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Fraser institute presents to the Meet Alaska Conference. January 21, 2011

Fraser institute presents to the Meet Alaska Conference. January 21, 2011

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  • 1. Global Petroleum Survey 2010ALLIANCE MEET ALASKA January, 2011 Fred McMahon Vice President Research, International The Fraser Institute
  • 2. 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)
  • 3. The Survey Questions
  • 4. 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
  • 5. Factors Addressed by Questions (2)9. Labour Regulations and Employment Agreements10. Quality of infrastructure11. Geological Database12. Labor Availability13. Disputed Land Claims14. Political Stability15. Security16. Regulatory Duplication and Inconsistencies17. Legal system
  • 6. Possible Responses to Each Question:1. Encourages investment2. Is not a deterrent to investment3. Is a mild deterrent to investment4. Is a strong deterrent to investment5. Would not invest due to this criterion
  • 7. • Scoring Methodology
  • 8. 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
  • 9. 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).
  • 10. Position Held by Respondent Company President, Other, 7.4% 18.8%Consultant, 32.2% Vice President, 12.1% Manager, 29.5%
  • 11. The Global Picture
  • 12. The Global Results Map
  • 13. Focus on Alaska
  • 14. U S -S ou th D 0 10 20 30 40 50 60 70 80 90 100 U ako S ta - U Te S x U - I as S lli U - W no S - M yo is is mi si ng U ss S U U ipp O S S- i ffMild deterrent to investment sh -O U or k ta e— US lah h G - A om ul f o la b a f M am ex a U ic o U S S -A -O U h S rka io -L n o sa U U uis s S S i - N - K an a o r an t s U h D as S ak - U M ot U S - on a S tStrong deterrent to investment - W Mic ana U e h U S st V iga S - n O Ne irg ff w in sh i or Me a Offshore AL e— x i U c U S Ala o S -C s - P o ka en lor All-Inclusive Composite Index: US n a U sy d o S U - K lva S O en n ia ff U tu c Alaska sh S o r - A ky e — la U s S Atl ka - C an a tic U lifo U S rn S US - F ia O lo ff - N rid sh e or w Y a e— o Pa rk ci ficWould not pursue investment due to this factor
  • 15. All inclusive: Canadian Comparaison10090 Alaska80 AL Offshore70605040302010 0 CA CA CA CA AL CA CA CA CA CA AL CA O US -M -O -Y -B -Q -S -N -N -A -N ffs uk rit as -2 nt ue ew ov lb or an ho 01 er ar is th on ka be a it o fo h re ta io 0 w Sc tc un c ba Co - es 20 he ot dl tT lu 10 ia w an m an er d bi r it a or ie s Mild deterrent to investment Strong deterrent to investment Would not pursue investment due to this factor
  • 16. All-Inclusive Composite Index: 2010 and 20095040302010 0 AL 2010 AL 2009 Offshore-2010 Offshore-2009 Mild deterrent to investment Strong deterrent to investment Would not pursue investment due to this factor
  • 17. • Alaska Focus on Alaska• US—Alaska (Offshore • Norway—North Sea AL) (Norway-NS)• South Australia • Norway• Western Australia • United Kingdom—North• Australia Offshore Sea (UK-NS)• Indonesia • Russia• Alberta • DRC• BC• Newfoundland • Iraq• Yukon • UAE• NWT • Venezuela• Texas • Brazil• US— Atlantic• US—Pacific• US—Gulf of Mexico
  • 18. Would not invest a el zu ne Ve i a s us R q ia fic Ir a nes ci do Pa In e— or RC h D ff s O SAll-Inclusive Composite Index U l Strong deterrent to investment zi Alaska ra B ic T an t W l N At — S U ka s la A rta AL e lb r e— A ho f fs O C d B ay l an w d or n N fou S ew -N Offshore AL N ay w or N re AE n ho U ff s ko O a- ia Mild deterrent to investment Yu rali al t tr us us A NS n A alia ico - er t r ex K t U es Aus f M W o U- th lf A ou Gu S — U- e A hor f fs O s xa Te 100 90 80 70 60 50 40 30 20 10 0
