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The phrase "capital is mobile" is the garlic bulb the oil patch uses to try to stave off any fiscal-policy changes that would bite into profitability.

The rallying cry is getting louder in Alberta as Premier Rachel Notley's New Democratic Party government moves ahead with its pledge to put royalties under the microscope for the second time in less than a decade.

It is true that higher royalties equal higher costs, which equal reduced investment attractiveness – all the more so when oil and gas prices are depressed and there's scarce capital to sink into drilling and land, as well as plants and pipes.

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What's not clear at all, though, is just how mobile all that capital really is. Can the very mention of reviewing royalties scare away billions of dollars from the province with the largest bounty of resources, some of it invested in long-term hard assets, and can that money be easily and quickly redeployed elsewhere?

The answer is not cut and dried.

Alberta has reviewed royalties – the rent that companies pay the people for the right to produce oil and gas – several times over the decades, but the collective memory centres on a 20-per-cent increase imposed by Ed Stelmach's Progressive Conservatives in 2007.

The latest reminder came courtesy of Tim McMillan, president of the Canadian Association of Petroleum Producers. In an opinion piece in the Calgary Herald last week, Mr. McMillan said the result of that change was a drop in the well count to 6,700 in 2009 from 16,000 in 2008. He also said that government land sale revenue sank 25 per cent.

Mr. McMillan, whose job is to take aim at any policy moves that may mean higher costs, left out some other factors that squelched overall capital spending and sent investment dollars fleeing to other jurisdictions.

First of all, if we look back to late 2008 and into 2009, a few global banks failed and credit dried up. Tens of billions of dollars worth of energy projects in Canada and around the world got cancelled or shelved owing to insufficient funds. It had a major impact on the amount of money oil companies had to invest.

I made that point through social media and was told in short order by a CAPP rep that despite the financial crisis, capital migrated out of Alberta and into British Columbia and Saskatchewan.

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The stats show money indeed shifted to the East and West. According to a report by TD Securities, Alberta's share of Western Canadian land sale revenue fell to 24 per cent in 2008 from 81 per cent in 2006. At the same time, B.C.'s slice surged to 53 per cent from 15 per cent and Saskatchewan's jumped to 22 per cent from 4 per cent. Drilling stats from the era tell a similar story.

But to chalk 100 per cent of it up to royalty changes, and a rush of companies pulling up stakes in Alberta to avoid them, is far too simplistic.

Besides the credit crunch and big drops in oil and gas prices, Alberta's policy changes coincided with a wholesale technological shift in North American energy.

That was the shale revolution and it triggered a search for new plays suited to the horizontal drilling and hydraulic fracturing that was unlocking massive reserves in the Marcellus and Haynesville shale formations and other hot zones in the United States.

Energy executives may have been hot under the collar about Alberta royalties, but they were also drawn to the Montney liquids-rich formation in British Columbia and Bakken light-oil play in Saskatchewan, where investments took off between 2007 and 2009. Alberta lagged the other provinces in shale, and was still known for conventional gas.

TD says the experience "has unequivocally shown" leakage of capital spending to other jurisdictions owing to the ill-timed royalty rise. But just how much of the capital migrated solely for that reason is impossible to know.

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Despite what oil producers would like politicians and the public to think, capital may not be as mobile as advertised. Energy companies have major dollars sunk into infrastructure, land and other things that make it hard to just walk away.

Larger ones can adjust spending among operations in different locales, but smaller players don't have that luxury. Some sold investors on the idea of developing resources in Alberta, so it is hard to declare it no longer makes any sense, especially when the downturn is sector-wide.

Ms. Notley has had a crash course on industry indignation since her government's surprising leap to power in May, and has sought to calm the waters with some pro-energy comments. She's also appointed ATB Financial's top banker, Dave Mowat, to head up the royalty review panel.

Royalties are just one in a constellation of factors that affects industry activity. The best course of action for the government is to take a wide range of economic influences into account and come up with some realistic numbers.

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