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Lethbridge Herald Newspaper Archives

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Lethbridge Herald, The (Newspaper) - November 2, 1974, Lethbridge, Alberta Saturday, November 2, 1974 THE LETHBRIDGE HERALD Canadian oil drilling rigs lured to U.S. CALGARY (CP) Canadian oil industry spokesmen say intense oil exploration activity in the United States coupled with greater financial rewards is luring more and more Canadian drilling rigs south of the boundary. The industry spokesmen concede it is more profitable to drill in the U.S. where the basic royalty is lower than Canada's The Canadian price for each barrel of crude oil now averages with royalties ranging to 50 per cent. The U.S. price for domestic oil is just over a barrel for old oil hut for new oil. One-third of old oil may be sold at the price, and for every barrel of new oil found an oil company is allowed to reclassify some oil into the bracket. George Warne of the Alberta Energy Resources Conser- vation Board says "it is safe to say that U.S. royalty levels and taxes are generally less than 25 per cent exclusive of in- come taxes." With American firms having more money to spend on ex- ploration as a result, the demand for drilling rigs is high and said John Porter, general manager of the Canadian Association of Oilwell Drilling Contractors. He added that by the end of October, 38 drilling rigs that normally work in Canada had moved to the U.S. Walter Zaruby, senior vice-president of drilling at West- burne International Industries Ltd., said there is "no question" drilling is more profitable in the U.S. and his firm has already moved several rigs south and intends to move more. "We were way ahead of the pack, it just made economic sense." he said Another factor is the ease of drilling in warmer climates. Because muskeg in Canada can only be drilled when it is frozen, the average working days for a rig here is 150 a year compared with an average of 250 days a year in the U.S., he said. This means rigs can double their cash flow, half in more drilling days and the other in "higher profitability." Jim Anderson, office services manager at the Alberta Energy Resources Conservation Board, says that so far drill- ing is "holding up relatively well in Alberta." And Archie Jones, drilling manager for Shell Canada at Calgary, says there still is some spare drilling capacity here and "I think this whole thing has been overplayed." Airline rivalry labelled myth MONTREAL (CP) Air Canada Chairman Yves Pratte detests attempts to match Air Canada and CP Air like wrestlers, with the Crown-owned airline in the eastern Canadian corner and the private carrier in the western corner. "We don't consider ourselves as an eastern air- he said in an interview in his office here this week. "And I'm sure they don't look on themselves as a western airline because it cer- tainly isn't the way to unite the country." Whatever Mr. Pratte's feel- ings, the picture of Air Canada, the eastern represen- tative, fighting to the finish with CP Air, the western champion, is widespread. Two years ago there were reports that western ministers were pushing CP Air's claims to the newly- created Milan route in federal cabinet discussions. CP Air eventually got Milan after a strong battle with Air Canada. Mr. Pratte said he has seen news reports that CP Air con- siders Air Canada won the bulk of the new routes to the United States in a confronta- tion between East and West. He said he doubts that these reports correctly reflect CP Air's views. "It is difficult for me to un- derstand how people think in these terms." Mr. Pratte said. "I never think in terms of Eastern Canada and Western Canada. Most of our senior personnel are from Western Canada." Air Canada has more employees in the West than CP Air, he said. He agreed that one reason for linking CP Air with the West in the pop- ular mind may be that the private carrier's head- quarters are in Vancouver while Air Canada's are in Montreal. But Air Canada has fewer employees in Vancouver than CP Air because the publicly- owned airline was shut out of the Pacific by government policy, Mr. Pratte said. There was no incentive to build up a strong Air Canada base there. Air Canada got 14 of 17 new routes to the U.S. after a new agreement was concluded with Washington earlier this year. CP Air got only one new Vancouver-Los losing its ex- clusive rights to the lucrative Vancouver-Honolulu run. It must now share this route with an American airline. The Air Canada chairman said he sees nothing strange in the Crown-owned airline getting the lion's share of the routes. Air Canada was sup- posed to be an instrument of government policy. It could also provide more service to passengers because it had more routes than CP Air. Several of Air Canada's new routes are in the West. He said he hopes