fraser institute
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Fraser institute presents to the Meet Alaska Conference. January 21, 2011TRANSCRIPT
Global Petroleum Survey 2010
ALLIANCE MEET ALASKA January, 2011
Fred McMahonVice President Research, International
The Fraser Institute
Project Objectives Are To:
• Rank jurisdictions according to barriers to upstream investment.
• Identify issues that jurisdictions need to address in order to attract more greater shares of investment.
• Identify year-to-year changes to jurisdictions’ apparent relative attractiveness for upstream investment. (Valuable information for both business planners and policy makers)
The Survey Questions
Factors Addressed by Questions (1)
1. Fiscal Terms2. Taxation Regime3. Environmental Uncertainty4. Regulatory Uncertainty5. Cost of Regulatory
Compliance6. Protected Areas7. Socio-economic Agreements8. Trade Barriers
Factors Addressed by Questions (2)
9. Labour Regulations and Employment Agreements
10. Quality of infrastructure11. Geological Database12. Labor Availability13. Disputed Land Claims14. Political Stability15. Security16. Regulatory Duplication and Inconsistencies17. Legal system
Possible Responses to Each Question:
1. Encourages investment
2. Is not a deterrent to investment
3. Is a mild deterrent to investment
4. Is a strong deterrent to investment
5. Would not invest due to this criterion
• Scoring Methodology
Composite Indices (Used to Facilitate Comparison)
• All-Inclusive Composite Index- Based on average of responses to all 17 questions
• Commercial Environment Index- Fiscal terms, taxation, trade barriers, quality of infrastructure, & labor availability
• Regulatory Climate Index- Based on average of responses to the 6 regulatory questions
• Geopolitical Risk Index- From “Political Stability” and “Security” questions
2010 Participation
• 645 questionnaires received; up from 577 in 2009• Over 364 companies represented.• Participating upstream petroleum companies
responsible for more than half of global 2009 E&P expenditures according to International Energy Agency estimates.
• 133 jurisdictions ranked (vs. 143 in 2009, 81 in 2008, 54 in 2007).
Position Held by Respondent
Other, 7.4%
Consultant, 32.2%
Manager, 29.5%
Company President, 18.8%
Vice President, 12.1%
The Global Picture
The Global Results Map
Focus on Alaska
All-Inclusive Composite Index: US
Offshore AL Alaska
0
10
20
30
40
5060
70
80
90
100
US - South
Dak
ota
US - Tex
as
US - Illin
ois
US - Wyo
ming
US - Miss
issippi
US - Utah
US - Okla
homa
US - Alab
ama
US Offs
hore—Gulf
of M
exico
US - Ohio
US - Arka
nsas
US - Louisi
ana
US - Kan
sas
US - North
Dak
ota
US - Mon
tana
US - Mich
igan
US - Wes
t Virg
inia
US - New
Mex
ico
US Offs
hore—Alas
ka
US - Colorad
o
US - Pen
nsylv
ania
US - Ken
tuck
y
US - Alas
ka
US Offs
hore—Atla
ntic
US - Cali
fornia
US - Florid
a
US - New
York
US Offs
hore—Pac
ific
Mild deterrent to investment Strong deterrent to investment Would not pursue investment due to this factor
All inclusive: Canadian Comparaison
0
10
20
30
40
50
60
70
80
90
100
CA - Manitoba
CA - Saskatchewan
CA - Ontario
CA - Yukon
CA - Newfoundland
CA - British Columbia
CA - Nova Scotia
CA - Alberta
AL Offshore-2010
AL US-2010
CA - Northwest Territories
CA - Quebec
Mild deterrent to investment Strong deterrent to investmentWould not pursue investment due to this factor
AL OffshoreAlaska
All-Inclusive Composite Index: 2010 and 2009
0
10
20
30
40
50
AL 2010 AL 2009 Offshore-2010 Offshore-2009
Mild deterrent to investment Strong deterrent to investment Would not pursue investment due to this factor
Focus on Alaska• Alaska• US—Alaska (Offshore
AL)• South Australia• Western Australia• Australia Offshore• Indonesia• Alberta• BC• Newfoundland• Yukon• NWT• Texas• US— Atlantic • US—Pacific • US—Gulf of Mexico
