|
Alberta turns to Asia Long reliant on US to ‘sustain superior economic prosperity,’ province says different behavior required in post-recession world Gary Park For Petroleum News
As North Africa and the Middle East spiral into the unknown, heightening worries over the security of global oil supplies, the Alberta government reinforced an indirect, but clear early warning to the United States.
Premier Ed Stelmach, whose days in office are winding down, has identified Asia as the long-term key to his province’s economic prosperity.
Faced with what it terms “fragile growth” in the U.S., his government, in opening a new legislative session, gave priority to building new export markets in Asia for its energy products.
It said an Asia Advisory Council will be established to recommend ways of enhancing trade ties with Asia, especially India, China, Japan and Korea.
The council will operate until the end of 2014 and must deliver an annual report to the government.
Stelmach said Alberta “cannot sustain superior economic prosperity” by relying on the U.S., which accounts for 85 percent of his province’s exports, currently valued at C$69 billion, and overwhelmingly weighted to oil and natural gas. Asia is the second largest customer at only C$7 billion, largely agricultural and forest products.
But he said “expanded relationships are critical to sustaining success and prosperity for Albertans now and well into the future.”
Stelmach has long endorsed industry efforts to expand its export markets beyond the U.S. and led a trade mission to China and India last year to strengthen trade ties and market Alberta’s natural resources, including oil sands products.
The government said it is in Canada’s interest to improve pipeline and rail capacity to British Columbia ports.
“Being successful in a post-recession world will mean doing things differently from how we’ve done them in the past,” it said.
Two proposals for exports Canada’s National Energy Board is currently evaluating two applications for large-scale oil and gas exports to the Asia-Pacific region, both scheduled to come onstream in 2015.
Kitimat LNG, a joint venture by Apache and EOG Resources, plans to initially convert 700 million cubic feet per day of Western Canadian gas, possibly ramping up to 1.28 billion cubic feet per day, and Enbridge has Asian backing for its 525,000 barrels per day Northern Gateway pipeline. But both face varying degrees of opposition from First Nations and environmentalists.
Gary Leach, executive director of the Small Explorers and Producers Association of Canada, said the Alberta Energy Department is already studying ways to increase pipeline options to the British Columbia coast.
Stelmach did not make any reference to his government’s concerns over TransCanada’s attempts to gain approval from the Obama administration for its Keystone XL project to transport 590,000 bpd of oil sands crude from Cushing, Okla., to Gulf Coast refineries.
But he has previously suggested that Alberta will support plans for a bitumen pipeline to the British Columbia coast and if the U.S. turns down pipeline proposals “they can take our bitumen on rails.”
Bitumen crucial to budget If any evidence was needed about the importance of oil sands bitumen to the Alberta government it was hammered home in the province’s 2011-12 budget.
Of an expected C$8.3 billion in nonrenewable resource revenues, C$4.1 billion will come from bitumen, rising over the next two years to C$7.14 billion as production climbs from 1.85 million barrels per day in the coming fiscal year to 2.36 million bpd.
In contrast, conventional crude revenues are forecast to hold steady at C$1.93 billion in 2011-12 and C$1.89 billion in 2013-14, while production edges down from 484,000 bpd to 459,000 bpd.
Natural gas production is projected to decline from 3.78 trillion cubic feet in the upcoming year to 3.23 tcf in 2013-14, although revenues are expected to rise from C$1.02 billion (down C$633 million from the current fiscal year which ends March 31) to C$1.47 billion.
Land sales expected to plunge Revenues from Alberta government sales of exploration land are expected to plunge from C$2.3 billion in 2010-11 to C$1.07 billion and remain close to C$1.2 billion for the following two budget years.
The government said horizontal oil and shale gas prospects are believed responsible for high bidding at land auctions over the past year and point to “solid investor confidence in Alberta.”
In addition to its Asia strategy, the government said it will build on its recent agreements to provide an initial 37,500 bpd of bitumen from its royalty-in-kind program as feedstock for a new upgrader project, while using carbon dioxide from upgraders for enhanced oil recovery which it estimated could generate C$25 billion in royalties and taxes from a resource of 1.4 billion barrels.
As well, the government said the province’s oil sands region will serve as a pilot for a new system to monitor the impact of development on air, land, water and biodiversity and establish Alberta “as a leader in responsible energy production and environmental stewardship.”
| 