Oilfield Experiences

[farmers_son]

What??? Perhaps you misread what was being said or do you just make up problems so you can answer them?

No one said anything against making a profit. I would like to make a profit myself. In response to Cowman’s suggestion that the mentioned CBM companies were Canadian I did point out these are American owned companies that are developing the energy resources under our land. As landowners we are impacted by this development. The benefits, and there are benefits, go elsewhere. The profits obviously go south of the border.

As for wanking the bad old U.S.A., why not? I am a cattle producer, tell me why I should not wank the bad old U.S.A. Last time I checked they were blocking the border to my cows even though they have BSE the same as Canada. The U.S. is not doing me any favours by drilling for gas under my land.

Perhaps I am not getting where your comments come from. If you are saying that the reason why Canadians are not able to invest in our own oil and gas has something to do with taxation maybe that is a good point. I think Albertans have reason to question why we even have to pay taxes with this bonanza under our land. As for government running every aspect of my life, well it is government that sets the policies and guidelines for drilling on private deeded land such as I and Cakadu own. Yes, it is a problem when oil and gas companies want to drill on our land and government (through the Surface Rights Board) tells us what we get paid and that we have to let the companies on our land even if we are not satisfied with the compensation or circumstances.

[cowman]

Well I thought Trident was a wholey owned Canadian company...which just goes to show you learn something new everyday!
I do believe however that the oil/gas company does "own" the right to drill for their property? They paid someone for that right...cash on the barrelhead?
Our government sets the rules and regulations for the company to access their property. If anyone doesn't believe they are getting fair compensation they have an avenue to address that? In the end an arbritation board will decide what is fair and just compensation.
If there wasn't some system in place how would the companies access their property? How would the government realize a benifit from their property? It isn't a perfect world but that is just how it is?
I would imagine if we had a different government, with a different philosophy the companies wouldn't be so gungho to operate here....its called Saskatchewan!
As far as the USA: We are selling close to 10,000 feeder cattle a week to the US. We are selling over 18,000 fats a week. They are our best customer...and we are theirs? Without the US market our cattle industry is toast...at least as we know it!
Yes our trade relationship hasn't been perfect. Both sides have done some dumb things? It has not been helpful to have our leaders call their leader a moron and a bastard!
These trade deals are a benifit to both countries. Now that we have a leader that has similar ideas to the American administration, hopefully we will move forward.

[farmers_son]

Good points. Time will tell which province is managing its energy reserves the best. Yes the majority of the activity is in Alberta but Saskatchewan may very well end up getting a far better deal for its energy. Bottomline, Alberta is more than willing to sell its oil and gas to the Americans dirt cheap. I would point out the 1% royalty the Province of Alberta receives on Tar Sands oil. Even considering conventional oil and gas, present market conditions should warrant an increase in royalty rates but they remain at the same levels they were when oil was $11 per barrel.

Most, not all, but most of the benefit of the high energy prices go south of the border while landowners in this province do have problems as a result of energy activity on their land. Not to mention that typical well site revenue a farmer receives would not even pay his heating gas bill for the year and it would take many wells to cover his fuel bill.

You mention arbitration…the Surface Rights Board. The SRB sets the tone for payments received for all well and pipeline payments in this province. The SRB awards are nothing less than a joke. The SRB awards have not changed significantly in 20 years. Even assuming SRB awards were fair 20 years ago they would not be fair today given how land values and costs in general have increased. The one and only reason energy companies are gaining access to deeded land today at these ridiculously low compensation rates is the sorry state of the farm economy and the SRB backs the oil companies up instead of supporting agriculture.

And we are selling feeders to the U.S. And that is a good thing. We should not forget for one minute the artificial costs they have built into that trade. Things like branding CAN, preg checking heifers and dentition on all animals. Those requirements are costing each and everyone of us money. And I would like someone to point out to me one good reason why our cows are not going south right this very minute if that is where the higher prices are. The Americans are not doing us any favours by buying our gas and oil or our cattle either. It is all about their self interest.

[cowman]

Well I think they are renegotiating the 1% royalty on tarsands? That low royalty was never meant to be forever, but was an incentive to bring in some investment? And yes the only ones willing were those evil international American corporations?
As far as surface lease payments: Sure we'd all like a million dollars, but that just isn't going to happen? In reality the renumeration for surface rights are a lot better than anything you might do with farming? I don't think any farmer would be happy getting paid barley prices for a surface lease!
And finally...I don't know why cows aren't moving across the border. The US dept. of Agriculture has decided the time isn't right...and they run the show! I sure don't think it helped when we had the "crooks" and American haters in office! And don't forget the old R-CALF boys were always in there stirring the pot! Patience my friend.

[farmers_son]

Re the border….No doubt it will happen. Patience is a virtue but the squeaky wheel gets the grease. It will be three years next month. It has been 2 ½ years since BSE was first discovered in the United States, 1 year since the U.S. had what was an admitted domestic case of BSE on an animal slaughtered 7 months earlier. There is not doubt that protectionist sentiments in the U.S. not science, are controlling the agenda for a resumption of normalized trade across our border. Science should have seen the border open a year ago. Maybe if we squeaked a little more the agenda could be moved up some. Every month the border is closed or restricted costs Canadian cattle producers $1.5 million dollars. And fewer and fewer producers believe that CAIS is going to make up the difference for their farms any more. You would think $1.5 million per month would get our attention but so far we have been very patient.
You say the U.S. is calling the shots. The reality is when the border was closed before we were hearing the wheel squeak from U.S. packers wanting our live steers and from feedlot operators who were wanting to ship U.S. packers those steers. The wheel was squeaking on both sides of the border then. Now we are dealing with our cows which are in the hands of the average producer like you and I; who will be our squeaky wheel? I think some grease was put in the right places cause I am not hearing a sound.