• Norway—North Sea (Norway-NS)
• Norway• United Kingdom—North
Sea (UK-NS)• Russia• DRC• Iraq• UAE• Venezuela• Brazil
All-Inclusive Composite Index
Offshore AL Alaska
0
10
20
30
40
50
60
70
80
90
100
TexasOffshore—
Gulf of Mexico
AU-South Australia
AU-Western Australia
UK - NSAustralia-Offshore
YukonUAENorway-NSNewfoundland
NorwayBC Offshore—
AL
Alberta AlaskaUS —
Atlantic
NWTBrazilUS Offshore—
Pacific
DRCIndonesiaIraqRussiaVenezuela
Mild deterrent to investment Strong deterrent to investment Would not invest
0
10
20
30
40
50
60
70
80
90
100
TexasUS —Gulf of Mexico
AU-South Australia
Australia-Offshore
AU-Western Australia
BC Offshore—AL
YukonUK - NS
Newfoundland
Alberta
Norway
UAENorway - NS
NWTAlaska
Offshore—Atlantic
BrazilOffshore—Pacific
DRCIndonesia
IraqRussia
Venezuela
Mild deterrent to investment Strong deterrent to investment Would not invest
Commercial Environment Index
AlaskaOffshore AL
Regulatory Climate Index
0
10
20
30
40
50
60
70
80
90
100
TexasAU-Western Australia
Offshore—Gulf of Mexico
AU-South Australia
YukonAustralia-Offshore
UK-NSUAE
BC Norway - NS
Newfoundland
Alberta
Norway
NWTOffshore—Atlantic
Alaska
Offshore—AL
BrazilDRC
Indonesia
Offshore—Pacific
IraqRussia
Venezuela
Mild deterrent to investment Strong deterrent to investment Would not invest
Alaska Offshore AL
Geopolitical Risk Index
0
10
20
30
40
50
60
70
80
90
100
YukonOffshore—
Atlantic
AU-South Australia
AU-Western Australia
Norway
Norway - NS
TexasUK-NS
Offshore—AL
Offshore—Gulf of Mexico
Australia-Offshore
Alaska
Newfoundland
BC UAENWT
Offshore—Pacific
Alberta
BrazilIndonesia
Russia
DRCIraq
Venezuela
Mild deterrent to investment Strong deterrent to investment Would not invest
AlaskaOffshore AL
Individual questions
Fiscal Terms
0102030405060708090
100
AU-South Australia
TexasAU-Western Australia
Australia-Offshore
Offshore—Gulf of Mexico .
BC Yukon Alaska
Offshore—AL
NWTUK-NS
Norway - NS
Brazil
DRC Newfoundland
Norway
Alberta
UAEIndonesia
Offshore—Pacific
Offshore—Atlantic
IraqRussia
Venezuela
Mild deterrent to investment Strong deterrent to investment Would not invest
Alaska Offshore AL
Taxation
0
10
20
30
40
50
60
70
80
90
100
Venezuela
Russia
IraqIndonesia
Brazil
Offshore—Pacific
Norway - NS
Norway
Alaska
Sorth Sea
Offshore—Atlantic
Alberta
UAE Newfoundland
DRCOffshore—
Gulf of Mexico
Offshore—AL
NWT
Australia-Offshore
BCAU-Western Australia
AU-South Australia
Texas
Yukon
Mild deterrent to investment Strong deterrent to investment Would not invest
Alaska
Offshore AL
Environmental Regulations
0
10
20
30
40
50
60
70
80
90
100
TexasUAE
DRCNewfoundland
AU-Western Australia
YukonAU-South Australia
Offshore—Gulf of Mexico
NWTAustralia-Offshore
Indonesia
UK-NS Alberta
IraqBrazil
BC Norway - NS
AlaskaNorway
Offshore—Atlantic
Venezuela
Russia
Offshore—AL
Offshore—Pacific
Mild deterrent to investment Strong deterrent to investment Would not invest
AlaskaOffshore AL
Regulatory Uncertainty
01020
3040506070
8090
100
AU-Western Australia
TexasAU-South Australia
Australia-Offshore
Yukon
Offshore—Gulf of Mexico
UK-NS
BC Norway - NS
UAENorway
Alaska
Offshore—AL
Newfoundland
NWTBrazil
Offshore—Atlantic
Alberta
DRCOffshore—
Pacific
IraqRussia
Venezuela
Mild deterrent to investment Strong deterrent to investment Would not invest
AlaskaOffshore AL
Cost of Regulatory Compliance
0
10
20
30
40
50
60
70
80
90
100
TexasAU-Western Australia
AU-South Australia
Offshore—Gulf of Mexico
UAEYukon
Australia-Offshore
DRCOffshore—
Atlantic
UK-NS
Brazil
Alberta
Newfoundland
Offshore—AL
Alaska
Norway - NS
Norway
BC Indonesia
NWTOffshore—
Pacific
IraqRussia
Venezuela
Mild deterrent to investment Strong deterrent to investment Would not invest
AlaskaOffshore AL
Uncertainty concerning what areas will be protected as wilderness or parks, marine life preserves, or archeological sites.
