Those costs will be paid by the federal government, assuming the company’s shareholders vote to approve the sale of the existing pipeline for $4.5 billion at the end of this month. He has been criticising Prime Minister Trudeau for a lack of action on the rail blockades and blamed this cancellation on the federal Liberal government saying, “”It is what happens when governments lack the courage to defend the interests of Canadians in the face of a militant minority”. — that is mixed with raw bitumen to transport it to refineries. Jim Roy, an Edmonton-based royalty consultant and a former senior advisor on royalty policy for Alberta Energy, told The Narwhal that Alberta’s rates can be compared to government returns in Saudi Arabia (85 per cent), Norway (78 per cent), China (63.5 per cent) and Australia (58 per cent). A number of factors were listed in the rationale for continuing Alberta’s royalty regime with minor changes during the 2015 royalty review — the high upfront costs of production being a major one. Although little mentioned, a financial concern may also be related to the cancellation. It would also have contributed about $70 million annually to various levels of government in taxes and royalties. In total, the top 30 oilsands projects paid $3.21 billion in royalties, taxes and fees to various governments — meaning governments collected 32 per cent of profits. The companies producing that oil — including Suncor, Cenovus, Canadian Natural Resources Limited and Imperial Oil — made $10.14 billion in profits, while Albertans collected $2.37 billion in royalties. That’s not the same argument to be made today,” said Ricardo Acuña, executive director of the Parkland Institute. The Narwhal analyzed 2017 royalty data published by Alberta Energy and federally mandated Extractive Sector Transparency Measures Act (ESTMA) reports to investigate whether that is truly the case. Lindsay added that these issues will have a pose a serious threat to investment in Canadian resource projects. In pre-payout, projects pay a royalty rate of one to nine per cent of gross monthly revenues based on the price of West Texas Intermediate (WTI). These acronyms are commonly used by the oil sands industry and can be found on this site. “If you give royalty relief and that amount stays in the province, then it’s a matter of how we spend our money. Without clarity on this critical question, the situation that has faced Frontier will be faced by future projects and it will be very difficult to attract future investment, either domestic or foreign”. The multi-billion dollar Frontier Mine project about 110 km north of Ft McMurray has been cancelled.
At last count, the Alberta Energy Regulator estimates it will cost at least $23.2 billion to clean up the oilsands tailings ponds. Payout refers to the moment when all the revenues a project has generated finally overtake the costs incurred by a project in its lifetime. The billion-dollar question is: how does this compare with what oil companies pay in other places around the world? The mine would have provided some 7,500 jobs during construction and about 2,500 once in operation. (Mike Symington/CBC). These indicators highlight trends across economic, environmental and social topics in Alberta’s oil sands and are subject to change. Teck resources said the $20 billion project in Alberta has been cancelled in large measure due to the ongoing protests against resource projects and the wider issue of climate change. “You have created a situation where the royalty is causing projects to come on. Oil Sands Royalty Information Management osrim@gov.ab.ca Even as protests continue over a proposed natural gas (Coastal GasLink) line in northern B.C., and continued opposition to an oil pipeline (TransMountain) from Alberta to the Pacific, a huge oilsands mine project has been cancelled. 9945 108 Street About 60 per cent of bitumen produced in the oilsands is mixed with diluent. It may be noted that the project which would also have provided thousands of long term jobs in northern Alberta had received the approval of 14 aboriginal communities and federal decision on the project was expected at the end of the month, although several within the Trudeau caucus were apparently not in favour. Producers that produce synthetic crude can transport about 30 per cent more bitumen in pipelines as a result of not mixing it with diluent.
He blames the Trudeau government for the cancellation saying Trudeau’s weak response to vocal minorities is the behind the cancellation. The multi-billion dollar Frontier Mine project about 110 km north of Ft McMurray has been cancelled. When the project was proposed in 2011, oil prices were hovering around $100 a barrel, and are now hovering just over $50 a barrel. Alberta's oil sands are the third-largest proven crude oil reserve in the world, next to Saudi Arabia and Venezuela. In 2017, the top 30 companies spent $18.21 billion on diluent, or more than one-third of total revenues. The royalty regime was first recommended by the industry-stacked National Task Force on Oil Sands Strategies in the mid-1990s, and has been largely untouched since.
