To upgrade or not to upgrade; that is the question!

An important debate has been taking place in Alberta’s coffee shops, boardrooms and online meeting places between those who believe we should export our raw bitumen and those who would like to upgrade this resource before sending it to other markets.  At the upcoming PC AGM, Alberta’s sharpest Progressive Conservative minds will come together to provide our political leaders with direction and support on this very topic.

In fact, the grassroots of the Alberta PC party has brought forward four (4) separate resolutions supporting more upgrading in Alberta and the Party has organized a bear pit session that will deal specifically with this issue.

The resolutions brought forward by various constituency associations include:

  • Edmonton Whitemud (A) Resolution – Upgrading of Bitumen in Alberta
  • Strathcona (A) Resolution – Increasing Canadian Content in Oil Sand Construction
  • Edmonton McClung (B) Resolution – Bitumen Extraction In Alberta
  • Calgary Shaw (B) Resolution – Encourage Further investment in Alberta’s Petroleum & Petrochemical Industries

Click here for the complete book of PCAGM Policy Resolutions.

Alberta needs to refine this resource if the province is to continue to be an energy superpower.  Sending downstream revenues to other markets through a pipeline in perpetuity is not a viable option.  Having said this, there is also a need to build a pipeline to the west coast that will export energy products to new Asian and Indian markets.  The two concepts are not mutually exclusive – in fact, moving forward with a two pronged approach is the best way for the Alberta Government to ensure Albertans retain the same quality of life they expect in the years and decades ahead.

There are those, however, who for reasons of political gain will argue that the government should not be in the energy business and should let the market decide whether upgraders are built locally.  I disagree with this opinion and agree wholeheartedly with Athabasca – Redwater MLA, Jeff Johnson’s conclusion that “our greatest risk is doing nothing”.  You can read his compelling arguments  in his discussion paper titled, Upgrading Alberta’s Future – Securing long-term economic opportunities through adding value to bitumen.  This conclusion is most succinctly supported by Wilf Golbert, Chair of Calgary Economic Development and Energy Analyst, who said “the export of Canadian bitumen rather than higher quality upgraded oil could become the greatest loss of economic value for any country in world history.”

Every day we do nothing, we lose billions of dollars that could be used to fund hospital beds, long term care facilities, new schools, new roads, etc….  Albertans own these resources and the value margin of refined bitumen belongs to them.  We need to make decisions today that ensure the prosperity of this province tomorrow.

A quick glance at history proves that the Alberta government has always been and should continue to be in the energy business – particularly in the value added aspects of the sector.  Since the 1970s, the Alberta Government has facilitated the growth of companies that are now the backbone of our economy.  Companies such as Syncrude, Encana, Cenovus, Transcanada, Suncor and others have all had their start in partnership with government and would not have had such successful starts without Alberta’s integral role in their development.

The government’s role in the energy sector has always been that of a “growth facilitator”, looking for ways to maximize value and realize potential.  Key factors that have made these partnerships between industry and government successful include the government’s early involvement in the project, as well as the government’s eventual and timely exit from the partnership.  Furthermore, the Alberta Government is currently a shareholder in many major oil companies through over $1 billion in shares through the Heritage Savings Trust Fund.  Ensuring the continued success of the entire energy sector is therefore a direct benefit to Albertans and therefore good public policy.

There are many more arguments that support adding value to Alberta’s resources here at home.   The Alberta Government’s decision to move forward on the Bitumen Royalty In Kind (BRIK) strategy is based on these reasons.  BRIK will facilitate the development of an upgrader in the province of Alberta by using our resource ownership position to stimulate the creation of independent businesses.  I recommend that you familiarize yourself with the reasons to support upgrading in Alberta by reading MLA Jeff Johnson’s report.

This issue is of critical importance to the future of Alberta’s energy security, as well as the quality of life we can secure for our children and grandchildren.  I encourage all PC AGM delegates to participate in the discussions and to ultimately support these resolutions.


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