Re evil American corporations. Of course American corporations are not any more evil than Canadian corporations. I think it is fair to say there is not a level playing field between the U.S. and Canada and that Canadians in general have not had the same opportunity to profit from our energy reserves. Whether the cause of this is taxation, politics or an immature investment environment; as a nation we have not been able to capitalize on our energy like other countries have. I am generalizing but I see Canadians have been able to take advantage of opportunities to participate in the service side but the ownership of the resource companies tends to be reserved for Americans.

Re surface leases…. You are right. It is better than anything we might do farming. I am not looking for a million dollars but surface revenue has not kept pace with inflation, costs in general, certainly not with energy prices. The SRB is part of the problem. Farmers who are being forced to grasp at cheap leases and easements are part of the problem too. The energy sector has been very successful in keeping a lid on surface lease compensation even in the face of record drilling and activity. They are determined, organized and well funded. And they are winning the battle over surface lease compensation to the agricultural sector. It is a one sided battle anyway as agriculture cannot afford to put up much of a fight.
Or should I be so foolish to think that government should have been fighting on our behalf. Yea right! Not in this province.

[cowman]

Seldom will any energy company force a farmer to accept a lease. Usually the problem isn't whether the farmer will allow a lease...but money? When it is a question of money then the company might go the extra step to arbritration.
You don't want the oil company in there, just tell the landman how difficult you will make it for him! Just tell him you'll get a lawyer and spend every last dime keeping him out! If you are convincing enough, he'll just go to the neighbor and drill under your land! Its not like there aren't many very willing people who want some surface lease revenue?
If you own the mineral rights don't lease them out...then you definitely will never have to worry about getting a well. I really find it funny that some freeholders want the mineral lease money but don't want the well!

[cowman]

In my area the one landowner that yelled the loudest about a proposed sour well, was meek as a lamb and more than happy to collect the surface revenue when one was drilled on his property a couple of years later.

[farmers_son]

Cowman: I am not sure I agree with your comments here. I speak with farmers on a regular basis about energy development on their land. If the company wants to go onto your land, no matter how threatening you may try to appear they will do it. It is not always wells, it can be pipelines or even a noisy compressor station near your house. Sometimes the companies will move the well onto the neighbours, sometimes they will not. There is little point in moving the well to the neighbours if later the company must approach you for a pipeline. And in some parts of the province where people farm bigger and own continuous blocks of land the company will not move away from you.

You are right when you say there are people who want surface lease revenue. But I am sure they would want fair surface lease revenue. I would put it to you if the technology exists today to allow the company to move across the fence they why do we still grant these energy companies the right to take our land by arbitration. Seems to me that arbitration is a throw back to the days before directional drilling existed. It would be interesting to see what happened to lease compensation if the Surface Rights Board was not there to keep a lid on lease compensation.

[farmers_son]

or if the EUB was not there to grant licenses !!

If there ever was a time to ensure that adequate compensation is paid to farmers its now when the companies are making the huge profits on their investment.

In my area some of the leases are fifty years old and you can imagine what sort of compensation was paid back then, not to mention the complete lack of environmental controls. As far as the technolgy involved in directional drilling is concerned, wells were whipstocked 30 years ago which amounts to the same thing.

[cowman]

farmers son: In my area there are certain people who are just a "no go" in the oil companies eyes? A least at the present time? There are very few large blocks of land here.
Last spring a coalbed company contacted me...wanted to let me know they intended to survey on my home quarter. I said no. Told the landman they screwed me on another deal and until they paid up($2800), no surveying! Of course he didn't know nothing about that deal!
He told me they have a right to survey and I said Hey listen, you want to survey get a court order and a mountie out to deliver it. After you survey, just try to get a deal with me. I'll spend every nickel I have keeping you out and you'll pay dearly and have an enemy for life! I also told him I have a bit of pull around here and will bring him a ton of grief with every landowner he deals with as well as any municipal officials he has to deal with! He then decided he wouldn't go ahead with the survey!
Now I want to make this very clear: I wasn't trying to squeeze more money out of him. I truly did not want any wells on that quarter no matter what he was willing to pay. Maybe I was like those old Pekisko boys...what good was the extra money...was I going to throw it on top of the pile? I valued the springs, the tranquility of my own little bit of paradise!
Now they are going to directionally drill under the home quarter...which is just fine by me.
The landman(who was a nice young guy) asked me how come I was so deadset against it? I told him I was too darned old and ornery to be chasing damned yearlings through the neighbors brush, which happened the year before, and was totally disgusted with his companies attitude! He told me those things could be resolved and they had an "attitude adjustment" after their first few years of operation. And I know what he said was true...a lot of the old boys went down the road! He also told me he would be back someday...and I know that is also true...but it bought me a few more years!