in 2017 Alberta collected a mere $2.37 billion in royalties for the 30 largest projects in the oilsands which all in generated more than $53 billion in revenues. At last count, the Alberta Energy Regulator estimates it will cost at least $23.2 billion to clean up the oilsands tailings ponds. -The oil sands have spurred massive economic growth in Alberta. “The industry always claims that it’s very high cost and nobody makes any money,” Boychuk said. Of the 30 largest oilsands projects, only six didn’t use diluent. to government returns in Saudi Arabia (85 per cent), Norway (78 per cent), China (63.5 per cent) and Australia (58 per cent). In that context, it is now evident that there is no constructive path forward for the project. An analysis by The Narwhal of new data released by the province raises questions about whether Albertans are collecting a fair share of the wealth created by oilsands development. But then diluent was subtracted (average of $12.58), operating costs (average of $16.34) and capital costs (average of $4.05). These indicators highlight trends across economic, environmental and social topics in Alberta’s oil sands and are subject to change. Find out yourself with a weekly dose of our ad‑free, independent journalism, Illustration: Carol Linnitt / The Narwhal, New data shows owners of one of the world’s largest oil deposits are getting cut out of the deal, Royalties are the price charged by a resource owner — in this case Albertans — for a producer to extract and sell a non-renewable resource. It’s an extremely expensive process, the direct result of not having enough upgrading capacity. The largest 30 projects received an average of $55.70 for every barrel sold in 2017. “In Alberta, the public owns the resources so theoretically we’re entitled to 100 per cent of the resource rent,” said Regan Boychuk, an independent researcher and member of the province’s 2015 Oil Sands Expert Group. At last count, the Alberta deficit was $8 billion. The remainder is upgraded into synthetic crude before being shipped off to refineries. An oil sands facility seen from a helicopter near Fort McMurray, Alta., on July 10, 2012. Ominously, Canadian oil sands producers chose to pay down debt or make further acquisitions rather than increase capex in 2019, with Alberta’s crude curtailment programme returning the industry to profitability. A much-maligned review of Alberta’s royalty system in 2015 came to the conclusion that the “current share of value Albertans receive from our resources is generally appropriate.”. That left an average of only $19.65 per barrel left to assess for royalties. Graphic: Jimmy Thomson / The Narwhal. -Although many new projects have been postponed, other producers in the area are moving forward with expansions. 1. In 2017, the province was paid 4.5 per cent of the oil’s value in royalties. All in all, the royalty regime combined with these unfunded liabilities calls into question a central argument of building more pipelines: that increased oilsands production will mean significantly larger revenues for schools, hospitals and roads. english@rcinet.caPosted: Monday, February 24, 2020 15:26 Alberta’s generous royalty system was designed to entice companies in the early days of the oilsands to make big, risky multi-billion dollar capital investments. That’s the real reason we collect such a minuscule percentage of oil and gas dollars generated.”. Oil Sands Royalty Project Applications and Compliance osrapplications.energy@gov.ab.ca What limited amounts of oil Alberta is able to export sells at roughly US$13 per barrel, 40 per cent below the world price and well below the costs of production. People always tell us they love our newsletter. Oil sands or bitumen is found in nature but must be processed before it is transformed into fuels or other products. These terms appear on this site and are commonly used by the oil sands industry. Although not directly blaming Trudeau, the CEO said in the letter that although the mine project was socially and environmentally responsible, the problem lies in the fact that Canada does not have a clear framework to reconcile resource development projects and climate change issues. Norway, for instance, charges a standard corporate tax rate of 23 per cent and a special petroleum tax rate of 55 per cent, bringing the total to 78 per cent. Learn more. “If we marginally increase the size of the pie, we’re still only getting four per cent of it. You have a bunch of people that invested their careers and lives and families and everything else. But he said we do know what low royalties did in retrospect: started a high-paced cycle of investment activity that overheated the sector, allowing high-cost projects to pass the economic test and be developed.
In pre-payout, projects pay a royalty rate of one to nine per cent of gross monthly revenues based on the price of. He holds a journalism degree from Mount Royal University in…. A number of factors were listed in the rationale for. When global oil demand will decline — and how it will affect Alberta’s economy — remains up for debate. Diluent is the substance — natural gas condensate or naphtha — that is mixed with raw bitumen to transport it to refineries. In a letter to the federal environment minister Jonathan Wilkinson, Teck CEO Don Lindsay wrote in part: “Unfortunately, the growing debate around this issue has placed Frontier and our company squarely at the nexus of much broader issues that need to be resolved. Since 1998, oilsands production has soared from nearly 800,000 barrels a day to more than 2.8 million barrels a day. Der Ölsand in Alberta ist ein Gemisch aus durchschnittlich 83 % Sand, 10 % Bitumen, 4 % Wasser und 3 % Ton. It’s not so easy then to say ‘we should increase the royalties’ like a lot of the academics do, and like I did.”. “The fact of the matter is that industry keeps 96 cents of every dollar,” Boychuk said. Alberta’s 30 most productive oilsands projects accounted for more than 95 per cent of oil produced in 2017, generating $53.5 billion in revenues. According to the new data from the province, 12 of the 30 most productive oilsands projects are in the “post-payout” category, each paying about 27.41 per cent of their profits. Then what do you do? In post-payout, they pay between 25 to 40 per cent of yearly profits, also dependent on the price of oil. The companies producing that oil — including Suncor, Cenovus, Canadian Natural Resources Limited and Imperial Oil — made $10.14 billion in profits, while Albertans collected $2.37 billion in royalties.
People always tell us they love our newsletter. Connect with Oil Sands, Coal and Mineral Operations: Hours: 8:15 am to 4:30 pm (open Monday to Friday, closed statutory holidays), Email: Alberta Premier Jason Kenney said the cancelled of the multi-billion dollar project was a grave disappointment. with minor changes during the 2015 royalty review — the high upfront costs of production being a major one. Learn the oil sands process, from initial permit applications through to reclamation of the site. “Low royalty rates tend to result in a higher pace of development and a desire to attract private investment,” Roy wrote.
That means the biggest oilsands companies paid a total royalty rate of 23.37 per cent of profits.
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