By Yogi Schulz

It’s time to retire the Alberta Petroleum Marketing Commission (APMC). Its cost, avoidable complexity, and redundancy can be eliminated for the financial benefit of all Albertans. Retiring the APMC is a terrific Cutting Red Tape opportunity for the Alberta government. Here’s what the APMC does and why we don’t need it anymore.

I’m describing why we don’t need the APMC using the topics the APMC uses to describe its work in the Alberta Petroleum Marketing Commission Roles and Mandate document.

Royalty In-kind Operations

All parties, meaning Albertans, producers, and the Alberta crown, would be better off if we settled crown royalties in cash rather than in-kind.

Settling Alberta crown royalties payable with physical crude oil volumes creates avoidable complexity and high administrative cost for both producers and the Alberta crown.

The benefit of this change to Albertans is that more of the crown royalty income could be used for public expenses rather than consumed by the administration of the crown royalty in-kind volumes.

The APMC currently receives physical crude oil volumes from producers in payment of crown royalties. The crown royalty volumes are called in-kind volumes to differentiate this situation from the cash that the crown typically receives from producers to settle other crown royalties due. How crown royalties are settled in Canada is illustrated by this table:

Summarizing how crown royalties are settled in this way demonstrates how ridiculous the current Alberta situation is and how there’s no risk in changing to cash and lots of efficiencies to be gained.

It’s time for the APMC to quit royalty in-kind operations because it’s adding no value to anyone.

Conventional Crude Oil Marketing Operations

All parties, meaning Albertans, producers, and the Alberta crown, would be better off if the APMC no longer marketed crown royalty in-kind volumes. The producers are happy to perform this task and don’t even charge the jurisdictions listed in the table above.

The benefit of this change to Albertans is that more of the crown royalty income could be used for public expenses rather than consumed by the marketing fees associated with selling the crown royalty in-kind volumes.

The APMC currently markets the crude oil in-kind volumes using multiple crude oil marketing companies and some administrative staff. Albertans, through the APMC, pay the marketing fee and the administrative expenses.

It’s time that the APMC quit marketing crude oil.

Adding value to Alberta’s energy resources

The APMC “explores value-added opportunities” for Alberta energy resources. It’s doubtful that the APMC can contribute much to this important task because it’s being performed regularly by the following groups and likely more:

1. Dozens or perhaps hundreds of oil and natural gas producers who are keen to increase their income in this way.
2. The Alberta Ministry of Energy whose mandate includes encouraging “additional investment that creates jobs and economic prosperity.”
3. A list of over 100 economic development-related organizations, including governmental agencies, industry associations, research organizations, and business service providers.
4. Canadian Association of Petroleum Producers (CAPP) and The Explorers and Producers Association of Canada (EPAC).
5. Central Alberta: Access Prosperity, Alberta’s Industrial Heartland Association, and other regional development groups focused on this task.

The APMC also manages “continuing . . . commitments to the Sturgeon Refinery”. This work has become small and routine because the Sturgeon Refinery is now complete. Others can easily absorb this work in the Alberta Ministry of Energy.

It’s time to recognize that the APMC is adding no value to Alberta’s energy resources.

Expanding access to global energy markets

The APMC is “expanding access to global energy markets” for Alberta energy resources. If the APMC is working on this issue, their progress is not perceptible. It’s doubtful that the APMC contributes much to this important task because the many groups listed above also perform this work.

It’s time to recognize that the APMC is adding no value to Alberta’s global energy markets.

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