|
Alberta to set bitumen ‘benchmark’
The Alberta government is aiming for mid-2008 to set a “benchmark” value for oil sands bitumen, a key element in its drive to keep more value-added upgrading and refining in the province.
Finance Minister Lyle Oberg said the fact that bitumen is not deemed a “fully marketable commodity” requires a careful tracking of product pricing and related mechanisms to arrive at the “benchmark” figure.
He said the 250,000 barrels per day of bitumen being traded on the New York Mercantile Exchange will be taken into account, but that volume represents less than one-quarter of Alberta’s output.
The process must be completed before Alberta can consider taking bitumen in lieu of royalties and strategically using the product to supply potential upgraders and refineries in the province.
Premier Ed Stelmach has raised concern about the increasing bitumen exports to the United States and the accompanying loss of jobs and revenues.
In its new royalty framework, the government said the province “needs to add value to its exports and expand its economy by upgrading resources in Alberta … to secure jobs and prosperity for future generations of Albertans.”
It ruled out as ineffective the use of a 5 percent upgrader credit as an incentive for industry to upgrade and refine in Alberta.
Renegotiation deadline On a more delicate matter, the government is facing a Jan. 22 deadline to renegotiate royalty agreements with Syncrude Canada and Suncor Energy that were due to expire in 2016.
Determined to create a level playing field for all oil sands producers, the government stirred widespread unease when it decided existing agreements could not survive its planned changes.
That has posed a dilemma for the government — to honor contracts or treat everyone equally.
One member of the royalty review panel, who did not want to be identified, said the only way the government will persuade Syncrude and Suncor to abandon their current deals is through a buyout that could cost billions of dollars.
What is at stake has been underscored by Marcel Coutu, chief executive officer of Canadian Oil Sands Trust, a 36 percent partner in Syncrude.
“We must ensure that our legal rights are preserved,” he said.
—Gary Park
| 