No Confirmation On Alsands Royalty Speculation

EDMONTON (CP) -- Alberta government and SHELL CANADA RESOURCES LTD. officials refused comment Monday on reports the province will receive $36 billion in royalties from the Alsands oil sands project.

Energy Minister MERV LEITCH said in an interview he would not elaborate on negotiations, still under way regarding royalty and taxation income from the $5.6 billion proposed project to be built about 60 kilometers north of Fort McMurray.

DICK ABERG, vicepresident of Shell Canada Resources Ltd. 's oil sands division, the leading member of the project's ninecompnay consortium was surprised at the figures. "I don't know where they got all this stuff from, " he said in a telephone interview from Toronto.

The Calgary Herald reported Monday that Alberta estimated a royalty and tax income of $36 billion after the plant begins production. This would begin with a two- percent royalty on gross revenue, increasing by two per cent every 18 months, until the eighth year of production.

Then when the company had recovered its capital investment, the province would take 35% of the plant's annual net profit or a 10 percent royalty, whichever was larger.

'DON'T MEAN MUCH'

"These numbers don't mean much", Leitch said. He added that inflation and expected future increases in oil prices would affect royalty deals.

The minister would not estimate when a royalty scheme would be approved between the province and the Alsands group. But Aberg predicted a deal by the end of the year.

The minister reiterated Premier PETER LOUGHEED'S statements Monday that Alberta would proceed with oil sands plant construction as long as a "fair energy deal" was awarded the province.

Aberg refused to confirm or deny that the 35% profit share or 10% royalty had been proposed to the Alsands group or if it had been refused.

But he said dispute over royalties is not impeding negotiations. "I don't think we're at an impasse. We're continuing to talk to them."

Members of the Alsands group include Shell Canada, Shell Explorer Ltd., Amoco Canada Petroleum Ltd., Pacific Petroleum Ltd., Chevron Standard Ltd., Gulf Canada Ltd., Petrofina Canada Ltd. and Dome Petroleum Ltd.