Suncor and Syncrude and Alberta’s royalty hike
SRJ Staff 07.NOV.07
Suncor Energy and Syncrude Canada Ltd will be affected by Alberta’s new royalty hike, but not immediately.
“Those companies are under separate crown agreements,” said Bob McManus, assistant director, communications Alberta energy. “Suncor was negotiated in 1963 and Syncrude in 1975.”
Premier Ed Stelmach announced a new royalty regime for oil and gas on Thursday, Oct. 25. Royalties would increase by $1.4 billion in 2010, a 20-per-cent increase over currently projected revenues for that year.
“There have been year-to-year adjustments to the royalty regime, but the last major overhaul was 1974,” noted McManus.
According to McManus, the Alberta government will head to the table with each of the companies when royalty terms end in 2015.
“There will be discussions about what is the best for the province and stakeholders.”
Suncor Energy responds
Suncor Energy commented on the hike in a press release. The company said the new royalty regime might hurt business.
“Suncor recognizes that the oil sands resource we develop is owned by the people of Alberta and Albertans have the right to benefit economically through royalties,” said Rick George, Suncor president and chief executive officer. “However, the royalty regime changes proposed by the Alberta government are substantial and could have a significant impact on industry economics. We will need time to study the changes and their potential impact on our business.”
However, Suncor added the province has outlined plans with the oil sands company to reach an agreement on a transition plan.
“As an oil sands pioneer and a proud Alberta company, we will work with the government to find the right solution for Suncor and the people of Alberta,” said George.
There’s no reaction from the Athabasca Oil Sands Developers to the recent Alberta government’s announcement of royalty hikes.
“Member companies are all evaluating their own projects so there’s been no reaction,” stated Jacob Irving, Athabasca Oil Sands Developers (also known as the Athabasca Regional Issues Working Group – RIWG).
Irving noted when the Alberta Royalty Review Panel report was issued last summer, it rattled the industry.
“Some companies were talking about pulling back investment, but the report didn’t go through as is. What the government adopted was different from the report.”
RIWG is an oil sands industry association that facilitates solutions to shared development issues related to the Athabasca oil sands deposit.