  • 19. Commercial Environment Index10090 Alaska80 Offshore AL70605040302010 0 Te US AU Au AU BC Of Yu UK Ne A No UA No NW Al O Br O DR In Ira Ru Ve f f d xa s — -So str -W fs k ho on - N wfo lbe r rw E rw T as k fsh azi l fsh C on q ss n e G al e S un ta ay ay a or or es ia zu ul uth ia- ste re — dl -N e— e— ia el fo A O a f M us ffs rn A AL an S At Pa d la ci ex tra ho us nt fi c ic lia re tra ic o l ia Mild deterrent to investment Strong deterrent to investment Would not invest
  • 20. a el zu ne V e ia fic ss ci Ru Pa q re — Would not invest Ira hoRegulatory Climate Index f f s ia O es n do In Offshore AL C DR i l AL az e— Br r ho t ic ffs an O ka Atl as e — A l hor Strong deterrent to investment ffs Alaska O T NW ay rw d N o rta lan be nd A l fo u S w -N N e ay rw No BC re E ho UA S ffs -N O a- U K r al i lia ic o t r a ex Mild deterrent to investment st A u n A us f M k o th l f o l ia Y u o u Gu t r a -S e — u s A U hor rn A ffs te O es -W AU s xa Te 100 90 80 70 60 50 40 30 20 10 0
  • 21. a el zu Would not invest ne Ve q Ira C R D a siGeopolitical Risk Index us ia R s ne do In l zi ra fic B ci ta er Pa lb e— A r ho ffs Strong deterrent to investm ent O T W N E A U d an C dl B un fo ew e o Offshore AL Alaska N or xic a sh e sk ff M la -O of A ia f al ul tr G us e— A r h o AL ffs — O re ho ffs O S -N K U s S xa -N Mild deterrent to investm ent Te ay ia or w al tr N ay us w A a or tern ali N tr es us -W A ic U th nt A ou tla -S A U — A re ho ffs O n ko Yu 100 90 80 70 60 50 40 30 20 10 0
  • 22. Individual questions
  • 23. a el zu ne Ve a si ic us nt R la At Would not invest q — ifi c Ira ore ac h P ffs — O ore h ffs ia O es n do In E A a U t erFiscal Terms lb d A ay an w dl or n Strong deterrent to investment N fou ew N C R D l zi NS ra - B ay w or Offshore AL N S -N K . U L T —A W N ore h ffs O a o sk ic A la ex n fM ko fo Yu ul G re C e— o B o r ffsh al ia Mild deterrent to investment h tr ffs -O s Alaska O al ia Au tr rn us te A es ia -W al U tr A s us A xa th Te ou -S U A 100 90 80 70 60 50 40 30 20 10 0
  • 24. a Would not invest el zu ne Ve a si s Ru q Ira sia ne do c In ifi il ac a z —P Br re ho S ff s - N O ay rw No y Strong deterrent to investment a rw No kaTaxation Alaska as a tic Al Se tlan rth A So re— ho ff s O a rt be Al d an E dl o UA un ic fo ex w fM Ne fo ul C —G DR re ho A L Offshore AL ff s e— O r ho ff s re O ho T ff s -O NW Mild deterrent to investment lia ra lia st ra Au st Au rn lia BC te ra e s ust -W A AU uth o -S AU s xa Te k on Yu 100 90 80 70 60 50 40 30 20 10 0
  • 25. fi c ci Pa — re L Would not invest ho — A f fs e O horEnvironmental Regulations ff s O ia t ic Offshore AL ss ela l an R u zu At ne e— V e hor ff s O ay rw N o ka NS as - A l ay rw Strong deterrent to investment No Alaska BC il az Br q Ir a r t a be Al S re - N ia s h o o UK s f ne O f ic d o ia- ex In r a l M of st lf Au G u li a T e — tra s N W hor A u ff s th l ia O ou tr a -S us A U on rn A Mild deterrent to investment k te d Y u e s lan -W nd A U fou w Ne C DR E UA s xa Te 100 90 80 70 60 50 40 30 20 10 0
  • 26. a el zu ne Ve Would not invest a si fic us ci R Pa q — Ir a or e h f fs O ic RC ntRegulatory Uncertainty D ta tla e r —A lb A or e h ffs O l zi Offshore AL ra B nd Strong deterrent to investment T la W nd N ou AL f ew e— N or h f fs O a sk Alaska la A ay w or N S N AE - U ay o w ic or ex N fM C fo B S ul N G K- r e— U ho re ffs ho O n ff s lia Mild deterrent to investment ko -O t ra Yu alia us tr A us ut h ia A al So tr U- us A s A n xa t e r Te es W U- A 100 90 80 70 60 50 40 30 20 10 0
