Bitumen Royalty-in-Kind (BRIK) Frequently Asked Questions
What is bitumen royalty in-kind (BRIK)?
In Alberta, royalties are a share of production from resources the government owns on behalf of Albertans. Under the Mines and Minerals Act, the government has the option to take its royalty share either in cash or in kind. Currently, the government takes its share of conventional crude oil production in kind and collects its royalty share for other resources in cash.
The decision to exercise the in-kind option for bitumen was identified in October 2007 as a way for the Crown to use its share of bitumen strategically to supply potential upgraders and refineries in Alberta, and to optimize its royalty share by marketing those volumes.
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What are the benefits of refining BRIK in Alberta?
This project ensures we are getting the best value for our bitumen. By refining products that have a higher price (value), we expect an increase in the value of the bitumen of roughly $200 to $700 million depending on market prices.
In addition, other benefits associated with refining our bitumen right here in Alberta include:
- An estimated 10,000 jobs during construction, plus associated spinoff employment;
- Roughly $100 million (present value) of provincial and property taxes;
- Additional enhanced oil recovery royalties; and
- Reduced carbon dioxide (CO2) emissions in the atmosphere.
What will this refinery produce?
This refinery will primarily produce ultra low sulphur diesel fuel for western Canada and diluents for use in the oil sands – both of which are in short supply. In addition, the refinery will produce naphtha, which is used as a component in high octane gasoline and a variety of other products such as propane, butane and ethane. The refinery will also produce carbon dioxide (CO2) which will be used for enhanced oil recovery.
What is carbon capture and storage?
Carbon capture and storage, or CCS, is the process that captures CO2 emissions that would otherwise go into the atmosphere and injects them into porous rock deep underground. It is a scientifically proven technology that will enable Alberta’s economy to continue to grow, while reducing carbon emissions from large-scale operations like oil sands extraction, value-added upgrading, and coal-fired electricity generation.
Why are we going the CCS route?
CCS will deliver the majority of our greenhouse gas reductions and will allow us to meet our climate change goals, while providing Albertans with the economic advantage and quality of life they expect.
Is CCS safe?
CCS is recognized as an effective and safe method to reduce CO2 emissions in the atmosphere. It has been endorsed by numerous organizations, including the United Nations Intergovernmental Panel on Climate Change and the International Energy Agency.
The key is in proper and careful planning. Alberta is working with world-renowned experts and looking at information from around the globe to ensure we have the appropriate programs in place to manage CCS activities properly.
We need to keep in mind that the CCS projects are not scheduled to get underway until 2015. Before anything from these projects is injected deep underground, we will have a world-class regulatory framework in place to ensure extensive measuring, monitoring and verification of these projects. The system will build on the decades of regulatory experience we have in managing the energy sector.
