Alberta Record

· Order in Council / Bitumen Royalty-in-kind Regulation · in-force

Bitumen Royalty in Kind Regulation

Establishes the Bitumen Royalty-in-kind Regulation, enabling the Alberta Petroleum Marketing Commission (APMC) to direct oil sands lessees to deliver the Crown's royalty share of bitumen directly, rather than as monetary payments. It outlin

High impactCentralization of powerThe public, directlyIndependent watchdogs

What changed

  • The Bitumen Royalty-in-kind Regulation is established under the Mines and Minerals Act and Petroleum Marketing Act, empowering the Alberta Petroleum Marketing Commission (APMC) to direct oil sands lessees to deliver the Crown's royalty share of bitumen directly.
  • Lessees and their designated delivery agents are required to act as agents of the Crown for managing and delivering directed royalty bitumen, with a framework for determining 'just and reasonable consideration' for their services.
  • Section 26.1 of the Petroleum Marketing Regulation (AR 174/2006) is repealed and replaced, broadening the definition of 'supplier' to include various crude oil transportation and storage entities.
  • The APMC is granted new authority to direct suppliers to transmit crude oil via pipeline to Commission-designated facilities or points, and to accept and store crude oil in their storage facilities.
  • A mechanism is established for determining 'just and reasonable consideration' for directed transmission services, referencing section 110 of the Public Utilities Act. APMC is prohibited from directing underground storage without prior Alberta Energy Regulator approval.

Why it matters

  • Shifts the method of collecting bitumen royalties from solely monetary payments to include direct physical delivery, centralizing control over a portion of Alberta's bitumen resources and potentially altering provincial revenue management strategies.
  • Introduces new operational and financial obligations for oil sands lessees, requiring them to act as agents of the Crown for managing and delivering a portion of their production.
  • May impact market dynamics for Alberta's bitumen by allowing the Crown to directly participate in the supply chain and potentially influence supply and pricing.
  • Expands the operational authority of the Alberta Petroleum Marketing Commission over crude oil logistics within the province, including the power to issue binding directives for transmission and storage.
  • Introduces new obligations for crude oil suppliers to comply with Commission directives for transmission and storage, while establishing a mechanism for determining compensation for these services.
  • Maintains a regulatory check by requiring Alberta Energy Regulator approval for specific types of underground storage directives, balancing new powers with existing oversight.

Other governance concerns

  • Increased direct government involvement in resource marketing and logistics.
  • Potential for altered market conditions due to Crown's direct participation in bitumen supply.
  • New compliance burdens and agency responsibilities for private sector operators.
  • Increased regulatory burden on crude oil suppliers.
  • Potential for disputes over 'just and reasonable consideration' for services.
  • Expansion of executive branch authority (via the Commission) into operational aspects of crude oil transmission and storage.

Primary sources (2)