Are Alberta's oil revenues burning?
You may think that the higher oil prices would be a good thing for Alberta – but how can the province reap the rewards if it’s not in the game?
Syncrude, the oilsand’s largest producer of synthetic crude, had a two-day fire in March causing several oilsands processing upgrader units to go offline until May. The price of synthetic crude initially skyrocketed, and major companies like ConocoPhillips and Nexen were then forced to significantly reduce their oilsands production.
The synthetic crude is required to breakdown the oil in preparation for shipping Canadian heavy crude oil exports via pipeline to major US export markets. Other US refineries (as far as Louisiana) also rely on this 350,000 barrel-per-day upgrading facility.
Without it, shipping the oilsands is impossible so its no surprise major companies have been forced to reduce their output by upwards of 40 percent. Syncrude is one of the largest operators in Canada so this creates a major trickle down effect impacting global supply and the price of oil.
Unfortunately, even with the prices skyrocketing, millions are being left on the table for other synthetic crude producers in the US. Between the lost revenues on synthetics and reduced oil sands production, this means major royalty revenues are being lost in Alberta, revenues that the Government requires to maintain our various social programs and climate initiatives.
You may think that the higher oil prices would be a good thing for Alberta – but how can the province reap the rewards if it’s not in the game? And what do these burning pockets mean for job security?
Photo credit: CNBC