Energy big hope to eliminate Alberta’s debt
Gary Park Petroleum News Calgary correspondent
With a helping hand from oil and natural gas prices, Alberta could wipe out the last of its remaining C$3.7 billion debt by next spring, in time to celebrate its centennial as a province of Canada.
Finance Minister Pat Nelson, in releasing the 2004-05 budget March 24, targeted a C$1 billion payment against the debt, based partly on predictions by analysts of a drop in oil and gas prices this year.
“If, and I say if, resource revenues are considerably higher than our forecast,” Nelson said she and Premier Ralph Klein want to hand Albertans “the gift of a debt-free province.”
Since Klein’s election as premier in 1993 the debt has been shrunk from C$23 billion.
Typically, the government is low-balling its commodity price forecasts, predicting West Texas Intermediate oil will average US$26 a barrel for the fiscal year, down from its 2003-04 forecast of US$30.75. It is budgeting for AECO spot gas prices of C$4.20 per thousand cubic feet, a sharp decline from last year’s C$5.64.
On that basis, resource revenues are forecast at C$4.784 billion for the upcoming year, compared with C$7.446 billion last year, contributing 20.8 percent of Alberta’s predicted revenues of C$22.952 billion.
“I know that many people looking at today’s budget will say the forecasts are too low,” Nelson told the legislature.
“How could we expect oil and gas prices and our resource revenues to drop when things are looking so good?” she said.
But Nelson said “most industry observers expect energy prices to go down. The question is when and by how much.”
She told reporters that she hopes her estimates are “soft.”
The Canadian Energy Research Institute has targeted oil prices of US$31 a barrel for 2004 and nine national forecasters have averaged US$28.27.
Each increase of 10 cents in the price of gas adds C$100 million to Alberta’s coffers over a full year, while a $1 jump in oil prices adds C$65 million.
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