Financial Results
- 2006 Business Results
- Joint Venture Operating Costs
- Stage 3 Project Complete
- 2006 Operational Highlights
- Research and Development
- 2007 Outlook
syncrude oil sands leases map
Sustained Growth, Significant Contributions
Non-energy procurement of goods and services from Canadian and international companies was in excess of $2.1 billion, representing 50 per cent of total expenditures.
2006 Economic Indicators – Since start-up in 1978, the Syncrude participants have made payments in excess of $7.5 billion to governments for royalties, payroll and municipal taxes and other Crown charges. Royalties paid to the Province of Alberta by Syncrude’s Joint Venture participants over this period have amounted to about $3.9 billion. In 2006, total payments to governments were $901 million, compared with $281 million in 2005.
Since 1978, the Syncrude participants have paid a cumulative total of more than $7.5 billion to governments for royalties, payroll taxes, municipal taxes and other Crown charges. Governments use these funds to provide services and programs to people.
Geographic Distribution of Economic Contribution – Overall benefits to the Alberta economy in 2006 were approximately $3.7 billion, including more than $3.1 billion in non-energy expenditures related to procurement of goods and services, royalties and taxes, and payments to employees. Spending on goods and services provided by Alberta-based companies totaled $1.8 billion. Business volume with Edmonton area companies was $693 million, while business with other Alberta firms totalled a further $418 million. Companies in other parts of Canada received business valued at $194 million, and purchasing from international suppliers was valued at $126 million.
Businesses in Syncrude’s immediate trading area, the Wood Buffalo region of Alberta, received a combined $690 million during the year, about 33 per cent of total procurement. This includes $132 million in business with Aboriginal firms in the Wood Buffalo area, which represents six per cent of total spending on goods and services, up from three per cent in 2005. Syncrude’s cumulative business with Aboriginal firms since 1992 exceeds $1 billion.
The majority of Syncrude’s 4,527 employees reside in the Wood Buffalo region. Their support of local businesses, combined with Syncrude’s procurement of goods and services from local and Aboriginal firms, contribute significantly to the economic base of the region.
Syncrude creates widespread economic impacts.
Minimum Royalty Period Ends – Syncrude’s current expansion project was enabled in part by the oil sands industry fiscal regime (also known as the generic royalty regulation) that was implemented by the Alberta government in 1996. Under this arrangement, a minimum one per cent royalty on gross revenue is paid by the developer until project capital costs have been recovered.
Relatively high crude oil prices over the last three years greatly accelerated the recovery of capital costs by Syncrude’s Joint Venture participants and, as a result, the minimum royalty period came to an end in 2006. Royalty payments to the Province of Alberta in 2006 were made on the basis of 25 per cent of deemed net income, and this led to an eleven-fold increase in royalty payments in 2006 to $654 million, up from $55 million in 2005.
In 2006, Syncrude paid $654 million in royalties to the Province of Alberta.