0
10
20
30
40
50
60
70
80
90
100
DRC Texas
UAEUK-NS
Newfoundland
Offshore—Gulf of Mexico
AU-South Australia
IraqBrazil
Indonesia
Norway - NS
AU-Western Australia
Yukon
Australia-Offshore
Alberta
NWTBC Venezuela
Norway
Russia
Alaska
Offshore—Atlantic
Offshore—AL
Offshore—Pacific
Mild deterrent to investment Strong deterrent to investment Would not invest
Alaska Offshore AL
Socioeconomic agreements
0
10
20
30
40
50
60
70
80
90
100
TexasAU-South Australia
Offshore—Gulf of Mexico
UK-NSAU-Western Australia
Norway
YukonBC Alberta
Australia-Offshore
Offshore—Pacific
Norway - NS
UAEOffshore—AL
Alaska
Offshore—Atlantic
Newfoundland
NWTBrazil
DRCIndonesia
IraqRussia
Venezuela
Mild deterrent to investment Strong deterrent to investment Would not invest
AlaskaOffshore AL
Tariff and Non-tariff Barriers
0102030405060708090
100
AU-South Australia
Offshore—AL
Offshore—Gulf of Mexico
Yukon
Australia-Offshore
AU-Western Australia
BC Newfoundland
TexasUK-NS
Norway
NWT Alaska
Offshore—Pacific
Offshore—Atlantic
Norway - NS
Alberta
UAEBrazil
DRCIndonesia
IraqRussia
Venezuela
Mild deterrent to investment Strong deterrent to investment Would not invest
AlaskaOffshore AL
Labor Regulations and Employment Agreements
0
10
20
30
40
50
60
70
80
90
100
Offshore—Gulf of Mexico
Offshore—AL
TexasOffshore—
Atlantic
UK-NS
Alberta
AU-South Australia
Yukon
Alaska
AU-Western Australia
Australia-Offshore
Offshore—Pacific
British Columbia
Newfoundland
UAENorway - NS
NWT
Norway
IraqDRC
Brazil
Indonesia
Russia
Venezuela
Mild deterrent to investment Strong deterrent to investment Would not invest
Alaska
Offshore AL
Quality of Infrastructure
0
10
20
30
40
50
60
70
80
90
100
Norway
UK-NSTexas
Norway - NS
Offshore—Gulf of Mexico
UAEAU-Western Australia
Australia-Offshore
US Offshore—Atlantic
Newfoundland
BC Offshore—AL
Brazil
AU-South Australia
Yukon
Offshore—Pacific
Alaska
Indonesia
NWT
Venezuela
Russia
IraqDRC
Mild deterrent to investment Strong deterrent to investment Would not invest
Alaska
Offshore AL
Geological Database
0
10
20
30
40
50
60
70
80
90
100
Norway
AU-Western Australia
AU-South Australia
Alberta
BC Offshore—Gulf of Mexico
Alaska
Norway - NS
NWTAustralia-Offshore
UK-NS
TexasYukon
Newfoundland
Offshore—AL
UAEBrazil
Offshore—Atlantic
Offshore—Pacific
Indonesia
Venezuela
IraqRussia
DRC
Mild deterrent to investment Strong deterrent to investment Would not invest
Alaska Offshore AL
Labor Availability
010
2030
405060
7080
90100
Offshore—Gulf of Mexico
TexasUK-NS
Brazil
Alberta
Offshore—AL
UAENorway
BC Norway - NS
AU-South Australia
Offshore—Atlantic
Offshore—Pacific
Newfoundland
Australia-Offshore
AU-Western Australia
Alaska
NWTYukon
Indonesia
Russia
Venezuela
IraqDRC
Mild deterrent to investment Strong deterrent to investment Would not invest
Alaska
Offshore AL
Disputed Land Claims
01020304050
60708090
100
Norway
US Offshore—Atlantic
US Offshore—Gulf of Mexico
Norway - North Sea
UK-NSTexas
UAEAU-South Australia
