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Manitoba Sees Oil Boom

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26 Re: Manitoba Sees Oil Boom on Wed Mar 23, 2011 1:29 pm

EdWin


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grumpy old man wrote:Let's get off welfare!

Larger provincial royalties from the oil and gas sector would definitely help put a dent in reducing Manitoba's equalization payments. This would be the biggest single benefit, IMO.

27 Re: Manitoba Sees Oil Boom on Wed Mar 23, 2011 1:29 pm

Deank

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hehe. nah just poking fun at your "bunch of farmers get rich and contribute essentially nothing in return" comment Smile


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28 Re: Manitoba Sees Oil Boom on Wed Mar 23, 2011 1:34 pm

grumpy old man

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Farmers have really struggled to make a decent living IMO.

I'm willing to bet the average farmer works much harder than the average Canadian. Sun up to sun down. Weekends.

Yes, farmers worker harder...


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29 Re: Manitoba Sees Oil Boom on Wed Mar 23, 2011 1:43 pm

cherenkov

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I read something about the royalty system a couple years ago. If I remember correctly, it has to do when when the land was purchased. If the land was purchased before year X the mineral rights came with the land, but if it was purchased after year X when the law was changed, the province retained the mineral rights.

Sask and AB implemented similar laws around the same time, but at that point in time less land was privately owned in those provinces, and therefore the province retained rights to a greater share of the land. In the case of AB there is very little land where the rights are privately owned.

http://anybody-want-a-peanut.blogspot.com/

30 Re: Manitoba Sees Oil Boom on Wed Mar 23, 2011 2:14 pm

sputnik

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Deank wrote:hehe. nah just poking fun at your "bunch of farmers get rich and contribute essentially nothing in return" comment Smile

I would say that they do nothing for the oil industry.

So why should they collect oil revenues?

31 Re: Manitoba Sees Oil Boom on Wed Mar 23, 2011 2:19 pm

sputnik

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cherenkov wrote:I read something about the royalty system a couple years ago. If I remember correctly, it has to do when when the land was purchased. If the land was purchased before year X the mineral rights came with the land, but if it was purchased after year X when the law was changed, the province retained the mineral rights.

Sask and AB implemented similar laws around the same time, but at that point in time less land was privately owned in those provinces, and therefore the province retained rights to a greater share of the land. In the case of AB there is very little land where the rights are privately owned.

Here is the explanation.

Fortunately for many Manitobans in the area, they not only have the land sought by oil companies but they also own the mineral rights to that land. Through a pleasant quirk in the law, many farmers and their descendants hold mineral rights because the area was homesteaded before 1890 — the year Ottawa took over mineral rights in Western Canada which have since been transferred to the provinces.

http://www.winnipegrealtors.ca/editorials.aspx?id=300

32 Re: Manitoba Sees Oil Boom on Wed Mar 23, 2011 2:23 pm

Deank

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sputnik wrote:
Deank wrote:hehe. nah just poking fun at your "bunch of farmers get rich and contribute essentially nothing in return" comment Smile

I would say that they do nothing for the oil industry.

So why should they collect oil revenues?

They shouldn't. The oil industry should simply not have access to the oil.


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33 Re: Manitoba Sees Oil Boom on Wed Mar 23, 2011 2:33 pm

sputnik

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Deank wrote:
sputnik wrote:
Deank wrote:hehe. nah just poking fun at your "bunch of farmers get rich and contribute essentially nothing in return" comment Smile

I would say that they do nothing for the oil industry.

So why should they collect oil revenues?

They shouldn't. The oil industry should simply not have access to the oil.

Right. Provincial prosperity is so overrated.

34 Re: Manitoba Sees Oil Boom on Wed Mar 23, 2011 2:40 pm

Deank

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The farmers never stole the oil under their farms. They own it. Why should they not profit from it?

Maybe in 100 years when soil is at a premium because of global warming the province should automatically own that too and allow someone to come in and make money by selling it?

I think you should be far more questioning why the oil companies are allowed to make so much off the resource without actually owning it.

Imagine how much money Canada would have if all the oil companies got was paid for extraction.


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35 Re: Manitoba Sees Oil Boom on Wed Mar 23, 2011 3:01 pm

AGEsAces

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and it's not about oil...it's about minerals...whatever they may be.

today it's oil, tomorrow it might be iron, or water

if you owned land and found diamonds on it, would you want the government to come in and steal all your diamonds so that "everyone" can profit from it.

Again...the government has no business in the mineral business. It's not what they were created for. And they get their cut from the taxes they steal on the sale, export, etc. off the minerals already.

http://www.photage.ca

36 Re: Manitoba Sees Oil Boom on Wed Mar 23, 2011 3:02 pm

sputnik

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Deank wrote:Imagine how much money Canada would have if all the oil companies got was paid for extraction.

