Alberta government seeks bidders for bitumen royalty-in-kind program

CALGARY — The Alberta government wants oilsands companies to participate in a program to boost the province’s upgrading, refining and petrochemical industries, where there have been concerns over jobs and investment flowing south of the border.

CALGARY — The Alberta government wants oilsands companies to participate in a program to boost the province’s upgrading, refining and petrochemical industries, where there have been concerns over jobs and investment flowing south of the border.

The province said Tuesday it is looking for proposals from companies to pay their royalties to the province in-kind, or with physical bitumen, rather than in cash.

The government could then strategically use the sticky, tar-like substance that needs to be heavily processed before being turned into more valuable products like gasoline to spur economic activity in the province.

“Reaching our oilsands resource potential is the cornerstone of a flourishing, value-added energy industry that includes upgrading, refining and petrochemicals,” stated Energy Minister Mel Knight.

“This initiative will further our goal of establishing Alberta as a world-class energy centre.”

Some oilsands producers have decided not to build multibillion-dollar upgraders to process the bitumen they squeeze from the ground in northern Alberta.

Instead, some have found it makes better economic sense to retrofit existing U.S. refineries to handle the heavy crude.

That has raised worries that Alberta may be losing competitive ground to jurisdictions south of the border.

“Bitumen royalty in-kind is a strategic tool that fosters value-added development in Alberta,” said Finance Minister Iris Evans.

“Adding value to our resources diversifies our energy economy, keeps jobs in the province, and produces larger total energy revenues for Albertans.”

The province said it intends to supply a company, which it did not name, on a commercial basis with up to 75,000 barrels per day of bitumen.

Initially, the bitumen royalty in-kind program will not include integrated companies, which have activities in the production, refining and retail segments of the business.

The deadline for proposals is Dec. 2.

The Canadian Chemical Producers’ Association embraced Alberta’s strategy.

“We recognize the challenges of implementing this vision,” said association president Richard Paton in a statement Tuesday.

“But a firm commitment to upgrading bitumen here in Canada is a step towards what we hope will be a sufficient series of projects that in the aggregate will represent world scale feedstock opportunities for the petrochemical industry.”

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