  • 27. a el zu ne Ve a si fi c us ci Would not invest R Pa q — Ira ore h ffsCost of Regulatory Compliance O T a W i N es n do In C B ay w NS Strong deterrent to investment or - N ay w or N a L Alaska s k —A la A ore nd h a ffs dl O oun f ew N ta er lb A l zi ic nt Offshore AL ra la B S At -N — K re U ho re ffs ho Mild deterrent to investment O ffs C O R a- D al i o tr ic us ex A n fM ko fo Yu ul G alia E A re — s tr l ia U ho Au stra ffs h O out Au -S te rn U A es -W U A s xa Te 100 90 80 70 60 50 40 30 20 10 0
  • 28. fi c ci Pa — re L c ho A nti ffs e — l a O or At h ffs e — O orwilderness or parks, marine life preserves, or archeological sites. h ffs Offshore AL O ka s la A ia Would not invest s us R ay w la orUncertainty concerning what areas will be protected as N zu e ne Ve C B e T or sh Strong deterrent to investment W N ta ff er O lb ia- al ia A al tr tr Alaska us us A n A n k o te r Yu es S -W - N U A ay w ia or N nes do In l ia ic o zi al ra tr ex B us M A of Mild deterrent to investment q th l f Ira ou G u -S e — U d A or lan h ffs nd O ou f ew N S -N K U E A U s xa Te C R D 100 90 80 70 60 50 40 30 20 10 0
  • 29. Socioeconomic agreements100 90 80 70 Offshore AL Alaska 60 50 40 30 20 10 0 Te A O U A No Y B A A O N U O A O Ne NW B D In Ir R V xa U-S ffs K-N U-W rw uk C lbe us ffs orw AE ffs la s ffs w T raz RC d o aq us en s o ho S e a on rta tra ho a ho k h fo il ne s i ez a u ut re st y l ia re y - re a o r un si el h — er -O — N — e— d a a Au G n ffs Pa S AL la At nd st ul Au ho cif la ra f o st re i c nt lia f M ra ic ex l ia ic o Mild deterrent to investment Strong deterrent to investment Would not invest
  • 30. a elTariff and Non-tariff Barriers zu ne Ve s ia us R q s ia Would not invest Ira ne do In C R D zi l ra B E ic A U rta NS ant e - tl Strong deterrent to investment lb y A wa —A ifi c c or re a N ho —P ff s r e O ho ff s Alaska O ska la A T W N ay w or N S -N nd K U s dla ia xa un al Te fo tr us Mild deterrent to investment ew A e n r N e r ho o C st fs ic B We -Of ex - fM Offshore AL U l ia A tr a fo us ul A n G k o — L lia re Yu ho —A tra e ffs r us O sho A ff th O ou -S U A 100 90 80 70 60 50 40 30 20 10 0
  • 31. a el zu ne Ve a i ss a Ru e si n doLabor Regulations and Employment Agreements In il az Br C DR q Ira y Would not invest a rw No T NS NW y - a rw No d an E dl ia UA un b Strong deterrent to investment fo m w ol u i c Ne C ci f sh Pa iti — ore Br re h ia ho ff s ral ff s ia -O s t O ra l Au s t ern Au e st Alaska -W AU ka as lia Al ra n st ko Au Yu uth o Mild deterrent to investment -S AU a rt be ic Al nt S tla -N —A UK re ho ff s ic o O ex Offshore AL s L xa — A fM Te ore fo h ul G ff s e— O r ho ff s O 100 90 80 70 60 50 40 30 20 10 0
  • 32. C DR q Ira a i s s la Ru ue z ne Ve Would not invest T a NW si ne do fic In a ci k Pa as — Al re ho lia ff s ra O n st ko Au AlaskaQuality of Infrastructure Yu uth Strong deterrent to investment o -S AU l L i A az — Br ore h ff s O d ic an nt dl At la BC un fo re— e w o or Ne fs h sh lia f f a O -Of s tr US lia Au ra n o s t ter Offshore AL ic Au e s ex fM Mild deterrent to investment -W AU fo ul E G — UA ore h S ff s - N O ay rw No s xa Te S -N UK ay rw No 100 90 80 70 60 50 40 30 20 10 0
  • 33. RC D ia s Would not invest us R q ela Ir a zu ic ne ia cif Ve nes Pa tic do e— l an In or AtGeological Database h ffs e— O or h ffs O il z ra B AL — AE e d Strong deterrent to investment U hor lan ffs nd O fou ew N n Offshore AL ko Yu s re xa ho Te S ffs N -O K- ia U al tr us o A S ic W T -N ex N ay M w of or lf N ka Gu s la e— A or h ffs lia Mild deterrent to investment O ra a C st ali B ta Au str er u lb th A ou rn A Alaska S U- te A es W U- A ay w or N 100 90 80 70 60 50 40 30 20 10 0
