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Alberta makes soft price forecasts Natural resource revenues are projected to account for 22% of total revenues in 2003 Gary Park Petroleum News Calgary Correspondent
The Alberta government has taken its customary cautious stance in forecasting oil and natural gas prices for the 2003-04 fiscal year.
In releasing its budget April 8, the province based its revenue projections on an average of US$23.30 per barrel for West Texas Intermediate crude oil and C$4.05 (US$2.75) per thousand cubic feet for AECO spot gas, which most analysts placed at the low end of their estimates.
Last year’s predictions of US$20 for oil and C$3 for gas were hiked in late August to US$25.50 and C$3.25, which are expected to generate C$6.43 billion in natural resource revenues for 2002-03 once the final numbers are released in June.
For the new fiscal year, Alberta has budgeted for C$4.78 billion in resource revenue, or 21.8 percent of total revenues, with crude production expected to average 1.67 million barrels per day and gas volumes at 5.03 tcf for the year. Alberta accounts for about 80 percent of all Canadian oil and gas production.
Non-conventional oil production, including oil sands and condensate, will represent 63 percent of total oil output, up from 56 percent in 2002-03. Non-conventional gas sources, such as coalbed methane, will edge up to 0.5 percent from 0.3 percent. Sustainable budget plan Finance Minister Patricia Nelson also unveiled a previously announced plan to spend no more than C$3.5 billion a year from oil and gas revenues, with anything above that level being directed into a “sustainability fund” that will be drawn down when commodity prices fall.
“Instead of pegging our budgets and spending plans to best guesses about the price of oil and gas, we’ll consistently count on C$3.5 billion in oil and gas revenues,” she said.
Government land sales are predicted to yield C$679 million, up strongly from 2002’s C$502 million, but well short of the record C$1.08 billion in 2001.
For the first quarter of 2003, operators paid C$174.5 million for exploration rights, with average prices surging to C$256 per hectare (2.471 acres) from C$156 for the same period last year. But analysts are counting on land values easing once commodity prices dip.
Welcome news for the petroleum industry was a government pledge to lower the corporate tax rate this year to 12.5 percent from 13 percent and drop the rate to 11 percent in 2004.
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