Ministry of Energy and Minerals (Alberta)

In 1984, the Alberta Department of Energy and Natural Resources (ENR), was a complex multi-divisional organization, with a permanent staff of 2, 605 and a budget of $499 million, that was responsible for the management of energy, mineral, forest and fish and wildlife resources as well as public (crown owned lands) which constituted 62% of Alberta's land base. ENR policy was based on the premise that with proper planning and management, land can support a variety of uses, such as, timber, recreation and wildlife. However few were ideally compatible creating a climate of competition and conflict. In 1986 the Department of Energy and the Department of Forestry, Lands and Wildlife were created. The original resource agencies continued and interdepartmental planning took place under Resource Evaluation and Planning (REAP). The Resource Evaluation and Planning (REAP) division was created in 1976 to provide coordination and data gathering services. In the 1980s REAP oversaw an integrative planning system using a team approach to decision-making. It was a challenging time of transition. More established agencies like the Alberta Forest Service supported preservation of traditional attitudes and behaviour and felt threatened. By the 1980s Alberta Forest Service had a strong authority system with a military style chain of command and system of ranks. Fish and Wildlife Division were more flexible and less formally structured. Public Lands were more bureaucratic and mechanistic. The Fish and Wildlife division who emphasized long-term research and monitoring are under the auspices of the Fish and Wildlife Act. Fish and Wildlife division were with the Department of Recreation and Parks before joining Energy and Natural Resources (ENR) in 1979. The Mineral Resources division had very high status and power because of their client groups, which included the oil and gas industry, who are "powerful actors on the Alberta scene." In 1982 the Alberta Forest Service had a staff of 765 and a budget of $123 million and the Fish and Wildlife division whose clients were often environmental groups, had 414 positions and $20 million. ==Non-Renewable Resource Royalties==

Royalty rates in Alberta are based on the price of WTI. That royalty rate is applied to a project's Net Revenue if the project has reached payout or Gross Revenue if the project has not yet reached payout. A project's revenue is a direct function of the price it is able to sell its crude for. Since WCS is a benchmark for oil sands crudes, revenues in the oil sands are discounted when the price of WCS is discounted. Those price discounts flow through to the royalty payments. The Province of Alberta receives a portion of benefits from the development of energy resources in the form of royalties that fund in part programs like health, education and infrastructure. In 2006-7 the oil sands royalty revenue was $2.411 billion. In 2007/08 it rose to $2.913 billion and it continued to rise in 2008/09 to $2.973 billion. In their response to the 2010 competitive review with input from the Canadian Association of Petroleum Producers (CAPP) and the Small Explorers and Producers Association of Canada, Alberta Energy lowered non-renewable resource (NRR) royalty rates. Following the revised Alberta Royalty Regime it fell in 2009/10 to $1.008 billion. In 2009/10 royalties from the oil sands amounted to $1.008 billion (Budget 2009 cited in Energy Alberta 2009. When the price of oil per barrel is less than or equal to $55/bbl indexed against West Texas Intermediate (WTI) (Oil and Gas Fiscal Regimes 2011:30)(Indexed to the Canadian dollar price of West Texas Intermediate (WTI) (Oil and Gas Fiscal Regimes 2011:30) to a maximum of 9%). When the price of oil per barrel is less than or equal to $120/ bbl indexed against West Texas Intermediate (WTI) "payout." Oil Sands Royalty Rates "Bitumen Valuation Methodology (BVM) is a method to determine for royalty purposes a value for bitumen produced in oil sands projects and either upgraded on-site or sold or transferred to affiliates. The BVM ensures that Alberta receives market value for its bitumen production, taken in cash or bitumen royalty-in-kind, through the royalty formula. Western Canadian Select (WCS), a grade or blend of Alberta bitumens, diluents (a product such as naphtha or condensate which is added to increase the ability of the oil to flow through a pipeline) and conventional heavy oils, developed by Alberta producers and stored and valued at Hardisty, AB was determined to be the best reference crude price in the development of a BVM." Budget 2014 forecast that the 2014-2015 West Texas Intermediate (WTI) - Western Canadian Select (WCS)- differential, would be 26% with the WTI price at US$95.22. ==References==