  • 34. C R D q la Would not invest Ira zu e ne Ve ia s us ia R es n do In n ko ia Yu al Alaska T tr W usLabor Availability N a A e s k e rn o r la t h A es ffs -W -O U ia d Strong deterrent to investment A al n tr d la fi c us i A oun ac c f P i ew — nt N ore Atl a ia h al ffs e — tr O or us h A ffs h O out S -S - N U A ay w or N C B ay w or N AL E — A U ore h ffs Mild deterrent to investment Offshore AL O ta er lb A l o zi ic ra ex B S fM -N fo K ul U G s xa e — Te or h ffs O 100 90 80 70 60 50 40 30 20 10 0
  • 35. T W N C B n ko Yu ia al tr q Ira ta us A e r e rn Would not invest lb tDisputed Land Claims A es -W la U A zu e n e ia Ve es n do In a si c us ifi Strong deterrent to investment R a ac e s k —P o r Alaska la A ore ffsh h O ffs a- O al i tr us A l L zi —A ra B ore h ffs d O an ia C d l tral Offshore AL R D oun us f A ew h Mild deterrent to investment N out -S U A E A co U a exi xa s Se M Te S th of or lf -N - N Gu c K i U ay e — nt w r tl a or ho A N ffs — O ore S h U ffs O S U ay w or N 100 90 80 70 60 50 40 30 20 10 0
  • 36. a el zu ne Ve Would not invest q Ira C R D ia s us sia R ne c do ifi In ta ac er —P lb A ore h ffsPolitical Stability O l zi ra B a sk Strong deterrent to investment la Alaska A nd o T d la ic N W un ex fo fM ew fo N ul G C re — B L ho A ffs — O re ho re ffs ho O ffs A E -O U al ia tr us Offshore AL A S -N - NS K U ay w or N s ic xa Mild deterrent to investment nt Te la n At ko — Yu ore ali a l ia tr a h tr ffs us us O A A h n ut er So est -W U A ay w or N 100 90 80 70 60 50 40 30 20 10 0
  • 37. q la Ira u e z ne Ve Would not invest C R D a si us a R esi n do In l zi ra B E A U ta er lb A C B d Strong deterrent to investment T an W dl N unSecurity fo re ew ho N s ffs xa -O Te al ia tr S us - N A ay w or N S -N K U n ko ic nt Yu a tla A sk — c co la re cifi exi A ho Pa M ffs — f of O re ul ho G ffs — Mild deterrent to investment O ore L h A lia Offshore AL ffs re— tra O ia ho us ral ffs A t O uth us Alaska o A -S e r n U A est -W U A ay w or N 100 90 80 70 60 50 40 30 20 10 0
  • 38. q Ir a RC D a si a c us l ifi R zue ac P ne — Ve or e Would not investRegulatory Duplication and Inconsistencies h ffs ia O es nd n la do d In un fo ew N T ic W nt N a tla s k —A la A or e Alaska h ffs O rta e Strong deterrent to investment lb A C B l zi AL ra r e— B ho al ia ffs tr O n us Offshore AL ko h A Y u o ut S S U- - N A ay w or N s xa re Te ho ay f s w Of ic o or a- ex N ali Mild deterrent to investment tr fM us fo A S ul N G K- re — ia U al ho tr ffs us O A rn AE te U es W U- A 100 90 80 70 60 50 40 30 20 10 0
  • 39. a si a us l R zu e ne Ve q Ir a RC sia Would not invest D ne do fic In l ci zi Pa ra e— B or h ffs O AL AE e— U or h ffs O ta er lb A Strong deterrent to investmentLegal system C B a sk N S la A y- a w or N s Offshore AL xa Te ay w or N nd o T dla ore xic Alaska W h N oun ffs Me f O of ew a- lf N rali u t —G us A or e h ffs Mild deterrent to investment O S N ic K- nt U n tla ia ko —A ral Yu or e ust alia h A tr ffs th Aus O ou S rn U- te A es W U- A 100 90 80 70 60 50 40 30 20 10 0
  • 40. Global ComparisonAlaska Third Quintile: Green
  • 41. 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.
  • 42. 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.
  • 43. Thank you All Fraser Institute Publication Avalable for free at: http://www.fraserinstitute.org/Follow these links: Research & Publications/Publications/Surveys/Petroleum Survey 2010.