Canadian oil sands royalties surge as project costs are paid off
Canadian oil sands producers are poised to pay an increasing share of their revenue to the government in coming years as surging oil prices allow them to pay off the costs of multibillion dollar well and mining projects earlier than planned, bumping them into a higher royalty bracket.
Five oil sands projects reached so-called “post-payout” royalty status last year from “pre-payout” and two more are expected to reach to post-payout each year from 2022 to 2025, the Alberta government said in a budget update Wednesday.
A windfall of cash from higher oil has allowed companies to pay off the up-front costs incurred when oil sands well sites or mines were built, sometimes years in the past. Once paid off, oil sands projects are pushed into a higher bracket for royalty payments, meaning a bigger portion of revenue generated by companies goes to the government.
Companies themselves have contributed to the trend as they resist building new projects or expanding older ones in order to pay down debt and return cash to shareholders. Oil and gas investment is expected to rise about 35% in Alberta this year but most of the increase reflects higher input costs, the government said.
Alberta’s two-tier royalty structure means companies pay little or no royalties when they are still paying off the costs of their initial investment. Below are oil sands projects where parts the facilities moved to “post-payout” in 2021 from “pre-payout” in 2020 plus the royalties they paid, generated from Alberta government data.
Oil sands royalties for Alberta’s government are forecast to reach C$20.1-billion ($15.3-billion), C$9.7-billion higher than originally budgeted, in the current fiscal year, the Alberta government said Wednesday. The windfall from hydrocarbons will contribute to a C$13.2-billion budget surplus for the province.
Comments
Research Reports
Projects
Latest Multimedia
Showroom
SBS® Tanks is a leading provider of innovative water security solutions with offices in Southern Africa, East and West Africa, the USA and an...
VISIT SHOWROOM
Immersive Technologies is the world's largest, proven and tested supplier of simulator training solutions to the global resources industry.
VISIT SHOWROOM
Press Office
Announcements
What's On
Subscribe to improve your user experience...
Option 1 (equivalent of R125 a month):
Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format
Option 2 (equivalent of R375 a month):
All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors
including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.
Already a subscriber?
Forgotten your password?
Receive weekly copy of Creamer Media's Engineering News & Mining Weekly magazine (print copy for those in South Africa and e-magazine for those outside of South Africa)
➕
Recieve daily email newsletters
➕
Access to full search results
➕
Access archive of magazine back copies
➕
Access to Projects in Progress
➕
Access to ONE Research Report of your choice in PDF format
RESEARCH CHANNEL AFRICA
R4500 (equivalent of R375 a month)
SUBSCRIBEAll benefits from Option 1
➕
Access to Creamer Media's Research Channel Africa for ALL Research Reports on various industrial and mining sectors, in PDF format, including on:
Electricity
➕
Water
➕
Energy Transition
➕
Hydrogen
➕
Roads, Rail and Ports
➕
Coal
➕
Gold
➕
Platinum
➕
Battery Metals
➕
etc.
Receive all benefits from Option 1 or Option 2 delivered to numerous people at your company
➕
Multiple User names and Passwords for simultaneous log-ins
➕
Intranet integration access to all in your organisation
