Bitumen Royalty-In-Kind
As the resource owner, the Government of Alberta is entitled to take its royalty share of bitumen production in kind, as it does currently for conventional oil production. The Government’s bitumen royalty volumes will be a significant and growing source of reliable hydrocarbon feedstock into the future. The Government will consider having a portion of its bitumen royalty in-kind volumes commercially upgraded to higher value products in the province.
The Alberta Royalty Framework provided the option of "...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 9 and risks) in upgrading, refining and petrochemical markets, and optimize its royalty share.”
RFP to Utilize Bitumen Royalty in Kind for a Value Added Facility in Alberta
The Request for Proposal (RFP) will focus on a value-added facility located preferably in the Industrial Heartland Area of Alberta. The rationale for this approach is:
- A purpose of the BRIK program is to stimulate value-added processing in the province and obtain the best value for the government from its bitumen and potential products as directed by the Provincial Energy and Oil Sands strategies.
- The industrial heartland will be a preference location under the first BRIK RFP to leverage existing infrastructure and local synergy.
- Companies outside Alberta have recently indicated an interest in using the royalty barrels as part of an entry strategy for investments in Alberta around upgrading, refining and gasification.
- There are market opportunities for synthetic crude oil, diesel, refined products and polypropylene.
- The municipalities in the Capital Region are attempting to attract heavy industry to the region and a chemical cluster is forming.
The provision of BRIK volumes to specific RFP winners is focused on security of supply for those projects, and will be based on firms paying a market price for the bitumen. BRIK is not a method to provide subsidized bitumen. The Crown may be requested to enter into commercial custom processing arrangements to have its BRIK volumes processed within a privately owned upgrader.
For more information email BRIK-RFP@gov.ab.ca or view the Initial RFP Frequently Asked Questions.
Final RFP
- News Release - Province issues Final RFP to upgrade bitumen royalty-in-kind
- Alberta Purchasing Connection Final RFP
Information Meeting – Initial BRIK RFP
The Department held an information meeting in the Edmonton area on the afternoon of August 6, 2009 in order to answer questions and provide any clarifications requested in regard to this Initial RFP.
The Information meeting was held at the:
- Executive Royal Inn Hotel & Conference Centre,
- 8450 Sparrow Drive, Leduc, AB
- Bitumen Royalty-in-Kind Program Request for Proposals“Processing of Crown Royalty Bitumen” Technical Information Session
(August 6, 2009) - Information Session Your Questions Answered
