If you asked a typical Canadian to name the best place for investing in the petroleum industry, they’d likely say Alberta. But ask a typical petroleum executive, and the answer is quite different.

In recent years, executives responding to the Fraser Institute’s annual Global Petroleum Survey have shied away from Alberta, a trend that began in 2009 when the province plummeted in terms of attractiveness for investment following introduction of the so-called New Royalty Framework.

Slowly though, Alberta has begun to return to respectability. In the 2012 survey results, Alberta ranked 21st out of 147 jurisdictions worldwide after slumping as low as 92nd (out of 143) in 2009. But it still has much to do if it wishes to rub shoulders with top 10 jurisdictions such as Oklahoma, Texas, North Dakota and the Netherlands. Moreover, relatively poor scores on a number of the 18 survey questions indicate that Alberta has its work cut out just to maintain its current ranking.

Alberta’s return to a royalty structure akin to that which prevailed in the pre-Stelmach era effective January 2011 has certainly helped. Similarly, the May 2011 announcement that the Alberta government planned to improve the efficiency of regulatory processes in relation to drilling, other project applications, and reclamation/remediation proposals by consolidating certain functions shared by the Alberta Departments of Environment and Sustainable Resource Development and the Energy Resources Conservation Board within a single regulatory body appears to have made a difference.

Most of the improvement in Alberta’s standing this year came as the result of improved scores on questions pertaining to the regulatory environment. These included the questions pertaining to uncertainty with regard to environmental regulation, consistency in the interpretation and administration of energy regulations, and the cost of regulatory compliance.

Yes, Alberta has improved in the eyes of investors after shooting itself in the foot in 2009. Yet there is no room for complacency. According to the Fraser Institute’s recent survey, the province is less attractive for upstream petroleum investment than 20 other jurisdictions around the world, including Oklahoma, Mississippi, Texas, North Dakota, the Netherlands (both onshore and in the North Sea), Denmark, Louisiana, Norway – North Sea, and New Zealand. Moreover, the margin of difference between Alberta’s score and that of several jurisdictions with slightly inferior scores (e.g. the United Kingdom – North Sea, Montana and the U.S. Gulf of Mexico) is very small.

Questions pertaining to factors that drive decisions to invest in petroleum exploration and development on which Alberta scored relatively poorly in the 2012 survey highlight some of issues on which the province needs to focus if it wishes to improve its standing. These include: 1. Uncertainty in relation to protected areas – on which Alberta ranked 84th best of the 147 jurisdictions evaluated; 2. Land claims disputes -- 63rd place (of 147); 3. Cost of regulatory compliance – 57th (of 147); 4. Regulatory duplication – 56th (of 147) and 5. Labour availability – 35th (of 147).

The province’s plan to improve regulatory efficiency is intended to address the cost of regulatory compliance, regulatory duplication and other regulatory issues. However, it remains to be seen how effective the so-called “super board’ will be in this regard.

Labour availability is a looming issue in Alberta because of the number of oil sands production facility and pipeline construction projects underway or planned. This year, five per cent of survey respondents indicated that this is already a strong deterrent to petroleum investment in the province. Without careful attention, this matter could become a substantial barrier to project development in Alberta.

Some observers may conclude that there’s no cause for alarm with all of the oil sands projects on the radar screen. However, with the pending shortage of skilled labor and mounting frustration over the length of time required to get a straightforward in situ oil sands project approved, they may be kidding themselves. Yes, Alberta’s standing has improved for the moment. But it has work to do just to tread water, let alone compete with Texas where the oil and gas shale industries are booming, labor availability is not a problem and the cost of regulatory compliance is much less than in Alberta.