Energy Prices Boosting Alberta Export Revenue
Buoyant energy prices are having a dramatic impact on Alberta's foreign export revenues, which are headed for at least a 60% increase and a
record high in excess of $50 billion this year, says a recently released
report.
Data gathered by the Investment Dealers
Association of Canada
shows
revenues from crude oil and natural gas are up nearly 80% so far this year and
account for about a 60% share of total foreign export revenue for the province.
Statistics provided by the Alberta Energy and
Utilities Board
show oil
(excluding synthetic), bitumen and gas activity in the province through July
has provided $16.36 billion worth of business as significantly higher prices
boosted the total.
Alberta heavy, light/medium oil and bitumen production totalled 34.77
million cubic metres through July for a value of $7.75 billion. Gas for
delivery in Alberta, other parts of Canada and the United States reached 76.89
billion cubic metres for a value of $8.61 billion.
Providing an example of the commodity pricing differences, the price
for heavy oil used in the July calculation for Alberta was $264.54 per cubic
metre compared to $139.25 in 1999.
Alberta's public finances are experiencing unprecedented strengthening, thanks largely to the upsurge in oil and gas prices, the IDA report said.
This year's budget surplus in Alberta is projected at
more than $4 billion, nearly six times more than expected in February, when it
the province announced its initial forecast, and far above the $2.7 billion
surplus in 1999. Already, Treasurer Steve West
has projected the province will
take in a record $8.5 billion in resource revenue for fiscal 2000-2001.
The IDA report indicated world oil prices are heading for a 70% increase to an average of about $30 (U.S.) per bbl this year, a 17-year high,
while gas prices will rise more than 60%.
These skyrocketing energy prices are boosting cash flows for Western
Canada producers, with estimates of a doubling to record highs this year, the
IDA report said. Capital spending in the oil and gas industry will increase
more than 10% this year, the IDA said.
Four oil companies, Syncrude Canada
Ltd., Canadian Natural Resources Limited,
Suncor Energy Inc. and Mobil Oil Canada, Ltd.
have a combined $22
billion in capital spending planned for oilsands development to form a major
share of the energy industry's investments, the IDA said.
An average 278 oil and gas rigs were drilling (60% of available rigs)
in the first nine months this year, over 50% higher than the 181 rigs in 1999
(41% of available rigs), the IDA said. "These rigs are expected to drill 48%
more wells this year for a total 9,500," the IDA report said.
The sharp rise in oil and gas prices, reduced taxes and employment
gains have boosted business and consumer confidence and led to impressive economic growth in Alberta, the IDA said.
"Alberta's economic expansion, which will likely leap to the six per
cent range this year from 2.5% in 1999, will lead advances in all provinces,"
the IDA said.
The completion of the $2.4-billion Alliance pipeline project this fall
will boost capacity by about eight per cent, boding well for future shipments
as it creates unutilized capacity, the IDA report said.
Most of this year's projected surplus is being allocated to debt
reduction, with about half directed to meeting maturing debt and the balance
available for future debt, the IDA said.
Market debt is projected to decline by one-third from $12.5 billion
and Alberta's debt-to-GDP (gross domestic production ratio will fall to about
eight per cent in the current fiscal year from 11% last year, the lowest among
all provinces.
"While Alberta is enjoying unprecedented prosperity, we
commend the government for continuing to exercise prudence and fiscal
responsibility in dealing with its public finances," Joe
Oliver
, IDA president and chief executive officer, said in a statement.
The IDA said tax cuts, beginning next spring and phased over four
years, will make Alberta businesses the lowest taxed in the country, adding
impetus to growth in private investment. Businesses in Alberta plan to increase capital spending seven per cent in nominal terms this year to $31 billion, the IDA said.
Sustained private investment has contributed importantly to Alberta
boasting the highest annual average employment growth in the country of 3.1%
in the five years to 1999, accompanied by the second lowest unemployment rate
of 6.5%, the IDA said.
Value Of Alberta Heavy Oil Output
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