Oil companies like Shell, BP and Suncor do not extract oil.

Oil and gas companies find the oil using seismic and geological studies that they pay for.

They then pay local contractors to extract the oil (along with all other support trades) for them, pay royalties to the governing jurisdiction and then sell it on the commodities market to companies willing to refine it.

If it wasn't for oil and gas companies there would be no extraction at all.

Go past any oil rig and you will be hard pressed to find anyone that works for a big oil company.

37 Re: Manitoba Sees Oil Boom on Wed Mar 23, 2011 3:03 pm

grumpy old man

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How absurd a notion is it that farmers should not be compensated for the oil under their land. That's like telling the farmers that they should not profit on the wheat they grow as well.

That's ludicrous...


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Yes, I really am that Grumpy...

It's their, they're and there; in Canada it's colour, cheque, rumour and zed...

38 Re: Manitoba Sees Oil Boom on Wed Mar 23, 2011 3:08 pm

sputnik

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AGEsAces wrote:and it's not about oil...it's about minerals...whatever they may be.

today it's oil, tomorrow it might be iron, or water

if you owned land and found diamonds on it, would you want the government to come in and steal all your diamonds so that "everyone" can profit from it.

Again...the government has no business in the mineral business. It's not what they were created for. And they get their cut from the taxes they steal on the sale, export, etc. off the minerals already.

You might want to read a book and learn about resource extraction before talking.

The government isn't stealing anything.

In 1890 it was decided that the government owns the mineral rights in the ground and that all royalties from their extraction would be used for the good of the country instead of padding a homesteaders bank account.

As a result, in Manitoba when oil is extracted from land in Virden a farmer gets rich.

In Alberta when oil is extracted, the province gets rich. When that happens, roads and highways are better maintained, cities are better funded, hospitals are more modern and taxes drop.

Why do you think Alberta has no PST and the lowest personal income taxes in the country?

39 Re: Manitoba Sees Oil Boom on Wed Mar 23, 2011 3:10 pm

sputnik

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grumpy old man wrote:How absurd a notion is it that farmers should not be compensated for the oil under their land. That's like telling the farmers that they should not profit on the wheat they grow as well.

That's ludicrous...

Farmers have surface rights. They can do whatever they want to the top of the land.

In Alberta farmers lease the land to oil companies who set up wells on the property. However the royalties from oil extraction goes to the province and not to the farmer. The exception being land that was homesteaded and grandfathered prior to 1890.

40 Re: Manitoba Sees Oil Boom on Wed Mar 23, 2011 3:10 pm

grumpy old man

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sputnik wrote:You might want to read a book and learn about resource extraction before talking.
He merely expressed his opinion. No need to snipe.


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Yes, I really am that Grumpy...

It's their, they're and there; in Canada it's colour, cheque, rumour and zed...

41 Re: Manitoba Sees Oil Boom on Wed Mar 23, 2011 3:18 pm

Deank

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sputnik wrote:
Deank wrote:Imagine how much money Canada would have if all the oil companies got was paid for extraction.

Oil companies like Shell, BP and Suncor do not extract oil.

Oil and gas companies find the oil using seismic and geological studies that they pay for.

They then pay local contractors to extract the oil (along with all other support trades) for them, pay royalties to the governing jurisdiction and then sell it on the commodities market to companies willing to refine it.

If it wasn't for oil and gas companies there would be no extraction at all.

Go past any oil rig and you will be hard pressed to find anyone that works for a big oil company.

"Oil companies like Shell, BP and Suncor do not extract oil."
then they provide zero value other then as managers. They should not be making the money they are for simply being managers.


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42 Re: Manitoba Sees Oil Boom on Wed Mar 23, 2011 3:20 pm

Deank

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sputnik wrote:
grumpy old man wrote:How absurd a notion is it that farmers should not be compensated for the oil under their land. That's like telling the farmers that they should not profit on the wheat they grow as well.

That's ludicrous...

Farmers have surface rights. They can do whatever they want to the top of the land.

In Alberta farmers lease the land to oil companies who set up wells on the property. However the royalties from oil extraction goes to the province and not to the farmer. The exception being land that was homesteaded and grandfathered prior to 1890.

No. Farmers have the rights they have. some are surface, some are also below surface. And according the some people they own the rights to the air above them as well.

I say your Alberta way is even worse. It has oil companies making more money then anyone else off of something they dont even own.


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43 Re: Manitoba Sees Oil Boom on Wed Mar 23, 2011 3:33 pm

grumpy old man

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Farmers leasing their land is compensation. If the farmer is happy with his negotiation more power to him.


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Yes, I really am that Grumpy...

It's their, they're and there; in Canada it's colour, cheque, rumour and zed...

