BRIK Authorization
The option of government taking Bitumen Royalty in Kind (BRIK) volumes was identified in October 2007 in The New Royalty Framework (NRF), which stated …“taking bitumen in kind rather than cash. Bitumen could be used strategically to supply potential upgraders and refineries in Alberta. The Crown would share in potential gains (and risks) in the upgrading, refining and petrochemical markets, and optimize its royalty share.”
The Minister of Energy was asked by Premier Stelmach, in his March 2008 and April 2009 Mandate letters, to lead the implementation of strategies to increase upgrading and refining capacity in Alberta, including the implementation of Bitumen Royalty in Kind (BRIK).
The Provincial Energy Strategy endorses the concept of adding value to the bitumen resources in the province. It says …"as the production of bitumen from oil sands increase, there is further potential for value-added development in Alberta. ….This type of development provides numerous benefits for the province – for example, new upgraders and refineries means new, long term jobs and tax revenue on top of royalties the province already receives for the resources.”
The Alberta Oil Sands Strategy endorses the idea of taking Bitumen Royalty in Kind – as a means to maximize the value of Alberta’s oil sands resources. “Responsible Actions: A Plan for Alberta’s Oil Sands
” released in February 2009, includes the following strategies:
- 3.1.2 Use bitumen royalty-in-kind transactions to facilitate and expand an Alberta bitumen market.
- 3.1.4 Establish a government-led organization to manage Alberta’s bitumen royalty-in-kind volumes to maximize the long-term benefits for Albertans.
- 3.2.1 Leverage bitumen royalty-in-kind volumes to develop value-added oil sands products.
- 3.3.3 Encourage the development of outbound pipeline systems to open new markets for Alberta’s oil sands products.
A May 2008 Cabinet Report received Government approval to develop a business case for a Bitumen Royalty-in-Kind (BRIK) policy and a process for implementation, including issuance of a Request for Expressions of Interest to utilize BRIK volumes.
The Government of Alberta currently takes its conventional oil royalty in-kind; then markets it in order to realize the maximum value for its royalty share. Government has the authority to take royalties-in-kind, versus cash, for any of its resources, including bitumen.
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