Medicine Hat Media

Special Council Meeting Lets Public Share Their Views

*Updated September 6th, 2009*

Medicine Hat residents have an opportunity to comment directly to City Council on the Strategic Review of the natural gas and oil production business (Prodco) at a Special Meeting Monday, Aug. 31 at 6:30 p.m. in Council Chambers, City Hall.

The public is invited to make comments and or ask questions about the strategic review. The City’s Procedure Bylaw 2270 allows delegations to speak directly to Council for normally a maximum of five minutes, excluding Council members’ questions/answers or clarifications.

City Council retained Ernst & Young (E&Y), one of Canada’s leading professional services firms, in 2008 to undertake a strategic review of the City’s investment in its oil and natural gas production business. In January 2009, E&Y presented its five key recommendations for Prodco to City Council:

Create a sustainable dividend.

A Legacy Fund would be established and funded with the oil and gas assets and Prodco’s accumulated cash. The Legacy Fund would pay an annual inflation-adjusted dividend to the City to fund its operations, so current and future generations of Medicine Hat residents receive the benefits of the dividend.

Retain the Oil and Gas Business as part of the Legacy Fund.

E&Y believes that keeping the oil and gas business instead of selling it would maximize the value of those assets to the City.

Create an Independent Board of Directors.

E&Y recommended the strengthening of the governance over the Prodco business. In E&Y’s view, an effective Prodco Board of Directors should be independent and possess the appropriate professional, technical and business expertise. Board members would be appointed by Council and Council, as the shareholder, would retain ultimate control.

Operate Prodco as a separate stand-alone business.

The E&Y report concluded Prodco should be making decisions based on the goals of a commercial oil and gas enterprise to maximize returns over the long-term. E&Y suggested that the “service delivery” model that is appropriate for many of the City’s other operations is not appropriate for an active oil and gas business.

Increase operational effectiveness, set clear return expectations, increase accountability, increase technical skills and increase transparency.

The E&Y report noted that the oil and gas business owned by the City is a material enterprise and carries with it significant risks and operating challenges. A continual focus on enhancing the operating capabilities and returns of the business is critical to attracting and retaining the best people to manage and operate the business and to generate the best returns.

Following receipt of the report, City Council undertook a public consultation process from April to June 2009, which included three public information sessions, three open houses and a community-wide survey to provide opportunities for residents to learn about and comment on the recommendations.

City Council has scheduled another Special City Council Meeting on Sept. 9 in Council Chambers to begin debating the E&Y Report recommendations.

For detailed information on the recommendations, to view the original E&Y presentation or review the compiled feedback from the public consultations, visit

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