Pipeline payments to have Alberta farmers beaming
Traditionally marching to a different beat than the rest of the Canadian petroleum industry, Nova, an Alberta corporation, is yet again stealing the lead on a new compensation package for farmers here.Skip to next paragraph
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Farmers from the Peace River block (with the most northerly arable land in North America) to the Montana border welcome Nova's nonconformity.
There is also a very grateful provincial government in Edmonton, the Alberta capital. It is deeply indebted once more to the unobtrusive footwork of executive Robert Blair and his colleagues, successfully negotiating some of the most slippery political grounds.
It's all about Alberta farmers receiving annual fees for the trouble caused by pipelines crisscrossing their lands, instead of the lump-sum payments struck in the past.
In the corporate head offices of local oil and natural gas producers, annoyed executives of other pipeline operators are denouncing this latest Nova experiment. They fear that Premier Peter Lougheed, in his eagerness to court the rural vote at his crucial time, will in the end compel them to yield major fiscal concessions to Alberta farmers and ranchers.
Nova, formerly Alberta Gas Truck Line Company Ltd., an investor-owned company with a provincial charter to be the exclusive shipper of all the gas produced within the province, is now a fast-growing conglomerate already into manufacturing, petrochemicals, and alternative energy projects. Its extramural activities in fact are the results of moving some 6 billion cubic feet of gas per day.
Alberta landowners, long critical of the petroleum industry's modus operandim on their properties, are suddendly imbued with the apparent success of their three-year campaign to win a better deal for the inconveniences suffered under rights of access and easement regulations. In fact, the more militant among them are already talking about getting a "piece of the action" in the form of a share of the wellhead revenues, too.
The petroleum industry in general, convinced that Nova is simply obliging the Alberta government by resolving a complex and controversial issue, is opposed to the idea of annual charges on subterranean transmission facilities.
Although the extra sum is less than one-third of a cent per thousand cubic feet of gas or oil moved, the Canadian Petroleum Association says that what is at stake is the principle of signed and sealed agreements negotiated in the past in good faith. Besides, producers claim, Nova can easily afford to be cavalier with its money.
That largess can simply be counted as part of the cost of doing business, and can be charged against the wellheads. In turn, of course, such a deft maneuver lowers the producers' returns.
"We are sharing our pennies with quite a few parties as it is," an irate oilman exclaimed. But Nova, an old hand at reading the political winds, incorporated a clever proviso into its conditions for the lease proposals. For them to be effective, it required a federal-provincial energy pricing agreement. Such a deal eluded Ottawa and Alberta officials for the past two years, but was finally settled this week. It will permit Canadian oil prices to rise in stages to as high as $57.75 a barrel in Canadian currency by July 1, 1986. It prohibits the price from exceeding 75 per cent of the world price. Canadian oil is now priced at $18.75 a barrel in Canadian dollars, or $15.76 in American dollars. The price charged by members of OPEC ranges from $32 to $36 a barrel.
The Nova deal with the farmers, it was figured here, put pressure on the Alberta government, hoping to lock up the farm vote, to reach an acceptable deal with Ottawa.
Lougheed is thinking about a provincial election as early as next spring to win a strong mandate on an energy jurisdiction platform with which to confront Ottawa over revenue-sharing and ownership issues. The Nova proposal -- to take effect retroactively Nov. 6, 1980 -- would initially be worth only between $7 million and $15 million (Canadian) annually, depending on how persuasive the government chose to be. But critics of the lease arrangements claim they are "seeing just the thin edge of the wedge," with a lot more "soaking of a more expensive kind" to follow later.
They point to the Nova promise to reevaluate lands traversed by their network every five years. The annual dues will payable on half of the assessed market value. Legislation possibly stemming from the findings of a current select committee of the Alberta legislature could be enacted in a hurry to counter industry reluctance.
The impressions of political hanky-panky by the Alberta government, using Nova as a surrogate, may be quite hard to erase. "We know it smells of politics and that the government can make it stick," a Canadian Petroleum Association spokesman lamented. But that still "doesn't make it right, and that's why we will oppose it," he added.
In the meantime, contrary to past experience, Alberta agricultural land will fetch a bonus at auctions when honeycombed by steel pipe. Farmers believe that it's merely a matter of time before the rest of the industry follows the Nova lead, as usual.