Page 4 - NorthAmOil Week 35 2022

NorthAmOil COMMENTARY NorthAmOil

Alberta reports oil price

boost for provincial budget

The Alberta government has said it anticipates a far larger budget

surplus than previously expected, while producers are paying off oil

sands projects earlier than planned

ALBERTA THE Alberta government is benefiting from this Intermediate (WTI) oil prices would average
year’s increase in oil prices, as it reports that its $70 per barrel, whereas in reality the bench-
WHAT: budget surplus will be higher than previously mark averaged over $100 per barrel in the first
Alberta’s budget surplus expected. The higher crude price is also allowing six months of the year. While the price has since
is rising and oil sands producers to pay off the upfront costs of oil sands fallen, it remained close to $87 per barrel as of
producers are paying off megaprojects sooner than planned. the end of this week.
megaprojects earlier than However, once those projects are paid off, The updated budget now assumes that WTI
expected. this pushes them into a higher bracket for roy- crude will average $92.50 per barrel for the
alty payments, once again providing a financial year, up $22.50 compared with the original
WHY: boost to the government. forecast.
Oil prices have surged Alberta now expects its non-renewable
this year, boosting the Budget surplus resource revenue for this fiscal year to reach
provincial budgets In an update this week, the Alberta govern- CAD28.4bn ($21.6bn), more than double its
and allowing oil sands ment said it anticipated a budget surplus of previous forecast. The province’s total revenue
projects to be paid off. CAD13.2bn ($10.1bn) in this budget year, for the 2022-23 fiscal year is now projected
up from a previous forecast of a surplus of to hit CAD75.9bn ($57.8bn). This includes
WHAT NEXT: CAD511mn ($389mn), made in February. oil sands bitumen royalties of CAD20.1bn
Paying off the upfront Alberta Premier Jason Kenney attributed this ($15.3bn), up 73% from the previous fiscal year
costs of oil sands projects in large part to the rise in commodity prices and and CAD9.7bn ($7.4bn) higher than originally
pushes them into a higher royalty revenues. Indeed, the previous forecast budgeted.
royalty bracket. was based on an assumption that West Texas The Alberta government is planning to use

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