The US had 9 of the top 10 jurisdictions worldwide that oil and gas executives ranked as attractive destinations for upstream investment, according to results of a survey conducted by Fraser Institute, an independent research and educational organization.
Arizona, Arkansas, Oklahoma, Alabama, and Ohio were ranked as the states having the lowest barriers for upstream oil and gas investment. They were joined by Texas, the US offshore, Kansas, and New York.
Saskatchewan was ranked sixth in the top 10 out of 81 jurisdictions in terms of having low barriers to investment. It was the only Canadian province in the top 10. Alberta ranked 29 and British Columbia, 19.
Internationally, Bolivia was ranked as the least attractive country for petroleum investment and development. It was followed by Ecuador and Venezuela. Other nations considered to be the least favorable include Chad, Iraq, Nigeria, Argentina, Sudan, and Russia.
In most cases, jurisdictions that imposed heavier tax and regulator burdens during the past year received more negative scores than last year.
“Policymakers would do well to recognizes the consequences and weigh the costs of big government in terms of foregone investment, lost jobs, and corporate flight,” said Gerry Angevine, Fraser Institute senior economist and coordinator of the annual petroleum survey.
For instance, Angevine attributes Alberta’s ranking to the Alberta government’s decision “to grab a larger share of oil and gas royalties.”
Colorado out of favor
Stiffer drilling requirements and other regulations in Colorado contributed to that’s state being ranked as the 29th worst jurisdiction. Colorado was ranked in the same league as Ukraine, Pakistan, and Indonesia for investment attractiveness.
“Survey respondents were very concerned with Colorado’s changes to drilling permit requirements and other more stringent regulations,” Angevine said. “The Colorado Oil and Gas Association estimates that the new rules could increase drilling costs by $60,000-600,000/well.”
Alaska, which increased its petroleum production tax, was listed 22nd among the least attractive jurisdictions. California was ranked 11th. California’s ranking grouped it with other high-risk nations such as Russia and Sudan.
“California’s expended prohibitions on offshore drilling and concerns about environmental regulations are having a detrimental effect on the way the state is viewed by the petroleum industry,” Angevine said.
A total of 396 respondents participated in this year’s survey. Companies represented in the survey accounted for more than one third of the industry’s global spending on petroleum exploration and production, said Fraser Institute.
