Québec permits. The annual rentals are zero, the permit bonuses are zero and the royalties are zero. The Norwegian Government pays 78% of all up front exploration risks and only expects 78% of the profits including corporate taxes.
Norway understands that exploration is very risky and that a very few successes must pay for a large number of expensive failures. Norway’s $600 billion sovereign fund is growing in part because they figured out how to encourage companies to take high risks and then share in the benefits. Alberta charges more for permits, doesn’t share in the risk, and charges high royalties and yet has only a $12 billion sovereign fund. Where does all that money go I wonder?
I think its time to stop the confrontation over oil and gas in Québec. Let’s all work together on adopting the Norwegian system. I would even be willing to pay more, on top of the ten cents, I’ll give you my two cents.
That-that’s all folks!