UPDATE 1-Discounted bitumen prices hit Alberta's coffers

Wed Nov 28, 2012 2:13pm EST
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* 2012-2013 deficit could be C$2.3 bln-C$3 bln

* Revenues currently C$1.4 bln lower than expected

* Heavy crude discounts have been around $30 under WTI

By Jeffrey Jones

CALGARY, Alberta, Nov 28 (Reuters) - Deep price discounts on the crude wrung from Alberta's oil sands are taking their toll on the western Canadian province's finances, the government said on Wednesday, as it warned that its deficit could still be more than triple its initial projection.

In a second-quarter budget update, the Conservative government of Canada's biggest energy-producing province said it expects its 2012-2013 deficit will be between C$2.3 billion and C$3 billion ($2.3 billion and $3 billion), with revenues for the first six months tracking C$1.4 billion below expectations.

It originally planned for a deficit of C$886 million, but realized by the end of the first quarter that the likely shortfall was widening.

Finance Minister Doug Horner blamed a series of factors, including global economic problems, the high value of the Canadian dollar versus the U.S. dollar and lower-than-expected land lease sales to energy companies.

But he singled out unusually wide differentials between the price of U.S. benchmark light oil and Canadian heavy oil as the most painful factor.   Continued...