I would like to correct a number of issues raised in your editorial of July 21, Get ’er done not good enough.
To be very clear, the Alberta government supports a policy of a substantial amount of bitumen production being upgraded or refined within the province, with a reasonable share available for export to markets elsewhere in Canada and the United States to support a robust, competitive market for this unique resource.
Specifically, the Provincial Energy Strategy includes a goal of two-thirds being upgraded or processed here. But this needs to be part of an oilsands portfolio that includes production of raw bitumen, synthetic crude oils and refined petroleum products that in the long run will provide Albertans with the best combination of revenues, diversity to handle changes in the marketplace, and spinoff benefits in Alberta. It is this long-term value that matters most for the province.
The Energy Resources Conservation Board (ERCB) confirms that approximately 61 per cent of bitumen is being upgraded or refined within Alberta today. In their forecasts, they are taking into account current plans — which will change as increased bitumen production and increased transportation access provides new opportunities.
There is, of course, additional capacity beyond that. For example, in February, the Alberta government announced it had successfully negotiated the details of a contract with North West Upgrading (NWU) and Canadian Natural Resources Limited (CNRL) for value added upgrading and refining of bitumen royalty-in-kind barrels. There may well be additional opportunities for refining, but that will depend on the value of the markets available over the long run for the products and the transportation costs of getting into them.
The North West Upgrading/CNRL partnership will create about 10,000 jobs during construction, plus associated spinoff employment.
As the need for petroleum products increases, particularly in Asia, this will increase market opportunities for petroleum products and synthetic crude oils that can be refined to products. As the capacity for taking Alberta bitumen expands in North America and Asia through addition of coking capacity and transportation access, demand for bitumen will grow. This in turn, increases the sales price for bitumen resulting in increased royalties to the province.
It’s interesting that certain people are claiming we are shipping jobs to the U.S. when, in the midst of a slowly recovering economy and a falling unemployment rate, some industries are wondering what the Alberta government is doing to avoid a return to widespread labour shortages.
While Alberta is committed to increasing upgrading here in the province and getting the best value from our resources, over simplistic and inaccurate criticism that neglects to see the bigger picture is not beneficial to anyone.
Ron Liepert
Minister of Energy
Edmonton