Comparative analysis of fiscal terms for Alberta oil sands and international heavy and conventional oils

There are considerable differences between international heavy oil and Alberta oil sands projects, notably the high viscosity of the bitumen in the oil sands reservoirs. The oil sands bitumen do not flow to wells without heating the bitumen, thereby adding to the already high cost of Alberta oil sand operations. This report provided an economic comparison of Alberta oil sands and international heavy oil projects. It also included a brief scoping review to compare with conventional oil regimes. Full exploration costs including the costs of dry holes were allocated to conventional oil operations in order to obtain a proper comparison. This investigation included the costs of dry holes. The report was a follow up to an earlier study released on April 12, 2007 on the preliminary fiscal evaluation of Alberta oil sand terms. The report provided an economic framework and described project selection. It then provided a discussion of production, costs and price data. Four adjusted projects were presented and compared with Alberta. The Venezuelan royalty formula was also discussed. Last, the report provided a detailed fiscal analysis. Comparisons were offered with Cold Lake and Athabasca Mine. A review of some other fiscal systems applicable to conventional oil were also outlined. It was concluded that Alberta oil sands developments are very competitive. It would be possible to modestly increase government revenues, without affecting the international competitive position of Alberta with respect to conventional oil. There is also some possibility to increase the base royalty on the Alberta oil sands without losing competitiveness. tabs., figs