Newfoundland
DRCOffshore—
AL
Brazil
Australia-Offshore
Offshore—Pacific
Alaska
Russia
Indonesia
Venezuela
AU-Western Australia
Alberta
IraqYukon
BC NWT
Mild deterrent to investment Strong deterrent to investment Would not invest
Alaska
Offshore AL
Political Stability
0
10
20
30
40
50
60
70
80
90
100
Norway
AU-Western Australia
South Australia
Offshore—Atlantic
Yukon
Texas
Norway - NS
UK-NS
Australia-Offshore
UAEOffshore—
AL
Offshore—Gulf of Mexico
BC Newfoundland
NWTAlaska
BrazilOffshore—
Pacific
Alberta
Indonesia
Russia
DRCIraq
Venezuela
Mild deterrent to investment Strong deterrent to investment Would not invest
Alaska
Offshore AL
0
10
20
30
40
50
60
70
80
90
100
Norway
AU-Western Australia
AU-South Australia
Offshore—AL
Offshore—Gulf of Mexico
Offshore—Pacific
Offshore—Atlantic
Alaska
Yukon
UK-NS
Norway - NS
Australia-Offshore
TexasNewfoundland
NWTBC Alberta
UAEBrazil
Indonesia
Russia
DRCVenezuela
Iraq
Mild deterrent to investment Strong deterrent to investment Would not invest
Security
AlaskaOffshore AL
Regulatory Duplication and Inconsistencies
0
10
20
30
40
50
60
70
80
90
100
AU-Western Australia
UAEOffshore—
Gulf of Mexico
UK-NS
Australia-Offshore
Norway
Texas
Norway - NS
AU-South Australia
YukonOffshore—
AL
BrazilBC Alberta
Offshore—Atlantic
Alaska
NWTNewfoundland
Indonesia
Offshore—Pacific
Venezuela
Russia
DRCIraq
Mild deterrent to investment Strong deterrent to investment Would not invest
Alaska
Offshore AL
0
10
20
30
40
50
60
70
80
90
100
AU-Western Australia
AU-South Australia
Offshore—Atlantic
Yukon
UK-NS
Offshore—Gulf of Mexico
Australia-Offshore
Newfoundland
NWTNorway
TexasNorway - NS
Alaska
BC Alberta
Offshore—AL
UAEOffshore—
Pacific
BrazilIndonesia
DRCIraq
Venezuela
Russia
Mild deterrent to investment Strong deterrent to investment Would not invest
Legal system
Alaska
Offshore AL
Global ComparisonAlaska Third Quintile: Green
Conclusion
• Oil and gas companies will come to where the resources are, so they will come to Alaska.
• But the worse the regulatory/tax environment, the higher the profits companies will demand—weakening other development.
• Alaska has much to improve.• Improvement means reducing uncertainty, not
weakening environmental and other necessary regulatory safeguard.
Conclusion, continued• No one would accuse Norway of environmental laxity,
low taxation, or weak regulations.• Yet Norway in most areas scores ahead of Alaska—so
free-market Alaska scores behind “socialist” Norway.• Norway is also successful in spinning off related
business.• The most important factor in all areas is certainty, clarity,
and efficiency.• Everyone all on sides of ideological/policy issues should
want the same.• According to the survey, Alaska can improve on all of
these.
Thank you
All Fraser Institute PublicationAvalable for free at:
http://www.fraserinstitute.org/Follow these links: Research & Publications/ Publications/Surveys/Petroleum Survey 2010.