nds76
03-08-2006, 9:49am
It is the silver lining to the platinum cloud: Alberta's revenue will jump by hundreds of millions this year as the soaring price of crude pushes oil sands megaprojects into a higher royalty bracket.
The province is already swimming in record energy income, which will top $14.3-billion in fiscal 2005-06, according to the budget update released last week.
But most of that comes from natural gas royalties of $8.2-billion. Oil sands royalties are a distant fourth, with $1.2-billion projected for the current fiscal year, even though just under half of Canada's crude production comes from the megaprojects of northern Alberta.
The reason for the discrepancy the generous royalty breaks that Alberta has extended to the oil sands sector, which allow a project to pay a much lower rate until it has recouped its initial capital investment. So, many new projects will have to earn billions before they start paying the higher rate, when royalties typically rise eightfold.
But Syncrude Canada Ltd., the second-oldest oil sands project, has already started to pay higher rates, since it will shortly exhaust its credits. And that will give Alberta already racking up a budget surplus of more than $10-billion for 2005-06 an additional half a billion dollars in oil sands royalties for this year.
Canadian Oil Sands Trust, with a 35-per-cent stake in Syncrude, will pay out an extra $163-million to the province, spokeswoman Siren Fisekci said. Syncrude as a whole will pay out an additional $460-million.
Ms. Fisekci said her trust's expenses have risen, but it is simply a reflection of the bigger boom in revenue at Syncrude. It's tied to your profitability.
When it still had the full shelter of royalty credits last year, Canadian Oil Sands paid just $20-million in royalties, or a 1-per-cent levy on gross revenue. For this year, those credits aren't fully exhausted, so the trust will pay an 18-per-cent royalty on net revenue. After that, the rate rises to 25 per cent.
Canadian Oil Sands and the other Syncrude owners began paying the 18-per-cent rate in January, so part of those increased fees would be paid in the current fiscal year. Their full impact won't be felt until fiscal 2006-07, however.
The other members of the Syncrude joint venture include ConocoPhillips Co., Imperial Oil Ltd., Mocal Energy Ltd., Murphy Oil Company Ltd., Nexen Inc., and Petro-Canada.
Syncrude is not alone in paying higher royalties. According to the provincial government, two oil sands projects moved from the lower rate to the higher one between October and December, with 34 now paying the 1-per-cent royalty and 29 paying the 25-per-cent levy.
http://ctv2.theglobeandmail.com/servlet/story/RTGAM.20060307.walbertaa0307/business/Business/businessBN/ctv-business
The province is already swimming in record energy income, which will top $14.3-billion in fiscal 2005-06, according to the budget update released last week.
But most of that comes from natural gas royalties of $8.2-billion. Oil sands royalties are a distant fourth, with $1.2-billion projected for the current fiscal year, even though just under half of Canada's crude production comes from the megaprojects of northern Alberta.
The reason for the discrepancy the generous royalty breaks that Alberta has extended to the oil sands sector, which allow a project to pay a much lower rate until it has recouped its initial capital investment. So, many new projects will have to earn billions before they start paying the higher rate, when royalties typically rise eightfold.
But Syncrude Canada Ltd., the second-oldest oil sands project, has already started to pay higher rates, since it will shortly exhaust its credits. And that will give Alberta already racking up a budget surplus of more than $10-billion for 2005-06 an additional half a billion dollars in oil sands royalties for this year.
Canadian Oil Sands Trust, with a 35-per-cent stake in Syncrude, will pay out an extra $163-million to the province, spokeswoman Siren Fisekci said. Syncrude as a whole will pay out an additional $460-million.
Ms. Fisekci said her trust's expenses have risen, but it is simply a reflection of the bigger boom in revenue at Syncrude. It's tied to your profitability.
When it still had the full shelter of royalty credits last year, Canadian Oil Sands paid just $20-million in royalties, or a 1-per-cent levy on gross revenue. For this year, those credits aren't fully exhausted, so the trust will pay an 18-per-cent royalty on net revenue. After that, the rate rises to 25 per cent.
Canadian Oil Sands and the other Syncrude owners began paying the 18-per-cent rate in January, so part of those increased fees would be paid in the current fiscal year. Their full impact won't be felt until fiscal 2006-07, however.
The other members of the Syncrude joint venture include ConocoPhillips Co., Imperial Oil Ltd., Mocal Energy Ltd., Murphy Oil Company Ltd., Nexen Inc., and Petro-Canada.
Syncrude is not alone in paying higher royalties. According to the provincial government, two oil sands projects moved from the lower rate to the higher one between October and December, with 34 now paying the 1-per-cent royalty and 29 paying the 25-per-cent levy.
http://ctv2.theglobeandmail.com/servlet/story/RTGAM.20060307.walbertaa0307/business/Business/businessBN/ctv-business