44 Re: Manitoba Sees Oil Boom on Wed Mar 23, 2011 3:36 pm

Deank

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I know several farmers who told them. nope. sorry you cant come on.


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45 Re: Manitoba Sees Oil Boom on Wed Mar 23, 2011 3:43 pm

sputnik

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Deank wrote:
sputnik wrote:
grumpy old man wrote:How absurd a notion is it that farmers should not be compensated for the oil under their land. That's like telling the farmers that they should not profit on the wheat they grow as well.

That's ludicrous...

Farmers have surface rights. They can do whatever they want to the top of the land.

In Alberta farmers lease the land to oil companies who set up wells on the property. However the royalties from oil extraction goes to the province and not to the farmer. The exception being land that was homesteaded and grandfathered prior to 1890.

No. Farmers have the rights they have. some are surface, some are also below surface. And according the some people they own the rights to the air above them as well.

I say your Alberta way is even worse. It has oil companies making more money then anyone else off of something they dont even own.

The "Alberta way" is the way the majority of the world works. With the odd exception here and there.

How are oil companies making more money if the royalties are going to the government instead of to a farmer? At least with a government royalty system everyone in the province/country benefits. When individual farmers are competing against each other to get a contract with an oil company they end up undercutting each other and the oil company ends up paying considerably less than they would under a regulated government royalty fee structure.

46 Re: Manitoba Sees Oil Boom on Wed Mar 23, 2011 3:45 pm

sputnik

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Deank wrote:I know several farmers who told them. nope. sorry you cant come on.

Then the oil company goes across the road and pulls the same oil from the other land owner.

You would be stupid to say no if you own the mineral rights.

Have you seen the end of There Will Be Blood?

That said, in Alberta the lease is only for the use of the land (which usually works out to $5-10k/year per well head) and regardless of where the oil company drills the province still benefits just the same.

47 Re: Manitoba Sees Oil Boom on Wed Mar 23, 2011 3:47 pm

Deank

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"How are oil companies making more money if the royalties are going to the government instead of to a farmer?"

How does your question even make sense?

The oil companies dont own the oil,
According to you they dont even drill the oil.

They add nothing to the equation and they reap the highest profits. Makes no sense. Using your reasoning they should not be making anything and the Government should be the ones reaping the windfall from oil.

ie. They should be making every single dollar not getting paid some minor royalty.


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48 Re: Manitoba Sees Oil Boom on Wed Mar 23, 2011 3:49 pm

Deank

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"Then the oil company goes across the road and pulls the same oil from the other land owner.

You would be stupid to say no if you own the mineral rights."

nope. many areas everyone around told them to F' OFF.

and what the hell are you talking about.. stupid to say no if you own the rights. They dont own the rights the government does. But the farmers can still (well at least the used to be able to) still say NO to the oil companies.


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49 Re: Manitoba Sees Oil Boom on Wed Mar 23, 2011 3:56 pm

AGEsAces

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well, i did read that article, which explained it.

there are "surface rights", which the farmer can tell the oil company "no, they can't come on...to a point".

technically, the oil companies CAN go get their oil from the property, provided they compensate the landowner for any surface they disturb while extracting their minerals, but it's a hassle, and a legal issue...that for now those companies aren't keen on fighting. (according to the article)

http://www.photage.ca

50 Re: Manitoba Sees Oil Boom on Wed Mar 23, 2011 4:01 pm

sputnik

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Deank wrote:"How are oil companies making more money if the royalties are going to the government instead of to a farmer?"

How does your question even make sense?

If I give $5 to you or $5 to the government. What difference does it make.

I also explained how it is often reversed because farmers are generally left to their own devices when negotiating leases and are often undercut by the oil company or their less intelligent neighbour.

Deank wrote:The oil companies dont own the oil,
According to you they dont even drill the oil.

How is a house built without a general contractor? Just because the GC doesn't pour the concrete or nail down shingles doesn't make their role irrelevant. In fact, their role is the most important part of the structure being built.

Deank wrote:They add nothing to the equation and they reap the highest profits. Makes no sense. Using your reasoning they should not be making anything and the Government should be the ones reaping the windfall from oil.

They add capital.

They add geological and seismic exploration.

They add IT infrastructure.

They add SCADA infrastructure.

They add the risk in acquiring leases and hiring companies to drill wells.

They add the capital and risk necessary to trade the oil on the markets. You can't just take your barrel of oil and sell it on the steps of the NYMEX.

Deank wrote:ie. They should be making every single dollar not getting paid some minor royalty.

Then let the farmer pull the oil out himself and we can see how well that will work.

51 Re: Manitoba Sees Oil Boom on Wed Mar 23, 2011 4:03 pm

Deank

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so your argument is.. (just to be clear)

The oil company should make the most money, and the government should just earn a pittance and the farmer should make bugger all even if he is the one that owns it?


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